Funders should aim to maintain higher levels of unrestricted grants post-Covid-19, researchers say.
Experts from Durham University said charities and grant-makers trusted one another despite fears that a small number of organisations may have “gamed” the system during the pandemic.
Data published in the paper, released today, show that the proportion of charities receiving some unrestricted funding rose from 46 per cent to 60 per cent between 2019 and 2022.
In the same period the proportion of charities that held reserves also rose, from 76 per cent to 83 per cent, the paper says.
This is evidence that many grant-makers “shifted from restricted to restricted funding” in response to Covid-19, the researchers argue, but also that a small minority of charities may have exploited this change by receiving several grants to cover the same work.
The paper says that funders may consider restricting more grants again in response to these fears or to meet their own post-Covid-19 strategic goals.
But the research warns: “Certainly, it is not advisable to build a grant-making system around the possibility that fewer than 5 per cent of organisations bend the rules when it is known that most third sector organisations can be trusted.”
The paper is the latest research in Durham University’s Third Sector Trends series, which was established in 2008. It draws on survey data from 6,000 charities and analysis of information on more than 180,000 voluntary organisations.
The researchers say funders already do “a good job” distributing grants across different causes and different parts of the UK, but urge them to keep “a watching brief” on where grants are being spent.
An earlier paper in the series, published in January, found that funders proactively approached 40 per cent of charities with offers of help in 2022, up from 25 per cent before Covid-19. The proportion of grant-makers demanding detailed impact reports fell from 55 per cent to 32 per cent.