Pre-empting funders' questions in your funding application can help give them confidence in your organisation. Conchita Garcia talks through four potential areas of concern for funders - and how charities can address them.
When competing for precious funding, how can charity give itself the best possible chance of making a good impression, and make every application count? Well, one way is to anticipate some of the questions funders may have about your organisation, project or finances, and address these directly in advance. This article highlights four key areas with which many charities struggle in their applications, and gives some tips on how best to handle these.
New programme/organisation or untested activities
If you are a relatively new charity, or you're starting to run a new project, it can be hard to provide evidence that you know your work will be a success if you don't have the track record to prove it. This can be especially tricky if you're a small charity that the funder may not have heard of.
While many trusts and foundations are willing to take a risk on funding new or innovative work; you'll still need to be able to eliminate any questions they may have on your ability to deliver.
One of the easiest ways to do this is to show them your business plan, or the model on which your programme is based, and explain why you believe it will work. You'll also need to show why your charity is the right organisation to carry out these activities, and what experience your staff or volunteers have to support the delivery of the outcomes.
Let them see that you have in place, or have a plan to put in place, a comprehensive monitoring and evaluation system, before the programme is underway, which will be able to capture the impact of your work. This will allow you to assess the effectiveness of your programme and whether improvements are required, as well as providing you with a wealth of information to evidence your impact in future bids.
Your accounts may be showing what look like large reserves, which may not be in line with your reserves policy. If this is the case you should explain why - before the question is raised - and why you are therefore not using the reserves to run the projects you are requesting funding for.
If you are unable to explain the level of reserves your charity has, then you will need to think about releasing these reserve funds to run your services, as many funders will refuse your requests if they feel you already have the funds needed.
On the other hand, if you have not met your reserves policy, i.e. you do not have the specific level required as set out within your accounts/policy, you will need to explain why this is the case, and show that this is something you are actively working towards. Otherwise it can raise questions on the governance of your charity and potential risks around insolvency or other financial difficulties.
If your charity is in a deficit, this is another potential reason why a funder may question the financial security of the charity. Again, this is something that you should explain in advance - including the reason for the deficit and the plans you have in place to eliminate it.
Over-reliance on one source of funding
If you are over-reliant on one source of funding, then your sustainability may be brought into question. If this funding happened to be cut, your organisation would be vulnerable - and therefore you will need to show the funder that you are aware of this vulnerability, and that you have a plan in place to move away from the over-reliance.
This can be done by developing a mixed income economy, whereby you raise funds from a range of different sources, and/or take steps to secure funding from a mixture of raised voluntary income, statutory income and earned income.
For more information on best practise in applying to trusts and foundations or further fundraising support, the FSI delivers free training for charities with a turnover under £1.5m.