Charitable foundations and donor-advised funds gave more in grants to charities than the government and National Lottery’s distributors for the first time last year, according to new data.
Estimated figures released today by 360Giving’s UKGrantmaking platform show that funding from trusts and foundations increased by 12% year-on-year to £8.2bn in 2023-24.
Donor-advised funds, which distribute philanthropic gifts from individuals and families, also increased grantmaking to charities by 20% to £2.1bn last year, becoming a growing part of the sector’s income.
Grants from central government directed to the voluntary and community sector declined in real terms to £2bn while money to arm’s length bodies, excluding National Lottery distributors, was £4.1bn.
Together, this £6.1bn represents a below inflation increase of 4.8% overall.
Meanwhile, UKGrantmaking estimated that grants from local and devolved government organisations amounted to £1bn.
This means that government bodies are no longer the largest source of grant income to the sector, although they remain the main providers of contract income.
Overall, more than 14,000 grantmakers gave over £23bn in 2023-24, a 7% increase compared to the previous year, representing around 18-22% of the sector’s income.
‘Invisible’ growth of donor-advised funds
360Giving chief executive Tania Cohen told Civil Society that the numbers were a sign of growing philanthropy.
“There are more people giving, which is positive, and there are also more people choosing to give through donor-advised funds because sometimes it is easier in terms of the tax, and some of them may want to give anonymously, rather than giving directly to the charity,” she said.
“People don't really know much about donor-advised funds, but £2.1bn is a lot of money.
“It's that invisible part of the sector that is growing, and no one's talking about it.”
Increase in grants to individuals
Meanwhile, using new data from the Charity Commission, 360Giving estimated that grants to individuals and families was £850m last year.
The latest data also found a 9% increase in grantmaking to individuals and families compared to the previous year from the largest 100 grantmakers in the category.
Cohen said: “We have seen increases in grantmaking, but it's also positive that we are seeing that better data leads to more informed decisions, more collaboration, which I think helps in the situation where the sector is under pressure.
“It will be really important for us to be working together to look at what the solutions could be.”
Catherine Seymour, director of policy, practice and research at the Association of Charitable Foundations (ACF), which is also part of the UKGrantmaking project, said that while the numbers show that charitable funders’ contribution is significant, other sources of income are needed.
“Lasting change relies on collaboration across sectors, and continued data transparency and shared learning are essential to building a more resilient, equitable and effective future,” she said.
Responding to the findings, think tank NPC’s director of transforming funding Alex Hayes said: “It’s great to see an overall increase in giving this year. We believe there is a need to increase the amount of funding going into the impact sector.
“Going forward, it’s equally important for grantmakers to recognise there are other ways they can have impact. The report shows endowment levels are steady.
“Grantmakers should be thinking of how they can utilise their whole assets, including their endowments, to create impact.”
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