Restricted or Unrestricted? Is it reasonable for both grant makers and grant receivers to expect or insist on one or the other?

Grant makers understandably decide on what type of charitable activity they are going to support, and whether they expect their grant to be spent on a specific item or project, agreed in advance (restricted); or on anything the charity feels appropriate – call it core funding, running costs or simply unrestricted use. Many grant makers take the view that as this is their money, they should have a say – some would argue, the ultimate say – in how their grants are spent.

It is hardly surprising that grant receivers take a different view. They often find it intensely frustrating that many grant makers have lists of “What we don’t fund” which are far longer than the areas they do fund ! Charities – especially small ones – are obliged to spend time and money they can ill afford going through guidelines and instructions before making applications for often quite small grants. Their view is understandably: “we are a responsible, registered charity and we know what our beneficiaries need and how we will deliver to meet this need. Why can’t grant makers simply trust us and let us get on with it ?” The answer to this question in the minds of many grant makers is: “Look at charities like Kids’ Company and 4U: that’s why we put restrictions on how grants are spent”.

There is of course a compromise position. Interestingly, it took the coronavirus crisis to create a situation where grant makers, especially if they were making emergency grants to charities they had previously supported, were allowing – indeed often encouraging – the recipients of their grants to spend the funding as they sought fit while the crisis lasted. Interestingly, there has been little or no suggestion that any charities used this offer in an irresponsible way.

Perhaps the coronavirus crisis has signposted grant makers and grant receivers to a new and more flexible relationship. There will need to be give-and-take on both sides, but any arrangements which enable funding to meet the needs of charity beneficiaries more effectively and reduce the proportion of time small charities spend on administration and form filling must surely represent an advance in this somewhat contentious area.