The Value of Small Grants in Rural and Regional Communities

Grantmakers need to recognise the value of small grants and realise that “context is everything”, according to the CEO of the Foundation for Rural and Regional Renewal.

After an 18 month review process, FRRR recently released an Evaluation Impact Report, examining the organisation’s first 17 years of grantmaking from 2000 until December 2016.

The report explores who and what was funded, the parties who contributed and funding outcomes, based on more than 26,000 grant applications received by FRRR during this period.

FRRR CEO Natalie Egleton told Pro Bono News that the report highlighted the significant impact these grants were having on regional and rural communities.

“FRRR grants have largely filled gaps that have been created or left as different funding priorities have shifted over time, as government funding and policy changes have taken shape and as the philanthropic sector’s funding has evolved and shifted,” Egleton said.

“The report told us that for rural communities, particularly those smaller communities, these grants have really been fundamentally about strengthening social fabric and have enabled a community-led approach to local community development.

“They’ve been quite catalytic in many cases, where a relatively small amount of money contributed by FRRR has then led to a whole range of other things taking place as a result.”

Between 2000 and the end of 2016, FRRR offered 325 grant rounds and funded 8,374 successful grants, with a median grant of $4,031.

Over time FRRR has shifted its grant-making activity towards making a higher number of small grants, predominantly to smaller communities.

The report noted that this had been a “highly effective” strategy.

“There are also substantial benefits in the scale and volume of support provided via small grants, as evidenced through the articulation of the roles that FRRR grants have played, as well as the identification of the change mechanisms adopted and nature of outcomes achieved,” the report said.

“It can be concluded that FRRR’s approach to providing small grants has been highly effective in developing and improving the core competencies needed to sustain vibrant and adaptive rural, regional and remote communities, at scale.”

Egleton agreed that small grants were highly valuable to the community.

“This review has certainly reinforced and validated the impact of small grants. I guess our finding is that all grants aren’t the most effective everywhere and in every context,” she said.

“We took some time to ask ourselves what kind of measurement of impact was going to be meaningful for us as an organisation and for informing our granting strategy.

“And we deliberately steered away from traditional impact measurement approaches because we found that our work is actually fairly dynamic and with hundreds of smaller grants across hundreds of communities, it’s very difficult to then draw the direct line between cause and effect and between a dollar and an outcome.”

Looking towards the future of grantmaking, Egleton said that context was important when deciding how and if a project will be funded.

“I think what the report tells us is that context is everything and that ‘one size fits all’ approaches don’t work, which I think we all know,” she said.

“But when it comes to designing philanthropic responses, it’s really critical to understand the context that we’re looking at supporting, and that’s not just the issue and it’s not just the population group. It’s got to be understanding the actual experience of the ecosystem that you’re wanting to fund into.

“That’s essentially what we do with all our granting. Town by town we actually create a very flexible grants structure which allows for those communities to identify what they need and to apply for funding for what they need.”

The report also examined “unmet need” and areas that struggled to secure grant funding.

Of the more than 17,800 failed funding applications FRRR received, the most common activity requested was developing organisation resilience and capacity, with more than 6,440 (or 37 per cent) unmet requests.

Second most common were requests to support promoting individual and community health and social wellbeing (3,270 applications or 18.8 per cent), followed by supporting lifelong learning and education (14.6 per cent).

The report said because FRRR funds were primarily sourced through partnerships with other philanthropic organisations, businesses and governments, the nature of success for grant funding reflected “a broader historical trend of philanthropy funding activities and ‘things’ in preference to funding the capacity and capability of the organisations delivering the outcomes”.

“FRRR’s grants data is reflective of this historical pattern and this review presents an opportunity to further consider the implications of this and engage in dialogue about whether the focus of funding, as it has been, is striking the right balance to achieve impact,” the report said.

“It is noted that this is occurring in many parts of the philanthropic sector, however this may be further informed by data and insight.”

Egleton said this created challenges for FRRR, but noted that things were changing in the philanthropic sector.

“You can see there’s a huge gap in organisational capacity building and that historically… philanthropy has had a programmatic response over the last couple of decades,” she said.

“But we’re really seeing a very big shift at the moment away from that. And there’s a lot of discourse occurring around funding the leaders of these organisations to let them do their work with untied funds and investing in the organisations themselves rather than just taking a programmatic response.

“So I think [the report] has given us an interesting snapshot over the last couple of decades of the philanthropic sector’s focus areas and trends across rural areas.”