What are Charity Grants?
How businesses can use grant-making as part of their corporate giving strategy.
The difference between corporate grants and donations
Corporate grants and donations are quite different. Corporate donations, sometimes referred to as grant-making, are gifts that are typically given wholeheartedly for charitable purposes. Such gifts are awarded to benefit a good cause and come without any requirements for how the money is spent.
As a rule, corporate donations are much more flexible than grants. By contrast, grants are given for a specific purpose, and the money given can only be used for the purposes stated in the application. This gives the organisation awarding a grant some control over how the money donated is spent and establishes conditions for future funding.
Another key difference is that corporate donations are typically led by the organisation. For example, a corporate donor will choose a beneficiary organisation themselves, perhaps in response to a global or local crisis. By contrast, a grant is normally open up for applications from any qualifying organisations or individuals. This means the donor organisation has less control over who the end beneficiary will be. The grant-making selection process is more rigorous.
What is grant funding?
Grants are sums of money given by an organisation or an individual to a charity for a specific purpose. Usually, there will be an application process for a grant or series of grants so that the would-be beneficiaries can make a case for why they need the money.
Charities or worthy individuals can bid to become beneficiaries of grants. Once awarded to a beneficiary or organisation, the money donated can only be used for the purposes stated in the grant application. Grants are often large sums of money, and there may be detailed conditions attached to how these sums are awarded or received.
Both the recipient and the grant-maker must agree to these conditions in the form of a contract. Such contracts will often stipulate how the money will be spent, timelines for delivery of the grant (in one lump sum, or in smaller chunks, for example). Beneficiaries may also be expected to submit financial reports following the receipt of the grant money, detailing how it was spent and the impact or result it has had on their work.
How are grants awarded?
Once a grant has been agreed for tender, the giving organisation will publish a set of criteria for beneficiaries and details of an application process. Charitable organisations or individuals who might be eligible to win the grant can then submit an application.
Usually there will be a cut off date for receiving grant applications. The grantmaking organisation will then review all the applications and select the ones that meet their criteria and they would like to shortlistThese organisations will then be contacted to provide additional documentation to satisfy due diligence criteria.
At this point, there will be a risk assessment and a contract will be drawn up between the giving organisation and the beneficiary, detailing out how the grant money will be spent and what, if anything, the recipient will have to do to show the impact of its usage.
Who can apply for a Grant?
Any individual or organisation which meets the criteria stipulated by the grant-maker can become a recipient of a grant. However, many donor organisations choose only to give grants to registered charities.
If the beneficiary of a grant is not a charity, then there may be more requirements for risk assessment and due diligence to make sure they will comply with the terms of the grant. These sorts of checks can be time consuming to perform.
Sometimes grants will be open to invite any organisation which meets the requirements and in some cases organisations or individuals will need to be nominated.
Why are risk assessments essential?
Most charitable giving by business organisations requires a level of due diligence to protect the business from regulatory risk. With giving grants it’s no different, although a business organisation may choose a higher level of checks on a grant recipient as grants tend to be of much higher value.
Depending on the risk appetite, the majority of businesses will want some level of due diligence, as their reputation is at stake if they make a donation which turns out to expose them in some way to criticism, for example if the recipient is subject to sanctions.
Typically, due diligence checks are conducted on trustees and other key personnel at a beneficiary organisation in addition to our standard checks. It is also sensible to look at the published financial information of a grant beneficiary, such as level of income vs expenditure.
Nasim Hamdani, charity grants champion and Head of Finance and HR at GivingForce says:
“Once a beneficiary has made a grant application and been found to meet the criteria, that’s where our due diligence team comes in at GivingForce. We perform a number of checks to make sure that it’s a genuine organisation and we request additional information which we then verify.
The sum of money granted tend to be large and there’s an additional risk because the company and recipient will be publicly associated with each other when the grant is made public. For example, there might be a plaque on a playground stating that the new play equipment was paid for by a high street bank.
Our clients can use our portal to manage grant submissions, marking if they want to proceed with one, logging if further information is needed from the charity, when further checks are carried out and then marking if it’s a yes or no.
The GivingForce portal manages all that so you can pull a report on how many applications came in, how many went through to the next stage, and so on. Everything is captured in one place rather than in spreadsheets. So it's just streamlined information at your fingertips.”
Corporate grant giving with GivingForce
GivingForce Charity Grants software gives your company the tools to manage grant nominations and applications in one place, whether there is one or many.
Administrators can log and report on all aspects of your company’s grant programmes including budgets, schedules and payments. Grant giving applications can also be nominated by employees and organisations can choose either to open up grant programmes to the public or can invite employees to nominate charities they feel passionate about to apply.
All grant recipients awarded via GivingForce will undergo rigorous due diligence checks as part of our Charity Due Diligence services and Charity Payments can be used to manage grant payments to charities and nonprofits.
Using Charity Grants also gives users the ability to further streamline their grant-making process by taking advantage of our charity payment services, so that funds can be distributed by a designated payments agency and all the amounts logged centrally.
Book a consultation for your company and find out more.
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