Why grants are good

The launch of the Grants for Good Campaign brings a welcome focus on grants as a valuable funding mechanism. The newer arrivals on the funding scene (such as loans, social impact bonds and crowdfunding) have been getting a lot of attention. Novelty is always appealing and makes the more familiar ‘grant’ come across as a bit old fashioned and dull.

The Association of Charitable Foundations estimates that £6.1 billion of annual grants were transacted through grant-making foundations in 2013/14. Even with the reduction in government grants (down by more than £3.8bn over the last decade), they still have a significant role to play in funding charities and warrant our attention.

Debrah Allcock Tylor (see link below) has written about the benefits of grants for funders: they are straightforward (unlike contracts conforming to EU regulations); quick; flexible and good value (relatively low transaction costs). But why are grants a good thing for the recipients? Here are my top five benefits:

  1. You don’t have to pay them back – there will be a social return expected but you won’t need to worry about making a financial return as well. 
  2. They are valuable when needing to cover activity costs like research and development where it is difficult to generate enough income to cover costs.
  3. You get the money upfront – it is trusted that you will do what you said you would with the money so there are no cash flow problems unlike Payment by Results models. 
  4. They give credibility and can act as leverage to more money – if you have a grant approved from e.g. Henry Smith or Heritage Lottery Fund then it gives confidence to others who are considering supporting you. 
  5. They represent a partnership – the funder's involvement can bring added value such as access to a network of similar organisations or help with influencing policy.

And finally, fundraisers may disagree, but I find that the discipline of applying for a grant helps ensure that projects are well thought through. The external scrutiny can help hold you to account for the activities you deliver.

If you agree that grants are good, then the Grants for Good Campaign would like to hear from you: https://www.dsc.org.uk/grants-for-good-2/get-involved/