Grants and trusts

 

Introduction to grants and trusts

Preparation and Procedures

Reporting, Accounting and Legal Points

Legal requirements 

 

Introduction to grants and trusts

Many fundraising organisations receive much of their funding from statutory sources and grant-making trusts.

There are numerous sources of funding available but it is important to know where to look and how best to approach the funders. Establishing which options are right for your organisation is an important first step.

Trust Fundraising refers to the process of asking for support from trusts and foundations that are empowered to make grants for charitable purposes. Technically, a trust is a fiduciary relationship whereby a person or persons (trustee/s) hold(s) and manage(s) property for the benefit of one or more others (beneficiaries). Fiduciary means 'in good faith' or 'in trust' so trustees have to act in the interests of the trust. A trust's purposes and rules are set out in its governing documents (normally trust deed or Memorandum and Articles or Association where company limited by guarantee).

This guidance is concerned with trusts that are set up for charitable purposes but do not have any named beneficiary.

In England and Wales, the Charity Commission oversees charities, and the Attorney General represents the interests of the beneficiaries in any High Court proceedings to determine that such a trust has used its money for the prescribed purposes. In Scotland, the Office of the Scottish Charity Regulator oversees charities. The Charity Commission for Northern Ireland will take on a similar role.

A foundation is, for the purposes of this guidance, synonymous with a ‘trust’.

 

Preparation and Procedures

Defining the need

Good trust fundraising always starts with a clear articulation of the need that the applicant requires to be met. This may be for its general purposes, for buildings or equipment, or for special projects. Only by first defining the need clearly is it possible to identify accurately the prospective funders. Therefore, the first step in making an application to grant making trusts should be a clear articulation of the need for which the grant is being sought in the context of the organisation's whole mission.

 

Research

It is advisable for applicants to explore their own organisation’s records to identify past approaches to trusts, past donations and existing contacts that can be developed. Next, carry out external research (for example, in published directories) to identify those trusts whose objectives and policies match the need for which the grant is required. The more research undertaken, the greater the chances of success; for example, this can include looking at the trust’s past grant recipients, trustee backgrounds and influences.

If possible, try and obtain a trust’s guidelines, through directories, websites or by asking for them. If there are no guidelines, it will be useful to undertake research to find out the trust's interests and preferences, geographical area and the typical size of grant awarded. Since grant making bodies sometimes change their criteria, it is advisable to revisit these sources from time to time. If it looks like a trust does not fund a type of cause, it is not advisable to plead for exceptional treatment, as this is highly unlikely to be given.

 

Making the approach

Trusts are extremely varied, for example, institutional or family-based, so good practice will inevitably vary when planning individual approaches. It is generally acceptable to make contact with any known trustees to find out how best to apply, if a trust does not specifically disallow this.

It’s a good idea to put processes in place to ensure that: a trust is approached in a manner appropriate to its guidelines; only trust’s within whose remit your cause falls are approached; only apply for appropriate amounts of money that fit the trust’s normal funding limits; and make sure that only one person or department within the organisation approaches the trust. In order to insure your best chance at being successful, always adhere to a trust’s rules on how often they can be approached.
 

The Application

When considering your application to trust, ensure that your proposals match the aims of the trusts being approached, and make sure to match your application to the trust’s interests and proposals. It is also important to ensure that the application fits your own organisational strategies and is within its objectives, and that the purpose of your proposals is clearly expressed. While efforts should be made to ensure there is no distortion to try to demonstrate a match that does not really exist, strict adherence to trust guidelines need not inhibit creativity in framing applications. If in doubt, contact the trust to ask for clarification - where the trust does not specifically disallow this.

Where appeals are for general funds, any specific projects mentioned should be clearly identified as examples of the applicant charity’s work. It is essential that an application does not mislead a trust into believing that their grants will only be used for particular projects when this is not the case.

To ensure the best chance of being accepted, it is important for your application to strictly adhere to a trust’s procedures, and for all requested information to be provided. If a trust requests further information, this should be provided as soon as possible. If any of this is not clear, seek clarification with the trust, wherever possible. Make sure that your proposals are clear, accurate, and above all, honest.  For a good application, information will be as relevant and brief as possible, using clear and concise, non-technical language. (The Association of Charitable Foundations recommends two pages as a guide but the length should be relevant to the context.)

