Hidden funders: Is anyone out there?

According to the Association of Charitable Foundations (ACF), the UK’s foundation sector is under real strain. In its 2024 report Foundations in Focus, ACF notes that demand from applicants “far exceeds their capacity to address all societal challenges at scale”. ACF’s chief executive, Carol Mack, has talked of a funding crisis where “grant applications have surged by a reported 30 – 50%, with some foundations seeing their number double”.

It’s no wonder, then, that last September it was reported that just 50% of charities had “high levels of confidence in their ability to meet the demand for their services, both now and over the next 12 months”. Similarly, only half of charities felt very confident in their ability to afford overheads such as energy, buildings and supplies.

For many arts organisations, it feels like funding doors are closing faster than new ones are opening. Smaller charities and community-based groups are especially vulnerable, often lacking the infrastructure to compete for ever-scarcer pots of money.

But while traditional grant making may be under pressure, is the money actually decreasing?

Let’s look behind the numbers

Despite how it might feel on the ground, funding from grant makers has increased above inflation in recent years. According to UK Grantmaking, total spend by grant makers in 2022-23 was £6.41bn and UKGrantmaking reported a 13% rise in 2023, 3% above the rate of inflation, following a 13% rise in real terms during the pandemic. Rather than pulling back post-Covid to replenish assets, foundations continued to step up their support in response to the cost-of-living crisis.

Elsewhere, as the ACF has noted, some funders, such as The Sainsbury Family Charitable Trusts, have approved drawing from the foundations’ endowment to sustain and enhance their grant making efforts “to support those most in need.”

Even for trusts and foundations that are closing, it rarely means completely stopping all grant making. Equally, those foundations pausing new grant spending are often doing so because they see demand rising and they need to find a new strategy to meet the challenge effectively.

The rise of the quiet (and not-so-quiet) funders

New philanthropic players are entering the scene. Some are doing so quietly, others with considerable fanfare. Family foundations, private donors and high-profile figures are reshaping the giving landscape, sometimes operating outside conventional funding frameworks altogether.

Imagine you are divorcing the world’s richest man, and you walk away with a settlement of over $38bn. What would you do? Well, if you are Mackenzie Scott, former wife of Amazon founder Jeff Bezos, one option is to set about reshaping philanthropic norms – in two years she gave away $12.8bn.

But she started out as a ‘secret philanthropist’. Her approach was to have her team identify suitable grant recipients without anyone outside her inner circle knowing the basis on which potential grantees were selected. Since then, she has opened up her grant giving to applications, allocating a further half a billion dollars.

Yet, she’s not alone.

• The Bukhman Foundation has a philanthropy model which bypasses traditional grant cycles in favour of high trust support. In the words of co-founder Anastasia Bukhman: “the foundation will be making grants in the nine figures over the coming years” – without any formal application process.

Earlier this month they pledged £100m to “transform type 1 diabetes research and treatment” – the UK’s largest philanthropic commitment for this condition. One of the reasons cited is that their daughter lives with the condition so they know firsthand the challenges it brings.

• Similarly, the Clara Lionel Foundation, established by global superstar Rihanna, has become a model of targeted and responsive celebrity philanthropy, blending star power with grassroots impact particularly in the area of climate change.

An article in The Purist claims that a new wave of “mindful giving” is emerging among affluent individuals and families, who are increasingly focused on values-led, hands-on philanthropy.

It’s worth noting that in 2022, 61% of the top 300 funders were from family foundations and four of them, recently registered, contributed over £35m. Many of these funders operate outside traditional models and might never issue open calls for proposals. Why would they, if they want their giving to be relational, responsive and discreet?

So is the money gone, or is it just hidden?

The idea that funding has disappeared is partly perception. Increasing demand inevitably means lower success rates, but funding still exists, just in less visible structures, mostly flowing through private or bespoke channels. This ‘hidden funders’ phenomenon creates the illusion of scarcity. Overall, grant making hasn’t dropped – it’s being deployed differently.

Is this new model worse? Perhaps not – it’s just different. It places a premium on relationships, narrative and alignment of values. Rather than applying through an impersonal portal, access to these funds might begin with a conversation, a recommendation or even just a reputation.

How can arts organisations best respond?

Here are a few suggestions:

• Focus on relational fundraising

Funders increasingly want to see values alignment, not just eligibility. Building trust, engaging in dialogue and nurturing relationships over time has never been more important.

• People and stories matter

In a busy funding environment, compelling, human-centred narratives can help cut through the noise. Demonstrating impact through the stories of those you help – with real people and real change – resonates with funders, particularly smaller family foundations that choose with their hearts as well as their heads.

• Build your visibility and reputation

If funders are looking for values alignment and to give away proactively rather than via applications, then it follows they need to be able to find you. That means you need clear messaging, a confident online presence and strategic communications that express not just what you do, but why it matters.

• Get comfortable with ambiguity

Not all new funding streams will come with guidelines and deadlines. Some may start with a conversation on social media, an introduction at a dinner, or an unexpected collaboration. Being comfortable navigating the grey areas and complexities of building relationships is crucial.

So, is there any funding out there? Yes, but it is definitely harder to find and the rules are evolving. The money hasn’t necessarily vanished, it’s just found different ways to flow and to find it we need to change the way we invest in and build relationships.