A note from Integrate
As many of you know, we send funding notices out across the sector nearly every day. Last week someone on the list hit reply. No introduction. Just a piece of writing, sharp and a little uncomfortable, about core costs funding. We read it twice. Then we decided to publish it.
The writer calls themselves The Secret Fundraiser. We don’t know who they are and their Gmail gives us no clues. What we do know is that they’ve clearly spent a long time in this sector, and that what they have to say is worth reading.
By The Secret Fundraiser
There is a conversation happening in fundraising that many of us dance around but rarely say out loud.
It is about core costs.
Not outcomes. Not impact. Not innovation. Not theory of change diagrams.
Just the actual cost of running an organisation.
The salary of the finance manager.
The rent.
The CRM.
The insurance.
The chief executive who somehow finds time to manage staff, reassure trustees, deal with safeguarding issues and still attend meetings.
None of these things are optional. Yet when it comes to funding applications, many organisations still feel they have to apologise for them.
Why?
I have never really understood it.
If I wanted to build a house, I would expect to pay for the foundations. If I wanted to run a train service, I would expect to pay for the tracks. Yet in our sector there remains a strange idea that charities and social enterprises should somehow deliver programmes without properly funding the infrastructure that makes those programmes possible.
It makes no sense.
The reality is that many organisations are quietly subsidising funders.
Read that sentence again.
When a project costs £100,000 to deliver and a funder will only support £85,000 because they have decided fifteen per cent is a reasonable contribution towards overheads, the remaining money does not magically appear. Someone has to find it.
Usually that means unrestricted income.
Sometimes it means reserves.
Sometimes it means another funder.
Quite often it means the chief executive working ridiculous hours because there is no budget for additional support.
We call this resilience.
I am not sure that is the right word.
In many cases it is simply underinvestment.
The irony is that everyone knows this.
Finance directors know it.
Fundraisers know it.
Chief executives definitely know it.
Many grant managers know it too.
Yet somehow the fiction survives.
The fiction is that low overheads equal efficiency.
They do not.
A charity with a five per cent overhead rate is not automatically better managed than one with a twenty-five per cent overhead rate. In fact, I would often worry about the opposite.
Good organisations invest in systems.
Good organisations invest in people.
Good organisations invest in governance.
Good organisations invest in learning and improvement.
Those things cost money.
During Covid, there was a moment when it felt like the sector had finally moved on. Funders provided unrestricted funding. They backed organisations rather than individual projects. They recognised that charities needed strong foundations if they were going to survive.
Many organisations flourished because of that trust.
Then, little by little, some of the old habits returned.
The percentages came back.
The restrictions came back.
The awkward conversations came back.
If you are a fundraiser, my advice is simple.
Know your numbers.
Cost your work properly.
Do not create a budget based on what you think a funder wants to see.
Create a budget based on what it actually costs to deliver the work.
Then explain it confidently.
Too many organisations negotiate against themselves before the conversation has even started.
“We probably can’t include that.”
“They won’t fund this.”
“We should reduce that percentage.”
Maybe.
Maybe not.
But if you remove legitimate costs before the application is even submitted, you have already lost the argument.
And sometimes we need to challenge funders.
Respectfully.
Professionally.
Constructively.
But challenge them nonetheless.
Because every time an organisation accepts unrealistic assumptions about what it costs to exist, those assumptions become a little more entrenched.
This is not just a budgeting issue.
It is a power issue.
Funders have every right to decide what they want to support.
But organisations also have every right to explain what it genuinely costs to deliver high quality, impactful work.
The best funders understand this. More of them do every year.
The sector needs more of them.
Until then, fundraisers will continue having the same conversation in private.
The conversation about the money nobody wants to talk about.
The money that keeps the lights on.
The money that pays the salaries.
The money that allows all the other impact to happen.
The money that is not a luxury.
The money that is the work.
As someone who many years ago now, led a national training programme on Full Cost Analysis, 100% this!
The 'core' message was and is that charity overheads are GOOD, and a de facto indicator of quality and sustainability for any funder (project or otherwise).