Fundraising

This factsheet concentrates on writing fundraising applications/bids and gives a brief introduction to fundraising online. For a guide to developing a fundraising strategy, we recommend the Institute of Fundraising’s series of short videos.

To write a good funding application you need to identify the key selling points:

  • Why is the work of your organisation so important?
  • Whose needs are you satisfying?
  • How does your organisation ensure that its efforts are successful?

Think in terms of projects, rather than funding for the whole organisation or funding for specific items like rent. To adjust to “project thinking” write a list of all the services that you are providing and a wish list of the services that you would like to provide. Call each service a project and decide which are the most important and how they fit in with your other activities.

Projects should be in bite-size chunks, not too large or too small for the funder that you are targeting. A project could be broken up into smaller projects.

Providing an over 60s lunch club every weekday for a year, at a cost of £30,000 might be a project. Alternatively, providing a Tuesday lunch club would cost £6,000; different funders could be asked to fund other days of the week. A Christmas lunch costing £300 could also be a separate fundable project.

Innovation

Applications that are innovative, fit current fashions, thinking and concerns are more likely to be successful. A catchy title and fresh writing style helps. The proposal should be realistic and achievable, with specific outputs – ie. numbers of lunches served or clients helped.

First grants

Getting the first grant can be the most difficult because the organisation has no track record. Do not be too ambitious. Start with small applications, increase the size of applications as you gain experience and can prove your organisation’s competence.

Think about what you are trying to create and the key tasks that must be completed to establish the project. These should be written down as an action plan with dates for starting and completing each task.

Look at funders websites, gather information. A lot of information about their priorities and programmes are available online. Additionally, there are resources such as NCVO’s Funding Central (£100/free to groups with turnovers below £30K) which have a wealth of information about funding opportunities.

It is often worth discussing a proposal with a funder before you start to write the application. Find out whether it fits their criteria or specific priorities for the year. The funder might also give an indication of what the maximum is that they would be likely to contribute to the project.

It may seem intimidating picking up the phone to the funder, but remember that a great many funder’s staff have worked in local charities and community groups and appreciate how daunting it can be when starting out fundraising. Often they like to know what’s on local groups minds.

If you can meet potential funders at this stage that is even better. Some funders, such as the Arts Council, run regular seminars. Local authorities will often run seminars when they open major grants programmes. Many local CVS/infrastructure organisations (find your local one through NACVA) run workshops.

Outputs & outcomes

Outputs are measurable achievements like the number of home visits made or the number of young people attending a youth club. Outcomes are more long-term and reflect the impact on the community as a whole or the life prospects of the individuals assisted. A youth club could claim a reduction in local crime because the energies of young people have been diverted from crime and applied to positive activities. It might also be possible to claim an improved quality of life, reduced use of illegal drugs, better social skills and enhanced life opportunities for its members. This could appeal to funders ranging from Clinical Commissioning Groups to careers and education services.

The application process

Applications can be forms or written statements or a combination of the two. Very occasionally they can include giving presentations. Forms can often be filled out online through a portal and include creating a profile – such as the Arts Council – or can involve downloading forms from websites. Sometimes forms are still available via the post.  If you are completing a form in a portal find a way of printing or saving a copy onto your computer because after the closing date for the application you may not be able to get back into that section of the portal. In some web portals, you may need to copy your words into a word document to count and spell check them and then paste back into the portal.

You may be asked to send/upload information such as a brochure or press clippings, sometimes you may be specifically asked not to send these. It’s almost certain that you will be asked to send accounts. If you are a new organisation you will be asked to send a budget.

If you’re asked to write a statement stick to the guidelines ie. no more than two sides of A4, 400 words or whatever.

Whether you are filling out a form or making a statement, stick rigidly to addressing the funder’s criteria. Don’t write on a “fingers crossed” basis, thinking you’re a good cause and deserve the money. You’re competing with a lot of good causes. The success rate for applications can be as low as 10%. Make it clear why you are the best organisation to be getting the funding and undertake the work.

In general, applications will require that you:

  • Be realistic in terms of funding requested
  • State clearly what the problem or need is
  • Show how you intend to reduce or remove the need
  • State what the outputs will be
  • State the outcomes
  • Show that you have a competent management structure
  • Show that you operate within an Equality & Diversity Policy framework
  • Include a clear budget. See CASHFACTS: Budgets
  • State the date when your organisation formed and details of previous funders
  • Explain how you will monitor and evaluate the scheme

Your website should be up-to-scratch and be well maintained. Good websites support fundraising, especially when a funder doesn’t want you to send additional information but may take a peek at your website.

If the funder welcomes additional information with the application include things like photographs, brochures, annual reports and copies of newspaper articles and publicity. Credibility is strengthened by letters of support from users, and experts who have visited the project.

If you have the opportunity, show that your trustees, volunteers and employees have the required skills or access to training. Provide fuller details about the skills of trustees and key personnel. If recruiting, give details of how you expect to recruit or train competent people. Explain briefly how your supervision system works.

