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Originally published: September 2017

Trusts and foundations are a major feature of the charitable landscape in the U.K. According to the Association of Charitable Foundations, there are more than 10,000 trusts and foundations nationwide, distributing more than £2 billion in grants every year.

With public sector funding for the voluntary sector increasingly squeezed, a nonprofit's ability to navigate their way through these types of grantmakers is vital.

What are trusts and foundations?

Trusts and foundations are charities with private, sustainable income. In turn, trusts and foundations make grants to support individuals and other charitable organizations to achieve their goals.

The terms "trust" and "foundation" are often used interchangeably from a fundraiser's perspective. They do largely the same work, while the difference between the two lies in their constitution and legal status.

Trusts and foundations decide independently — and not necessarily influenced by current political priorities or other trends — what they'd like to achieve and how they'd like to benefit the community on a local or national level. When applying for a grant, charities therefore need to demonstrate clearly how their work will help achieve the grantmaker's goals and purpose.

What kind of funding do they offer?

Trusts and foundations provide many different types of funding, including:

  • Kickstart funding: to get a project off the ground
  • Revenue funding: to cover running costs, including salaries
  • Capital funding: to pay for building costs or equipment
  • Project funding: to pay for a mixture of items within a project budget, sometimes including a contribution toward overhead and management time
  • Long-term funding: to provide funding over a number of years

Trusts of all sizes often have programs for small grants as well — with less paperwork and a faster response time than standard grants. Applying for a small grant can be a good way to get to know a trust and establish an effective working relationship before putting in a more ambitious request.

What are the different types of trusts and foundations?

Trusts and foundations come in various forms and with different funding priorities. Some focus on giving to a particular type of organization; others on particular themes; others still have a more general remit. Many trusts give only within a specific geographical area, while others give nationally. Before investing time in researching individual trusts and foundations, it's helpful to first understand the different types:

Family trusts

Family trusts are those started by family members and set up to disperse personal family donations. An example is the Sainsbury's Family Trust.

Company (corporate) trusts

Corporate foundations donate money to charitable organizations from company profit. The value of such giving often goes beyond grants, though. Companies may — either directly or through their foundations — offer pro bono support or expertise, volunteer hours or other in-kind support. In some cases, they build a long-term partnership with a charity. Examples of corporate foundations include the Santander Foundation and the Asda Foundation.

Private trusts

Private trusts and foundations generate funding from private income, usually raised through investments. They then donate interest to charitable organizations in the form of a grant. The Wolfson Foundation is an example of an independent trust whose money is raised through an endowment.

Livery company funds

Livery companies were originally set up to protect the interests of particular trades, some dating back to medieval times. Some livery funds still provide grants and bursaries to organizations and individuals actively working within the same trade, but many have widened their scope of giving and provide grants to a variety of charitable organizations. An example of an active livery company is the Clothworker's Foundation.

Public appeal trusts

While the majority of trusts get their income from their investments, there are a few exceptions that raise money from the public. Household names such as Children In Need and Comic Relief raise millions of pounds annually from the public, which is then used to fund good causes.

Community foundations

There are 46 community foundations across the U.K. that connect donors with local groups and develop endowment pots to award grants over longer periods of time. As of 2015, their combined endowment was worth £500 million. In 2014/15, community foundations gave grants totaling £65 million.

The National Lottery

Twenty-five percent of the National Lottery's total ticket sales, or £1.9 billion, went to good causes in the year ending 31 March 2016, making it a major source of grant funding in the U.K. Since 1994, the National Lottery has raised more than £36 billion, funding more than 500,000 projects working with arts, heritage, sports, community, volunteering, health, education and the environment.

Funds are distributed through various agencies, such as the Arts Council or the Big Lottery Fund. The latter offers grants ranging in size (£300 to more than £500,000) to community and voluntary organizations.

How can a charity secure trust or foundation funding?

A general rule is that a smaller number of well-researched and tailored applications will be more successful than a blanket approach of sending out a generic letter to a larger number of trusts or foundations.

Your main objective in any application is to show how your project can help the funder achieve their purpose. Research, selection of the appropriate funding opportunity and a clear project outline is also vital when making an application to a trust or foundation.

This article draws on the expertise of Alison Allington from CCWorks, a U.K.-based community investment consultancy that specializes in helping organizations invest in community initiatives.

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Disclaimer

MissionBox editorial content is offered as guidance only, and is not meant, nor should it be construed as, a replacement for certified, professional expertise.

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References

Association of Charitable Foundations: Giving trends: Top 300 foundations grant-makers 2015 report (2015)

Institute of Fundraising: Grants and trusts

Knowhow Nonprofit: Trusts and foundations

UK Community Foundations: Find your nearest community foundation

The National Lottery: Where the money goes

The National Lottery: Good causes

Big Lottery Fund UK: Funding

UK Community Foundations: UK Community Foundations report and financial statements (2015)

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