Study Reveals Wastage and Pressure on Australia’s Grants Industry

Research into Australia’s $26 billion grants industry has revealed significant time wasted on abandoned grant applications, large organisations increasingly scooping up small grants, and pressure on local government to provide more money.

The Grants in Australia 2017 research study released on Friday has drawn on the views of more than 1200 grantseekers as part of a decade-long research project by Our Community’s Innovation Lab charting the field of grantmaking from the not-for-profit sector’s perspective.

The report said that there was significant work to done in reducing the non-completion of grants by not-for-profit organisations for both the grant-maker and the grant-seeker.

“A huge amount of time is being wasted on applications that are started then abandoned,” the report said.

“A whopping 54 per cent of respondents said they’d started an application that they didn’t end up submitting. A majority of medium and large organisations had started but not submitted an application over the previous 12 months, whereas smaller groups were more likely to proceed to submission.”

The report said: “This year we sought to find out more about un-submitted applications with the aim of providing some advice to both grantseekers and grantmakers about how some of the wastage could be reduced. What we found is that largely, it’s the grantseekers’ fault – 38 per cent of respondents told us they simply ran out of time.”

Almost 27 per cent said they discovered part way through filling out the form that the program wasn’t right for them and 16 per cent said they dropped out of the process after discovering that they didn’t fit the eligibility requirements.

The report also found that 70 per cent of environmental organisations started a grant application but didn’t submit in the last twelve months, as did 60 per cent of human service organisations.

Our Community executive director Kathy Richardson told Pro Bono News that: “anecdotally a lot of applications were started and never finished but we haven’t had the capacity to put the numbers around that before”.

“This time we tried to assess whose fault it was and how best to address it. We found it was a combination of grant seekers themselves not reading the guidelines, not preparing well and getting halfway through and then thinking, ‘no I am not actually eligible’,” Richardson said.

“But some responsibility should be sheeted home to the grantmakers who don’t make it clear enough what the eligibility is and the purposes of the program etc.”

The research also found that large not-for-profit organisations (those with annual revenue of more than $1 million) were not just winning large grants, they were scooping up many of the small grants (less than $5000) on offer as well.

“This was a finding that we were actually not expecting and were very surprised to see.
We had assumed that large organisations wouldn’t bother with the smaller grants,” Richardson said.

“We were shocked that the big organisations were also getting some small grants and it is one of the take aways that we gave to grant-makers that we don’t think large organisations should be necessarily ruled out of these small grants but if grant-makers do want to target small organisations they probably need to have good look at making sure they are not inadvertently
shutting them out.”

The research found that there was increasing pressure on local government to provide more funding. State and territory governments were the most relied-upon source of grants for not-for-profit organisations, but their importance was declining over time, while local government was becoming increasingly important, particularly for small not-for-profit organisations.

The report said corporate grants had not recovered since the global finance crisis.

“Corporate grantmaking in Australia was building as an important source of funds for not-for-profits between 2007 and 2010 but fell away after that and its prominence has not yet recovered to 2010 levels,” the report said.

Despite there being differences across sectors, on the whole, not-for profits reported either stable or increasing success in securing grants.

The report found that sport and recreation, and arts and culture organisations were applying for fewer grants than organisations from other segments of the not-for-profit sector.

The report said there was a need to moving to more strategic grantmaking.

“Multi-year grants and grants for core costs are getting harder to get, despite ongoing campaigns to encourage more of this type of funding, while a third of grantseekers report difficulties in forming a meaningful relationship with a grantmaker,” it said.

The report said grantmakers needed to get better at providing feedback to unsuccessful applicants.

“We’ve taken the pulse on this issue for more than a decade and grantseekers still highlight this as a key pain point,” the report said.
The research found that grantseekers were increasingly being asked for evidence of outcomes, but were, overwhelmingly, being forced to fund their own outcomes measurement activities.

“Grantseekers’ preferences for application forms switched from offline electronic forms (fillable PDFs and Word documents) to online electronic forms around 2013, yet a good chunk of grantmakers still use offline electronic forms to collect applications,” the report said.

Other key findings from the report were that funders were still to lift their game with decent feedback to failed applicants and more grants recipients are being forced to pay for their own evaluation.

“We try to make sure the research we do is not just interesting, but useful,” Richardson said.

“About $26 billion is distributed across Australia in grants each year by local councils, state and federal government agencies, philanthropic trusts, family foundations, community foundations and corporate foundations – a mass movement of money mainly to social causes.

“But good outcomes are not guaranteed.”