Your writing style should grab the readers attention  Try to adopt the writing of the tabloid press which has a reading age of 12.  Assume that your application is going to be read on a Monday morning by somebody in an open-plan office and wishing they were still at home.  You have to ensure that your application sparkles and goes into the pile of probably and not into the pile of rejects, so you get onto the next stage.

Websites and online fundraising

Websites are a key means of communicating with a variety of stakeholders including funders. Many small charities and community groups see spending £1,000 to £2,000 on a website as an investment. This would usually come with a content management system (CMS) so your staff can keep the site updated. Remember to include staff training in the budget.

If you can’t afford to pay for a web designer try a free service like wix.com or weebly.com (though you will have to pay to remove their branding and/or adverts, something like £10/month). You can achieve a good looking site so it’s worth putting the effort in.

WordPress.com costs £84 per year for their Premium Package, comes with a domain name, and fundraising button through which people can donate by having s PayPal account or using their debit or credit card. Many local colleges run affordable courses on WordPress (citylit.ac.uk in London) so a professional website is achievable.

There are now plenty of sites where you can raise money directly from the public. On some of these you can set-up a page, on others you can incorporate a giving page into your website. Monysavingexpert has a comparison of some of the sites on the market.

Crowdfunding is now popular a popular way of raising small sums from supporters, frequently as a short-term campaign with a specific goal. The Guardian Voluntary Sector Network has an introduction to crowdfunding.

You can claim Gift Aid as a charity or community amateur sports club (CASC) and so add 25% to what you have raised. There’s a guide on gov.uk.

Social media including Facebook and Twitter are good means of connecting with potential donors. However, as with all fundraising endeavours, you have to include the investment of staff time into the calculation of how much money you may receive. Staff time can be expensive after you have factored in all the costs of them sitting at their desk – ie. the overheads of running an office. Is spending time on Twitter really going to generate funds?

Budgets

Very simply, a budget is a shopping list of the items of expenditure related to the project – rent, materials, transport, etc. with estimated prices and details of where you expect the funding to come from.

Some funders will want a budget for the whole organisation covering all its activities. Other funders will want a budget covering just the activity you are applying for. An application to a local authority seeking funding for a key worker’s salary will probably require a full budget. However, an application to run a summer play scheme is likely to only require an application for that scheme.

Unforeseen expenditure normally outweighs unforeseen savings, so add a contingency (an extra bit) to some of the figures for the unexpected.

Funders usually allow you to apply on a “Full cost recovery” basis. This means you can write all of the costs of running your project into the application i.e. if your social club for over-60s runs three days per week, you can write three days per week overheads into your application (building costs, staff time etc).

Now that grants for core funding such as rent are becoming more scarce, full cost recovery is a key concept to grasp, especially as your organisation grows and you take on more complex work.

See CASHFACTS Small charity budgets and CASHFACTS Full cost recovery.

Matched funding

Some funders like you to match their funding with monies from other sources. So you will have to apply to several funders and put together a package with different funders contributing to different aspects of the project.

It’s often especially important for local authorities to leverage in additional funding. If you get a three-year grant, receiving your second and third-year payments may depend on the success of fundraising – or at least your ability to demonstrate that you have tried to bring in matched funding.

Partnerships

Many funders are keen on partnerships and joint working between organisations. They are frequently seen as a means of promoting innovation, potentially cutting overheads and reducing duplication of work.

You have to look at potential partnerships and evaluate whether they will benefit your organisation and ultimately your clients. They can be good sources of funding and from time-to-time a chance to look at new areas of work.

Flexibility

If possible allow for flexibility in your application so that the funder can provide at a level that suits them.

Hostage to fortune

Do not be so desperate to win a bid that you put in unachievable outputs or outcomes.  If you win the bid you could regret that its implementation is unachievable and become embarrassed when you report this to the funder.  Be realistic about what can be achieved with the funding for which you are bidding.

Capital

Many funders like capital projects (building renovation etc) because they are one-off. You will need to show that the project can raise associated revenue costs – salaries, heat, and light etc. If you are applying for a minibus can you demonstrate that you can raise the funds for vehicle repairs?

Unpopular projects

Some trusts specifically aim to support unpopular areas of work.

You can also be clever in how you allocate indirect costs (overheads) so that weakly funded projects contribute less to indirect costs like rent.

Creativity

Be creative in matching income to expenditure. This can involve linking unit costs to output. “Every £800 of a grant will enable us to provide two months of counselling to an individual”. Remember that unit costs include overheads.

See CASHFACTS Unit costs and pricing.

Relationships with funders

You should think of relationships with funders being longterm – not a smash and grab exercise.

Once you start to look at potential funders you’ll quickly notice that you have what might be called “core” funders, where you stand a reasonable chance to getting a grant each year and “marginal” funders where you have a slim chance of getting a grant. There will be funders between these two poles.

Keep a file on funders and especially on your core funders. You may not get a grant this year, but you may next year. If you are turned down it’s worth trying to establish why. Is it worth resubmitting?

