The inexplicable dominance of one-year grants

There are good reasons for a funder to limit the length of grants awarded:

1. To keep flexibility - tying up all future funding makes it difficult to shift priorities or respond to new applicants and emerging needs.
2. To be able to stop funding if problems arise - such as the organisation failing to deliver or changes its focus (though this can usually be better addressed through terms and conditions and grant management).
3. If it is the sole funder of the organisation so the reliance on one income stream makes the grant recipient vulnerable (a time limit and tapering down of funding may well be appropriate in this instance).

Otherwise, funders should award grants for as long as they possibly can. Multi-year funding means lower operating costs on both sides.  Applicants don’t have to reapply and the funder does not have to take the request through its full processes again. It also encourages a relationship between the funder and funded. For the grant recipient, it provides financial security and enables planning.

 

So why do so many trusts and foundations make annual grants?

 

Grantmakers for Effective Organisation’s 2014 survey (see link below) found an increase in the number of grantmakers that give multiyear grants at least sometimes to 58% in 2014. But that still leaves 42% who don’t.

 

Dependency is certainly cited by funders as a reason not to keep funding an organisation. But I think this is the funder’s issue - I don’t think the grant recipient worries about it. I have never had anyone say to me that they only wanted a one year grant as they did not want to rely on the funding. As long as the communication is clear at the start – e.g. “this grant is for four years only and you cannot reapply”- and you are not the sole funder, then dependency should not arise.

 

It may be that funders are uncertain about their own future income or want to prioritise flexibility and the ability to fund different causes. Perhaps it is all to do with accounting practice. Or is it that funding one-off project costs is still winning out over investing for long-term change?  I can find research on the benefits of multi-year funding but no particular references or research into the benefits of an annual grant cycle. So I remain puzzled. If anyone knows how the annual funding cycle arose, why it is so persistent and any research into its benefits, then please do get in touch.

 

www.geofunders.org/field-study

 

 

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