The view from… London Funders

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London is a dynamic and complex city and over the period of 2023-24 communities suffered with the ongoing cost-of-living crisis, inflation, cuts to public spending, and uncertainty as it headed into Mayoral and General Elections. 

It’s always important to see how money flows out in and out of London. While large sums are being distributed, much of it supports work beyond the capital. Smaller, locally focused charities, often serving the most vulnerable in our communities, receive a disproportionately small share of funding. These charities received a higher proportion of small grants (under £10,000) and a lower share of large grants (over £1 million), even though some large funders are included in this group. This echoes our most recent member audit, which shows that 74% of our members give out grants lower than £10,000. We can also see that grants given to poverty, as a theme, was substantially higher in London (49%) than Nationally (27%). Joseph Rowntree Foundation research has shown that higher housing costs in London, pushes a significantly higher proportion of Londoners into poverty compared to other regions, at 46% (after housing costs) in comparison to around 25% elsewhere.

Whilst the grantmaking across London Funders members increased overall in 2023-24, (an increase of 14% from 2022-23), we also know that there is a more nuanced picture. Where some funders have increased significantly e.g. Charities Aid Foundation (increase of £113m), National Lottery Community Fund (£146m), and National Lottery Heritage Fund (£140m), some have not been able to increase what they invest to keep better pace with demand, and some have reviewed their funding approach.

In December 2024, we reached out to our members to understand the growing demand for grants that has been building since late 2023. Whilst the impact of this may not be seen until next year’s UKGrantmaking, our survey confirmed what many in the sector have been observing: demand for funding is rising, but resources are not keeping pace. Stagnant funding pots and the impact of inflation are stretching existing grant programmes. While we couldn’t represent every funder and every sector, the survey responses added more detail to the overall picture, and helps us understand where further steps could be taken to bring change into the funding process.

Our survey revealed some striking trends: 

• Most respondents reported a 10-25% increase in funding requests, with some experiencing the highest application volumes seen in four to five years. 
• Funders also noted a growing trend: grantees are seeking larger grants to cope with rising costs. 
• Most funders reported adopting restrictive strategies (for example, narrowing eligibility criteria or shortening application windows) in response to demand.
• Funding pots have stagnated: Compared to the 2023-24 financial year, fewer funders have increased their total funding pot for 2024-25. Most respondents reported no change in the total funding available for grants, whereas last year, many funders reported increasing their funding capacity.
• Most respondents reported a 10-25% increase in funding requests, with some experiencing the highest application volumes seen in four to five years. 
• Funders also noted a growing trend: grantees are seeking larger grants to cope with rising costs. 
• Most funders reported adopting restrictive strategies (for example, narrowing eligibility criteria or shortening application windows) in response to demand.

Funders shared some of the steps they are taking to respond to demand: many are streamlining processes to reduce the time spent on applications. Using different digital tools, introducing tighter eligibility screening, simplifying guidelines and making use of shorter expression of interest forms (EOIs) before requesting a full application.

But the data also shows that to manage rising demand, many funders have adopted restrictive strategies – such as tightening criteria or geographic focus. However, this approach appears to have unintended consequences: the increased demand for some grants was often attributed to other funders’ restrictions, creating a spillover effect. 

Rather than simply shifting demand between funders, there is a clear need for greater collaboration and communication to find sustainable solutions that address the root causes of rising demand. It’s interesting to see that of our members that publish on 360Giving, 61 have grantees in common with over 800 organisations receiving funding from multiple members. By working together to co-fund initiatives or pool funding resources, funders could potentially stretch their impact further but also reduce the burden for grantees in their applications, reduce duplication, share risk, and ensure that support reaches communities in a more coordinated and strategic way.

We’re continuing to develop and evolve UKGrantmaking with each annual edition, so please do share your feedback and ideas for future development, and sign up to 360Giving’s newsletter for updates.