An increase in the proportion of long-term grants being handed out to charities has been revealed in new research.
The percentage of organisations which stated that grantmakers made a long-term investment in their work increased by at least eight percentage points from 2022 to 40% in 2025, according to the latest Third Sector Trends report.
This has marked a change for voluntary sector organisations which “for many years” have complained about the short-term investment they receive from grantmaking foundations, according to the report.
Rob Williamson, chief executive of Community Foundation North East, said: “An important shift is happening towards increased long-term, core funding, which is vital to enable charities and community groups to thrive.”
Unrestricted or core funding had increased from 2019, when 46% stated they received funding, to 60% in 2022. However, this declined to 56% in 2025.
Some 8,680 people across England and Wales between June and September last year responded to the survey which also found that charities with annual incomes below £10,000 form 36% of the sector but receive less than 1% of its total funds.
The percentage of TSOs which stated that innovation had been expected as a condition of grant funding increased from 50% in 2022 to 62% in 2025, but this remains below its 2019 level of 74%.
Williamson said that the “drift back” towards funders requiring innovation gave “some cause for concern”.
Some 35% of voluntary organisations stated that grantmaking trusts helped them to develop skills in 2025, up from 27% in 2022.
In 2025, 57% of TSOs said these trusts “took the time to get to know us”, a up from 48% in 2022.
However, that happened more often with larger funding recipients, 65%, than with the smallest, 47%, the report revealed.
Multi-year grant offers ‘encouraging’, ACF says
Responding to the research, Jim Cooke, head of practice and learning at the Association of Charitable Foundations, said: “Many charities have called for longer-term funding, so it is encouraging to see evidence that more trusts and foundations are responding with multi-year grants.
“Flexibility to fund over different time periods is a key strength of foundations, from responding quickly to emergencies or one-off needs, to enabling deeper impact through long-term partnerships.”
Cooke, however, said that as demand for grants rise a “tension” between supporting organisations for longer periods and remaining open longer to new applicants develops.
He added: “Each foundation needs to consider how best to balance this in their own context, with a clear understanding of their role in the wider funding ecosystem.”
‘Intense competition’ for finite resources
The percentage of voluntary organisations expecting income to rise fell to 28% in 2025, down from 32% in 2022 and 36% in 2019.
In 2025, however, just 18% of TSOs actually had rising incomes, a similar percentage from 2022 and 2019.
Between 2022 and 2025, the proportion of voluntary organisations which used reserves for essential costs fell from 30% to 27%, according to the research.
The latest report says that bigger organisations are more likely to be thriving financially, 16%, compared with 4% of the smallest charities.
Professor Tony Chapman of Durham University, who authored the report, said: “External factors can shape the financial prospects of TSOs, such as national economic and labour market conditions.
“But to blame external forces alone for the plight of voluntary organisations’ financial prospects is a serious mistake.
“The laudable, but extremely high levels of ambition amongst charities to achieve their social objectives has the inevitable consequence of producing intense competition over finite financial resources.
“This means that there will always be winners and losers.”
