Daniel Ferrell-Schweppenstedde

Former Policy and Public Affairs Manager

Charities Aid Foundation

Why modern grantmaking comes with core funding

19 July 2021

We recently attended the book launch of ‘Modern Grantmaking – A Guide for Funders Who Believe Better is Possible’ by Gemma Bull and Tom Steinberg. Both have years-long experience working for funders and charities, and know the funding landscape from multiple sides.

In our podcast episode with the authors, we discuss a range of topics around the future of grantmaking and how it could or should change.

At the launch event, we learned about a set of five core values which should be at the core of every funders work. These are: humility, equity, evidence, service, diligence. The book also presents a set of no-brainers tied to these values – things that funders should do to live out those values in practice.

The book presents a range of improvements for the grantmaking process and challenges to overcome. It offers a way that funders can become better at grantmaking by avoiding things like mission drift, wasting of time and resources, taking away intellectual property without compensation or acknowledgement, or simply ineffective grantmaking.

Providing unrestricted grants

One key tip to highlight is making most grants unrestricted. A mantra for a long time, we have seen increased focus on the idea of unrestricted or core funding during the pandemic. There are potentially reasonable arguments on why some funding should be restricted. And unrestricted funding can also come in different varieties and combine with other types of funding and investment. But overall there's an agreement that a far higher proportion of grants should come in the form of core funding.

To those who move in philanthropy policy circles it is easy to assume that this is a discussion all funders are aware of. But there is a vast range of people, organisations and vehicles worldwide providing charitable funding. From traditional institutionalised trust and foundations, to corporate funders, donor-advised funds, family offices, and individual philanthropists. Assuming awareness of the debate, let alone collective alignment across this vast diversity of players is naïve.

That’s why reiterating the message of the value of funding core costs is so important (as the book makes clear). CAF’s Resilience programme looked into what funders can do to support the resilience of smaller charities. One way was to help small charities focus on their organisational strengths. Allowing them to spend time to understand the root causes of their needs should come before offering specific support or restricted funding. This can be done by backfilling senior staff or paying core costs and non-delivery staff’s salaries. This is just one way core funding can help a charity to deliver its mission, and in a way that fits its organisational needs.

One points often made by funders who have adopted an unrestricted funding approach is that ‘if you would not trust your grantees with unrestricted funding, why would you fund them in the first place?’ That basic trust in the grantee to deliver outcomes and align with the funder’s mission is essential to making a decision on a grant. Restricting the funding (in an excessive way) looks like a step back in terms of trust in the grantee.

Learning from the pandemic

During the pandemic, many funders moved to a more flexible, responsive, and transparent way of funding. Funders signed important pledges that set the tone for best practice in supporting civil society in the wake of a crisis. For example the pledges hosted by London Funders signed by 350 funders and Dafne/European Foundation Centre). Making more unrestricted grants as part of financial flexibility were a big part of that picture.

Post-pandemic, it's time to assess how we can make the most of changes in funding practice to drive longer-term changes in funding norms. An increased use of unrestricted funding should be part of this process. It's a key part of funders (both individual and institutional) becoming ‘modern grant makers'.

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