Work with your local CVS/infrastructure organisation. Be prepared to face constructive criticism and welcome an external perspective.

Many funders will want publicity – logos on your letterhead, website etc – some will not. Where funders want publicity it’s worth pushing the boat out and celebrating your fundraising success and relationship with your funders a much as you can. It’s why having a good website can be important. Use it to make the funders “part of the story”.

Monitoring and evaluation

It is very important that your organisation shows that it has achieved some positive results with the funding it receives. This involves monitoring what you are doing (achieving the outputs). For instance, recording how many home visits your volunteers have undertaken, or how many enquiries have been received over the helpline, shows the quantity of service provision. Funders also expect that the service they have funded will be of reasonable quality and that users are getting what they need! Questionnaires can be used to measure what users think of the quality. User group discussions are sometimes run to discover if users think the service is appropriate to their needs.

Outcomes

They can also be monitored but this normally involves some form of tracking (tracing) of users over a period of several months or years and possibly a comparison with a sample of non-users. People in work six months after using a training scheme would be a useful outcome measure – particularly if it can be shown that similar people not attending the training maintained higher levels of unemployment. General outcomes like reduced levels of crime are often very difficult to relate to specific projects because a large number of factors influence them. Your application must include details of how you intend to monitor the service.

Evaluation

This is simply assessing the information that the monitoring process has provided. Sometimes you will be asked to write a report assessing the monitoring of information. These reports can be very useful when applying for new funding because they normally prove that you can provide the service competently.

NCVO’S Know How Nonprofit has a series of guides on monitoring and evaluation with the context of measuring your impact.

Grants

A grant is a gift. It is given in the expectation that your organisation will carry out certain activities ie. run a supplementary school for three evenings a week during term-time. If the organisation fails to provide what it has said it would, there is very little that the funder can do. They may stop funding your organisation and then you will have established a bad track record. It may be difficult to get funding from other trusts and public authorities. However, they cannot ask for the money back. The “clawback” of grants is generally illegal.

Contracts

A contract is a written agreement by the funder to purchase a specific service from your charity. If the charity fails to provide the service, the purchaser – often a local authority – could demand that their funding is repaid. They could also buy the service from another organisation and demand that your organisation pays any increase in the price and any costs the authority has experienced in finding a new supplier. Often a public sector purchaser would not enforce all its powers if you failed to fulfil a contract – particularly if your charity has very limited funds. But you should be aware that a contract is a specific legal relationship. If in your private life you purchased something which failed to work then you’d feel justified in taking action against the supplier. If your charity takes on a contract then the charity is the supplier.  We recommend that you reduce the personal risk to trustees by incorporating as a charitable company or a charitable incorporated organisation (CIO).

CASH’s Accountancy Services can help you to register as a charity.

Service agreements

These agreements include details of what the organisation will provide for the funding it receives. This might include the hours that a telephone helpline would be staffed and the number of enquiries received in a year. There may also be requirements concerning the training of staff, minimum insurance cover, equal opportunities and employment practice. In law, an agreement is either a grant or a contract.  A service level agreement relating to a grant is probably unenforceable unless a court decided that the agreement was actually a contract.  A service level agreement is often a subsection or appendix to a contract.  Either way, if you do not provide what the funder expected, they are unlikely to fund you again.

Get checking

To be successful at fundraising your organisation should either have the following or a plan and timetable by which they will be obtained:

  • A governing document, preferably registered with the Charity Commissioners
  • Be up-to-date with filing at the Charity Commission
  • A management committee of at least three people
  • Regular management committee meetings – at least every two months
  • Annual elections for the officers of the committee
  • Minutes of meetings
  • A bank account with instructions that at least two people must sign each cheque
  • A set of internal financial controls
  • An annual budget. Larger projects may need a three-year budget and cash flow.
  • A book-keeping system which is completed at least quarterly with a bank reconciliation See CASHFACTS Bank reconciliation and CASHFACTS Bookkeeping
  • Quarterly finance reports that compare actual income and expenditure with the budget.
  • An auditor or independent examination See CASHFACTS Audit & independent examinations
  • Public liability insurance and employer’s liability insurance if you are employing people
  • Insurance to cover property and equipment owned by the charity and other specialist insurances
  • An awareness of all the laws that relate to your activities. This might include the Children’s Act or other specific legislation that relates to your client group
  • A complaints procedure (see CASH’s complaint procedure as an example)
  • An equal opportunities/diversity policy covering service users, employees, volunteers and the management committee
  • A volunteers’ policy
  • A health and safety policy – compulsory if you have 5 or more employees
  • When people are employed, a recruitment and employment policy, contracts of employment containing a simple disciplinary procedure, person specifications and job descriptions
  • Induction for new employees, volunteers and management committee members
  • A fundraising strategy and access to directories/websites
  • Monitoring and evaluation systems

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CASHFACTS Fundraising is reviewed at the start of every financial year. It may be amended throughout the year. If you want to be informed of major updates subscribe to CASH eNEWS or follow/like us on Twitter and Facebook.

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