Small and medium charities are spending over a third of their grant income on the applications, due to 'inefficient processes', a new study has found.

Research conducted for the Law Family Commission on Civil Society has found ‘inefficient application processes’ mean the sector is spending at least £900m each year on applications alone.

The study highlighted the high number of funding applications, which are ineligible and unsuccessful, as well as finding many processes ‘unnecessarily laborious’.

It found small charities (with income of up to £100,000) spend 38% of their total grant income on fundraising applications, while medium charities (with revenues between £100,000 and £1m) spend 35%.

Large charities (with income of £1m and above) spend 16% of their grant income on the application process each year.

Pro Bono Economics research and policy director, Helen Barnard, said: “Much of the vital work carried out by charities around the country would simply not be possible without the billions of pounds of funding made available by foundations and trusts each year.

“However, this crucial pipeline of charitable funding embeds inefficiencies which are requiring many charities, especially smaller organisations, to spend significant sums of money on the application process.

“There are various examples of innovative funders already taking action to streamline their processes and cut down on inefficiencies, but this needs to be done at scale across the sector in order to save charities from considerable expense each year.”

Among various issues identified by the study, the Commission found that many foundations do not publish eligibility criteria, meaning charities cannot be sure they are eligible before starting an application.

The research also found application processes are often excessive – with one respondent describing a 60-page form being required for a grant of £500.

Many application forms are also often poorly designed, hard to navigate, do not make the questions visible to applicants at the start of the application (so that they can gather information and plan their answers) and cannot be saved when applicants need to pause and come back to them.

The Commission has recommended a range of “incremental improvements and initiatives be undertaken by individual funders” and called on more funders to come together in collaborations.

A future study will explore in greater depth how such changes in funder behaviour can be spread at scale across the funding system.

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