More than a tenth of funders in London have increased or uplifted existing grants in response to the cost-of-living crisis, research shows.
London Funders, the membership network for funders of London’s civil society, collected evidence from more than 170 funders and found that 13% of funders increased or uplifted current multi-year grants while 24% are planning to do so.
Some 20% of respondents to the survey said they created additional funding pots such as hardship funds and 28% are considering doing it.
Overall, 44% of respondents had increased “flexibility in terms of delivery and outcomes of current grants” to respond to the unfolding cost-of-living crisis.
Meanwhile, the Trust for London this week announced that it would uplift 247 grants by a total of £1.4m due to the cost-of-living crisis.
Impact on grantees
Eight in 10 respondents said their grantee charities had seen an increase in demand from their beneficiaries as a result of the crisis.
Meanwhile, six in 10 said that their grantees reported rising staff costs and were facing recruitment and retention challenges.
“Grantees were highly concerned about the impact on beneficiaries, particularly the most vulnerable, who simply cannot absorb any more financial hardship and are already faced with impossible choices,” the report said.
“Some funders reported that grantees are seeing people seeking help for the first time, suggesting a widening profile of those who need help. At the same time, some groups will be disproportionately hit, with a bigger impact on people already living in poverty, minoritised ethnic groups, those in precarious housing and other groups already experiencing disadvantage.”
They also raised concerns about the impact of the crisis on staff and volunteers, saying that these are struggling with burnout, low morale and increased workload “at a time when they themselves are being hit by the crisis”.
“There was a sense that the cost of living is a continuation of an already ‘battered’ sector which has yet to recover from the impacts of the pandemic, raising new questions about how funders can best support organisations to withstand yet more pressures,” the report added.
Applications have gone ‘through the roof’
Almost half of the respondents said that they have witnessed a rise in the number of applications in recent months.
One respondent said there was a “genuine sense of desperation”, with organisations forced to “shoe horn” their ideas into grant criteria.
“Our applications have gone through the roof and we cannot keep up with demand from our current resources,” one commented.
Some funders are shifting to cash awards in response to the crisis. Almost half who are already providing grants to individuals said they are looking at increasing the amount of available funding “to distribute via this route, either directly or via trusted third parties”.
Longer-term plans
Asked about how the cost-of-living crisis will impact their overall grantmaking budgets over the next two years, one in four funders said they are increasing their grantmaking activity.
One in six responded that they are looking at changing the types of activity they will fund and one in eight said they are considering drawing down more of their endowments.
One respondent commented: “Trustees have made a commitment to maintain our current grants budget for the next five years, despite the forecast downturn in our endowment. This means we are eating into capital. It also means (if inflationary pressures remain) that either the real value of our grants will go down, or we will make fewer but larger grants.”
Another one said: “We cannot go on like this. There needs to be a swing back to stabilisation rather than survival.”
Trust for London uplifts grants
This week, Trust for London revealed that it is uplifting 247 grants, with the total value of the uplifts reaching £1.4m, to help existing grantees cope with the cost-of-living crisis.
Speaking on the first day of NPC Ignites 2022, Manny Hothi, chief executive of Trust for London, said the current economic climate means that his charity is facing “tough choices”.
Trust for London typically fund around 300 organisations at any one time and awards about £10m in grants per year.
During the session, Hothi said that the charity, “like many others”, provided extra funding throughout the Covid-19 pandemic for crisis support.
He said the pandemic “badly exposed” several underlying issues such as racial and disability justice and that his charity recently went back into “crisis mode”.
“Endowments did really well after the first few months of Covid-19 and in the aftermath. Trustees were very confident to dip into endowments and provide an extra £8-9m of funding. This time is different, there’s a lot more hesitation about the future of endowments. Our trustees are nervous about giving out significantly more money now in terms of what that might do to our endowments so there are tough choices,” he said.
However, he continued: “We need to give out more money now, that’s the scale of this crisis, and that includes providing uplifts of 10% to existing grantees who don’t have inflation properly built into their budgets.”
Hothi added that making this decision to do this now means that his charity might not be able to fund new projects next year. “Those are the sorts of tough decisions we’re having to make but the scale of this crisis is such that we have to respond.”
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