46% of grants cost more than they're worth | Tom Neill | 2020

"...The reality is that writing grant requirements, sorting through grant applications and visiting grantee organisations can be a lot of work. For sure, some do it better than others, but there is a very real cost to this exercise. To do all this, you need to employ people. Fortunately for us, any foundation set up as a charity (i.e. all of them), lists their employees and volunteers with the Charity Commission. We looked at 29 of these foundations (chosen based on their reports to 360Giving). To get their total staff costs, we took employee numbers, and assumed that volunteers would work 1 day per week....

What is the cost to the organisation that received the grant? For the small charities we spoke to, we see that reporting and monitoring of a grant takes about a week. That includes preparing for a funder visit, collecting data on beneficiaries, describing your project, collecting case studies, working out "what you've learnt" etc. While some reporting requirements are seriously over the top, in general we estimate that reporting for a grant costs a charity £500.

But what about the organisations whose applications were unsuccessful? We need to know 2 things: 1) The time taken to apply to a grant and 2) The number of applicants for every grant. For 1), we used the Grant Advisor website. Most grants take 2 days to apply for. We then found estimates for the number of applications per grant from 3 different funders: Esmée Fairbairn (7.4), the Henry Smith Charity (5.0) and Lloyds Bank Foundation for England and Wales (6.7). So, if there's 6 applications, each needing taking 2 days of work, at a day rate of £115, that's £1,380 spent on applying. We rounded that up to £1,400.

Finally, what about the people who didn't apply?...

As a funder, if you're not going to change the way you do your applications, reporting and monitoring: give bigger grants. But, if you want to do smaller grants, that can target the 73% of charities with less than £100,000 income per year, you're going to need to be a bit different. The first step should be to make the application guidelines short, and somehow work out a way to give out a huge number of grants with hardly any staff. In our view, the second step involves replacing the application process with better reporting."