In 2019, Community Foundation Wales initiated a community consultation process to better understand the needs of its grantees. The results were strikingly consistent: the main concern was short-term, project-related funding, which prevented them from focusing on and delivering their mission. The foundation responded swiftly by reviewing its funding strategy to include support for core costs and for multi-year funding. In this interview, Andrea Powell, Director of Programmes (and Deputy Chief Executive), shares the organisation’s journey, the challenges it has faced, and the opportunities ahead.
First, could you give us a glimpse of your community – in this case, the whole of Wales?
Alongside with Ireland, Northern Ireland and Scotland, we are a state-based community foundation. Wales is a nation in its own right, with a bilingual community: Welsh is a distinct language, and there are pockets around the country, especially along the west coast, where it is the first language. Our population is just over three million, spread across a geographically challenging landscape: the South and North are separated by a mountain range, and three quarters of our border is coastal. Wales is the most deprived nation within the UK, with one in three children living in poverty.
In terms of identity and connections, people in the South of Wales tend to be more closely linked to Cardiff, Wales capital city, while those in the North often feel more connected to major English cities such as Liverpool and Birmingham.
And what about the composition of the Third Sector and your donor community?
Our civil society comprises a wide number of groups: most of them are not registered as charities. This poses a challenge for us since, as many foundations, and donors feel more comfortable supporting charitable organisations for reasons of compliance and perceived lower risk.
Around 55% of the sector comprises small entities with an income of less than €12,000. They are run by volunteers and often struggle to attract resources from institutional or well-established funders. For these reasons, the core of our funding strategy revolves around supporting this type of organisation with small grants, on average €6,000.
On the donor side, historically there are few wealthy donors that we could build relationship with as although we have a strong industrial heritage in terms of mining, there is little in the way of wealth accumulation. However, the Welsh diaspora, who want to give back, tend to favour specific themes or very specific geographical areas that they have a personal connection with. This makes our funds targeted and place-based, but this helps us to meet our vision of a hyper local approach.
Let’s dig deeper into the foundation’s funding practice: what has the transformation looked like?
In 2019, we kicked off a community listening and learning process, speaking over 100 charities and community groups across the country to understand their needs. The findings were as the title of our report states, loud and clear: 91% of the organisations said that the biggest challenge was related to funding, especially core funding to ensure they can continue to operate. The other key demand was to move away from the one-year funding cycle and instead build longer-term partnership with funders that would enable them to focus on their mission, give them greater security, to be able to plan for the future and ensure continuity of staff and services.
These findings confirmed what we had long suspected. We decided to shift our funding practices, and between April 2021 and March 2024 made awarded some €375,000 towards organisational core costs.
How did you ensure you could sustain this shift?
While implementing this new approach, we also wanted to keep funding emerging realities and needs promptly. To do so, we had numerous conversations with our donors and made amendments to our funds to ensure this new way of working could be maintained in the longer term. We adjusted and agreed a plan with our Trustees to manage our source of funds under this new framework.
With our flow-through funds – money available for immediate distribution – the process has been relatively straightforward. We commit the full amount for the three-year term in the first year, then release it annually. This requires careful balance, as committing too much up front can limit our short-term capacity to fund new emerging applications.
Managing our endowed funds is more complex. As a community foundation, we have a duty to grow our endowment for the benefit of future generations but also award funding every year to meet ambitions of the individual funds. To support multi-year funding therefore, we take the first year of funding from the budget available at that moment and we commit future payments based on the expected income earned in the upcoming years. This means, when looking at future budgets, we need to deduct any previous multi-year commitments before we can see the funding available for that financial year. Therefore, to enable us to fund new work each year, we need to carefully manage the number of multi-year awards we commit to, to avoid a situation of the multi-year payments absorbing all funding available.
With this carefully balanced approach, we have committed almost 4 million € in multi-year funding of up to three years, across 21 different immediate-impact and endowed funds.
What are some of the challenges and the learning you would like to share?
One of the greatest challenges has been communicating this shift clearly to potential grantees. We expected to receive more applications, but charities kept on asking for project-based funding, partly due to familiarity, and partly because our messaging was not as effective as it could have been.
We have also not provided a clear definition of core cost, what it encompasses: our feeling is that this notion varies from funder to funder and there is not a shared understanding in the Welsh Third Sector. All these elements can make the new funding proposal less appealing even though it addresses actual needs.
Looking ahead, we aim to strengthen the support we offer throughout the grant-making process and beyond. Where possible, we will enhance our grants toolkit to guide applicants, and work in partnership with others to share this learning. We plan to include an additional section on how to make the case for multi-year funding, particularly for core costs, and how to incorporate core costs into project funding applications.
What is your hope for the community foundation and its role?
My hope is to become more a convener and relationship weaver in the community: we want to bring together similar and different groups to exchange, learn from one another and collaborate. My ambition would be to create a trust-based space and the capacity for small organisations to also share resources among each other, optimising costs for what they need but also being able to build collective agendas and actions. In doing so, we have a strong compass: the Welsh future generation act that puts at its centre supporting each other and pooling resources.