Unless a trust's application procedure specifies other requirements on financial information, it is important that full budgets with breakdowns and explanations of costs appropriate to the application are included. Any reasonable and justified management and administration costs should be included in the proposed budget (even if these costs are not being asked for), and how figures were reached explained. It will be expected that applications include either a full set or a summary of recent annual reports and accounts, unless the trusts instruct against this. If the summary, rather than the full set, is enclosed (for example, because the reports are bulky) it is best to explain why this is the case, with an offer to send the full set if the trust wishes.

When applying to more than one trust for the same project, it is good practice to inform each trust approached whether targets may be exceeded if more than one grant request is approved if possible.

Make sure that applications are submitted in good time, are in line with the trusts deadlines, and before the money is actually needed. Check project timescales to ensure that they are appropriate to trusts’ assessment timescales. It is worthwhile to provide the trust at least two contacts in case the trust requires further information and the original contact is not present. Finally, it is important to be clear how the activity is to be monitored and evaluated and how the costs of these processes, and those of the grant making trust, are to be met.

 

Responding to approval or rejection of applications

When an application is approved, it is good practice for receipt of the grant to be promptly acknowledged in writing, confirming the purposes of the grants, and thanking the trust and trustees. It is advisable that all appropriate members of an applicant organisations’ project staff and/or volunteers are informed as soon as decisions are known.

Administrative requirements of the trust, regarding payment which the organisation is capable of complying with, should be strictly adhered to. It is important for any conditions attached to the grants, such as the trust having management, advisory or other inputs into the work, or requirements for public acknowledgement of the trust’s support, to be understood and agreed to in writing by both parties before the grants are formally accepted.

It is a good idea to maintain excellent internal and external relationships with grant making trusts and with staff and volunteers, and when there is a change in staff a thorough handover should be undertaken.

When applications are rejected, it is only advisable for appeals or attempts to persuade trusts to reconsider only be made in rare circumstances - such as where there are clear mistakes of fact or trusts have specified appeal procedures. While in some instances a trust might accept further applications at a later date, when trusts indicate that no further applications will be considered, it is advisable for the situation to be accepted, unless there are special reasons for making further applications.

 

Reporting, Accounting and Legal Points

Reporting

It is a good idea to keep the trust fully informed of all progress with projects. The specified reporting requirements and guidelines of a grant should be closely followed, and if these are unclear it is advisable to clarify these with the trusts.

It is advisable for reporting information to be kept brief and to the point, with fuller reports at the end of grant periods, covering the extent to which the objectives of the work were met. Where appropriate, it is good practice for the trust to be invited to become involved in projects. The relationship established during the application process will help both parties to understand what level of involvement might be expected or required once a grant is approved.

It will be beneficial for both parties for the trust to be offered the opportunity to discuss the work or request more information at any time. If there are potentially serious problems with the funded work (for example, the likelihood of significant delays to timetables or real risk of failure to complete), it is important to inform the trusts as early as possible, and to keep them informed as matters develop.

Ideally, risk assessments should be undertaken and discussed with grant makers before the start of projects. It is critical for measures to be taken to ensure that problems will be dealt with promptly and firmly and there is clear understanding as to what will happen in the event of failure. If changes are being planned as to how grants may be spent which differ from what was originally proposed, it is vitally important that the trust’s approval first be obtained in writing. Plans should be made from the outset as to how grants are to be returned if projects do not go ahead. 

 

Accounting

It is critical that all accounting requirements, as laid down in The Charities Act 1993 and in The Charities Act (Northern Ireland) 1964, must be followed, as ought the SORP guidelines, and trusts’ grant conditions.

 

Legal Requirements

Every registered charity in England and Wales with an income over £10,000 must state clearly the fact that it is a registered charity on all fundraising documents (whether the intention to solicit funds is expressed or implied). The trustees of any charity sending out a document without this information are guilty of an offence. (Section 5, Charities Act 1993).

The only organisations that can call themselves “charities” in Scotland are those that are registered with OSCR (the Office of the Scottish Charity Regulator). Charities that are registered must comply with the Charities References in Documents (Scotland) Regulations 2007 and make certain statements about their status in their documents. More information on Scottish charity law is available from OSCR (see Section 6.1).

In Northern Ireland, the Charities Commission is expected to begin registering charities shortly. In the meantime, charitable status is recognised for tax purposes by HMRC. Recognised charities in Northern Ireland ought to follow the same practices as those in England and Wales and Scotland.

When appeals for specific projects are so successful that not all money can be allocated to them, or projects do not go ahead, then any relevant parts of grants received must be returned, unless the grant maker's agreements for their grants to be used for other purposes have been received in writing.