What do you do when your lottery funding stops?

Or Is sustainability an urban myth?

There is no doubt that lottery funding has revolutionised how organisations are funded across the country, and that it has supported countless good causes. (Why not see what they have funded in your area on 360 giving). But what happens when your lottery funding runs out?

NCVO state that of the ￡50billion funding that comes into the sector in a year the lottery is responsible for 1% of this, so given the number of organisations that rely on this funding it is a surprisingly small amount. I have not analysed who is funded but this article concentrates on those organisations with incomes between ￡10K and ￡1million, that make up just under half the sector.

On the whole these organisations are relying on paid staff as well as volunteers to deliver predominantly local projects. Organisations work across the whole range of issues and causes that charities cover, and unfortunately NCVO research shows that these organisations have been disproportionately impacted by austerity, seeing income drop especially from statutory sources but also in other areas.

Apart from the biggest most of these organisations will not have a fundraiser, or, if they are lucky, they may have a part time fundraiser. Otherwise fundraising falls to other staff and to volunteers or trustees.

So, when these organisations get a three-year Reaching Communities grant, they breathe a sigh of relief and start concentrating on delivering services that make a difference. This funding will often cover the bulk of the programme that is being delivered. It will ensure a vital service continues and the organisation has a (by our terms) long term future. These days the money may also come with a Building Capabilities grant to improve how the organisation works and their sustainability.

But what happens when the funding starts to reach its end? How is this money replaced? What does sustainability mean?

If groups are very, very lucky they may get a second round of lottery funding, but this puts off the problem for another three years or so. But if this is not the case how do groups replace a single significant grant.

Earn your income. According to NCVO the biggest amount of money coming into the sector is from earnt income. This could be from selling services or a charity shop or from contracts. This is not long term income unless you are lucky to be able to get a contract which in the current climate is getting harder for small organisations. Couple this with the fact that many of these organisations are delivering to individuals and communities that can not afford to pay, earning significant income is not going to be a big source of new money. And to be fair the organisation was probably already maximising this to top up their lottery funding!

We have heard of groups being advised to try Social finance, but let’s get real this is a niche funding stream that the vast majority of organisations in this size range will not be able to access even if the trustees have reached the ‘we will try anything’ point to keep the organisation afloat. You can read one take on Social Impact Bonds here

Corporate sponsorship. If I had a pound for everyone that came to CCVS with the idea that this was going to solve their funding issues we could return all our grants! This is not a panacea as business does not have lots of free cash they are waiting to give to worthy causes. Building better relationships with business is extremely positive, many organisations benefit from financial and other support, but this type of fundraising takes time and energy. If you want to look at how business can help there are ways but it is more than simply sending them a well written email.

The public is the biggest external funder of the sector. But most of these organisations do not have the expertise, staff, or time to fund themselves in this way. Raising money from donations or legacies is time consuming. As technology moves on many organisations do not have the wherewithal to collect as much as they did in the past. Even in my local sandwich shop most people pay by card which means less change going into the collection tin on the counter. Fundraising from the public takes time and effort and you need to invest to make it happen. Maybe those organisations who get Building Capabilities funding should include investing in the skills and the technology to facilitate and grow this type of funding.

Statutory grants and commissions. This was a way many organisations were funded in the past but we are seeing grant levels going down, commissions getting bigger and services being taken in-house. The truth is they are not in the money so neither are we.

This leaves the staple for many of these organisations, grant funding! But many of these are for small amounts, often they want to fund something new and anything more than one years funding is unusual. We regularly see organisations trying to raise money this way. It didn’t take long to find a local group getting money from 45 different funders to find the ￡180K needed to run. The time and effort to apply and report to these is phenomenal and it has to be repeated year in year out. No wonder we are seeing burn out, organisations cutting projects and organisations closing.

What is sustainability in the real world. It is something we aspire to, something we pay lip service to because we have to, or something we can only dream about? How many of us are one funding decision away from partial or total collapse? People want our services, so do the professionals, it is not the need that is the issue it is the expectation that we will be there to deliver whatever. How much energy in the sector is wasted in getting the money and reporting and measuring? Energy that would be better used in delivering solutions and solving problems. Pretty much every organisation has the most senior person in the building not actually delivering services but filling in forms and writing reports.

What is the answer?

We need multi year grants from all providers three years minimum, 5 is better.

We need all funders to stop demanding their own reports. Organisations do financial reporting for trustees, they should also be reporting on activities and impact. Let us tell you as funders what we are already reporting and only ask for something different if you desperately need it.

We need more standardisation across how we apply for funds. This is the CV vs application form debate. If organisations have written project plans with budgets, needs analysis, outcomes etc. there should be an easy way to apply using them along with a covering letter about how you meet the funders particular priorities.

We need funding to enable small charities to catch up digitally and technologically with bigger charities in order to allow them to raise funds more effectively.

We need a long term, high profile campaign to change the narrative about charities so that the public recognise charities as the majority and not the minority of mega charities. That way they will think about smaller local organisations when they fundraise, donate or leave a legacy.

We need to reverse cuts to local government and other statutory services and ensure that they are funding local services and groups.

We need the HNS and local Clinical Commissioning groups to put their money where their mouth is about the importance of non-clinical and preventative services. We need to start to fund this to save money in the future.

We have to address inequality as a country in order to reduce its impact on people across all aspects of their lives.

Lottery funding is fantastic (if you are reading this we could do with some here at CCVS) but with it comes the inevitable cliff edge of what happens when it runs out. Fundraising is taking more time, energy, and resources away from delivering solutions. This is especially true in the smaller organisations who have been most impacted by austerity and reductions to income. We really need to address this or more organisations will be forced to close projects or simply cease to exist.