Open letter to a charitable grant-maker

June 2025


Dear Grant-Maker,


This Small Charities Week, we celebrate the remarkable contribution of the hundreds of thousands of small charities that work day-in day-out to make people’s lives better and communities stronger. The theme of Small Charities Week this year is financial resilience and it could not be more urgent.


According to recent research by The Big Give and NCVO reported by Civil Society News, almost half of small charities fear they may be forced to close within the next year. These are not organisations on the margins of relevance, these are critical community organisations, often working in places which other services simply don’t reach.


This crisis is not due to a lack of commitment or a lack of competence. It is the result of systemic underinvestment in the core foundations of small charities. The eco system in which they operate makes it almost impossible for them to plan ahead, build the reserves needed to bounce back from shocks, and ultimately have the confidence that they will be able to keep services going for as long as they are needed.


Yes, it is true that charitable grants account for just c12% of sector funding but the impact that they have on smaller charities is significant. Trust us, accounting for and reporting on even just a few restricted grants is no mean feat. It requires a good working knowledge of the Charities SORP, specialist financial management skills and the business management skills that are borderline wizadry to get it to all fit together. It takes times and headspace that is much, much better spent elsewhere. Releasing the restrictions would make the financial recording and reporting simpler, the financial position clearer and the financial decision making less challenging. It wouldn't resolve everything. But it would make it all a whole load easier. And given that charitable grant-makers are themselves of the sector we feel is it particularly beholden on them to work with and not against organisational resilience building.


As leaders of charitable foundations, you are in a powerful position to help turn the tide.

Your decisions influence not only who is funded, but how funding works. You decide how funds are given and what funds are given. We therefore urge you to consider the following actions as part of your foundation’s ongoing commitment to building a financially resilient eco system in which all charities – including smaller critical community organisations - thrive:


1. Champion unrestricted funding


Fund the long term charity not the short term project. Give charities the freedom to spend their funds on their mission as they see fit. You will get far more bang for your buck. Unrestricted funding enables charities to build reserves. Reserves power strategic thinking, innovation, and long term resilience. Unrestricted funding is a statement of trust. It is one of the most effective ways to build long-term impact.


2. Fund the full cost of delivery


Fund your fair share of core costs: infrastructure, staff, rent, technology, governance, and, yup, finance. These are not administrative extras. They are essential foundation of effective, safe, professional service delivery. If you are going to buy small charities a drink don't expect them to bring their own glass or have to borrow one from one of your neighbours.


3. Provide multi-year commitments


Certainty enables greater impact. Multi-year grants help small charities retain staff, plan strategically, and build resilience rather than merely surviving year-to-year. Individuals do not like financial uncertainty. Markets don't. Charitable foundations don't. Neither do small charities. Predictability is a gift.


4. Stand with smalls


One of the recommendations from the closure report of the Small Charities Coalition was that those individuals and organisations supporting small charities do so proudly and loudly, and in doing so, encourage peers to do so too.


This Small Charities Week, we ask you to consider how you use your platform to build the financial resilience of those who work closest to the issues that we are all collectively working to resolve.


Small charities are often the first to respond, and the last to leave. They are trusted in their communities and committed to their causes. But they cannot be expected to deliver long-term impact on short-term, restricted, and uncertain funding.


We hear and see daily how financially challenging it is for small charities and how detrimental this is to the mental health of those who lead them. Now is the moment for bold, thoughtful leadership. Many foundations - including Lloyds Bank Foundation, The Fore and others - have already begun to shift practice toward more trust-based models predicated on unrestricted funding. We urge you to join your colleagues.


Your support can be the difference between survival and closure. Between burnout and balance. Between a sector that barely survives and one that thrives.


Thank you for your leadership, and for standing with small charities.


With respect and solidarity,


Embrace Finance

x



"Awesome session
which took the 
fear out of 
financial planning"

Getting on top of and keeping on top of the numbers in a small charity can be challenging. 

Small charity finance is technical, regulated and complicated. It can be, we are sometimes told, boring, and when the numbers don't go the right way, it can be anxiety provoking.

We understand the challenges small charities face when building financial sustainability. We explain finance in a simple, accessible way. We take the stress out of it all.