If your charity is one that relies on grants for a portion of its income, you need to be thinking now about how you can maintain this funding as we head into a likely recession.

While funders have maintained or even increased their giving during the Covid-19 crisis, they will be unable to sustain this indefinitely and it is our view that 2021 is going to be a harder time for grant fundraisers. This is because funders such as trusts tend to distribute the income they have received on their investments in the previous year and 2020 has been a poor year for dividend income, with many listed companies cutting dividends to shareholders. Thus things will be tighter for funders in 2021, just when they will be receiving higher volumes of bids from charities which have seen other income streams fall.

In the last recession that began in 2008, trusts faced the dilemma of whether to reduce the size of their grants, while maintaining volumes, or to maintain the number of grants, while cutting their average size. In 2021 they will face the same question. This means rationing and a tougher fundraising climate for applicants.

So how should trust fundraisers respond to this challenge?

The key focus must be to maintain relationships and to protect the funds that you have got (as opposed to going for volume with a lot of cold bids). Funders that are retrenching are likely to prioritise organisations that they know and have funded before, so it is imperative to protect these relationships. In other words, focus first on the funders who know you and guard these relationships carefully.

The best way to do this is to communicate effectively with them. This can be done by sending updates on your current position, how you have coped with Covid-19, its impact on your charity and beneficiaries and on your finances, including what steps you have taken to adjust to the financial climate.

This can be achieved by producing a short summary document, which can be emailed or sent with a covering letter (but no ask). In particular, if the work they have previously funded is under threat or cannot be delivered as planned, let them know and explain the position. They are likely to be understanding and you will win brownie points for being open and honest about it.

If you can speak to your funders, then do so and, when events are allowed again, invite them to attend. Use every opportunity to communicate and to remind them that you are still there and value their support. Consider even sending them copies of research which underscores the need for your work (again, without a request for funds). Don’t overdo the communication but make it clear that you appreciate their support and treat them like the valued partner they are.

By maintaining your funder relationships in this way, you will be doing all you can to protect them and ensure continuity through what may be a prolonged recession.

Before making a renewed application, try to talk to your funders, where you can, to find out what they will be looking for in the next year (remember, all published information about funding criteria tends to be historic and even where criteria are still valid, such as on a trust’s website, there can be changes of emphasis in trustees’ interests that are not apparent unless you speak to them). Talking to funders before you bid also allows you to seek advice about such things as how large a grant to apply for, whether it is worth asking for multi-year funding and which of your projects stands the best chance of support. A pre-application call also warms up the bid and allows you to apply “following our recent conversation”, so your application is expected, which can increase your chances of success.

Only when you have covered all of your warm donors should you be looking to widen your support pool by approaching cold funders. When you do so, make sure you have explored any potential links to them via contact mapping, as relationships will be even more important than before in securing support from new funders.

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Throwing this all back at you...

What are your thoughts when thinking about Trust income during this crisis? How has your experience been? Any success or failure stories you'd care to share so we can all learn? How is your charity responding to these challenges?