Small charities are facing “broken” funding systems, a new report by NCVO has warned.
More than 300 charities with an income below £1m that responded to NCVO’s survey ranked funding as their primary concern, with many struggling to secure core, unrestricted, and multi-year funding.
The Power of Small report, published today by the umbrella body, warns that “short-term funding cycles create instability, forcing organisations to continuously seek new sources of financial support”.
Small charities also described feeling that funders favoured larger, well-established organisations over smaller ones when allocating funding.
The report lists other barriers facing small charities including culture and power that excludes them; a lack of practical support, and a need for better representation in policy and funder decision-making.
Small charity leaders also highlighted the emotional toll, stress, burnout, and in extreme cases, suicidal feelings, associated with the financial insecurity, administrative burdens and lack of support systems caused by running their organisations.
‘Decisions impacting us are made without us in the room’
The report was researched by the Fair Collective and written over 11 months, in consultation with over 600 small voluntary organisations.
Many small charities complained of feeling “overlooked” by funders, policymakers and infrastructure organisations, with 78% of respondents not feeling adequately represented in major funding or policy decisions.
One survey respondent said: “Decisions that impact our sector are made without us in the room.
“There is no mechanism for us to challenge or shape these conversations.”
This lack of formal representation has caused frustration and stress for small charity leaders, the report says, with their concerns reflecting broader issues around culture and power imbalances within the sector.
Lack of practical support
Many small charities were critical of the lack of practical support available to help them navigate the sector.
Despite the availability of training, information and support, many small charities reported finding it difficult to access relevant resources or lack the time to engage in professional development.
Some respondents suggested that hybrid models of support – combining in-person and digital resources – would be the most effective way to provide ongoing assistance.
The report also says that many small charities continue to face “significant” barriers in influencing policy decisions that affect them.
Meanwhile, 55% of rural-based organisations reported fewer funding opportunities compared to their urban counterparts.
Recommendations for funders and government
The report calls for commissioning and public procurement processes to be reformed in order to make them more accessible to small charities.
“Statutory bodies must urgently simplify procurement processes and lower access barriers to ensure smalls can participate meaningfully and sustainably in public service delivery,” it says.
The report recommends that funders should commit to increasing the average length and flexibility of grants awarded to small charities, in addition to tracking and publishing data on grant duration and funding type.
It calls for simplified application and reporting processes, with current systems being “disproportionately complex” for small charities.
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