A guide to grant funding for charities

GRANT FUNDING FOR CHARITIES – THE BASICS, THE CHALLENGES, AND HOW WE CAN HELP… At the heart of charities are dedicated team members, volunteers and trustees that often have the passion and drive to power a city but, realistically, is…

Blog30th Nov 2023

By Laura Moore

GRANT FUNDING FOR CHARITIES – THE BASICS, THE CHALLENGES, AND HOW WE CAN HELP…

At the heart of charities are dedicated team members, volunteers and trustees that often have the passion and drive to power a city but, realistically, is this enough?

Unfortunately, little can be achieved without proper funding. ‘Cash is King’ applies just as much to charitable organisations as it does to commercial businesses.

We are committed to ensuring that the charitable activities of our charity clients can continue, seamlessly, with little interruption and without the impending threat of lack of funds. So how can Sagars help?

There are a number of areas where we support our clients; however, in this blog, we will focus on how we can help you by assisting in the grant funding process.

WHAT IS A GRANT?

Grants are funds given to charities for a purpose. That purpose might be to support a specific project, to continue an ongoing activity, or to purchase something that enables them to help more people or work more effectively.

There are a variety of grant types and grant providers. Some examples include: short-term, long-term, government funded, match-funded, capital, revenue, and the list goes on!

The key point is that grant awards tend to support the charitable objectives of a charity and there is no need for the charity to make repayment (unlike, for example, a bank loan).

HOW CAN GRANT FUNDING BENEFIT CHARITIES?

While this may be an obvious question, it helps to highlight the key role that grants play in sustaining charities. A charity needs funds to pay its team, pay the bills and meet the costs needed to smoothly run its charitable activities or service delivery (be that the running of a community centre, provision of helpline support, conservation of historical artefacts, etc.).

Grants can assist a charity…

  • Seeking to finance a project / service or charitable objective
  • As a new income source to expand or continue existing services
  • Where the current grant funded period is coming to an end and new source of funding is required
  • When voluntary donations / trading income that top up the funds of the charity are not enough to support the day to day running of the charity
  • Purchase an asset required by the charity

Often, charities are reliant on grant funding exclusively, meaning that they would simply wind up their activities if grant funding was not available.

GRANT VS SERVICE PAYMENT

One area that can cause confusion for charities is the difference between a ‘true grant’ – which is given without any reciprocal supply being made in return – and a payment for services – where there is an obligation to undertake certain activities. This can be important for VAT purposes as the former will be outside the scope of VAT. However, service payments will fall within the scope of VAT and may give the charity an obligation to register for VAT and charge VAT in addition to the service payment.

Depending on the status of the funding body, treating funding under an arrangement as a service payment can provide a positive benefit to the charity. Whereas, if the funder is not able to recover any VAT chargeable, having a service payment is likely to reduce the available funding.

SO, WHAT ARE THE CHALLENGES?

Most organisations, grant-receiving or otherwise, are feeling the pinch. Competition for grant funding is exceptionally high and many organisations that were supported during COVID are finding that the tap has suddenly turned off.

Issues facing our charity clients include:

  • Lack of awareness – Not knowing what grant funding is out there in the first place or understanding the type of grant funding your charity needs or the funding cycles that funders have in place.
  • Lack of certainty – The time / effort taken to complete a grant application outweighs the probability of success.
  • Rejection – The grant application isn’t robust enough or doesn’t meet the specific criteria as determined by the funder.
  • Reporting requirements – The targets or reporting requirements as set by the funder are difficult to achieve / unrealistic to provide or cannot be prepared in the time allocated.
  • Limitation of grant amount – The amount of funding or lack of follow-up funding detracts from submitting an application in the first place.
  • Competition – Lots of charities out there competing with others for the same, limited funding.

There is also a real sense amongst our charity clients that funders only wish to fund the core service delivery or charitable activity but provide no overhead cost contribution, which of course poses a significant challenge to charities.

HOW SAGARS CAN HELP

Our team is highly experienced in supporting charities to access grant funding and navigate the challenges around doing so. So, how exactly can we help?

  1. We can work with you and your teams to take stock of your charitable activities, consider the opportunities for grant funding, and lay out a plan of action.
  2. We can prepare, proof-read or comment on grant applications, ensuring that it is robust, meets all the specific requirements, and stands out against competition
  3. We can put you in touch with a host of various grant providers and engage with them on your behalf.
  4. We can identify any VAT implications of a particular project to ensure that there are no hidden or unexpected VAT costs for the charity.

We are absolutely dedicated in helping you achieve your goals, so don’t hesitate to get in touch with Laura Moore or any of our specialist Not for Profit team to find out how we can work together and support your charity and its wonderful activities.

By Laura Moore

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