The evidence on the benefits of unrestricted funding is becoming hard to ignore, according to a review from the Institute for Voluntary Action Research (IVAR).
Evidence Review: Why restrict grants? was written by Chris Mills with input from Ben Cairns and Liz Firth. It explores the rationales for restricted and unrestricted funding, and whether they are substantiated by evidence.
The review states that while restricted funding is the dominant funding model, it has not earned its place as such. Instead, it found that the funder view that it’s preferable ‘because it delivers’ is based on familiarity, rather than evidence.
Examining common rationales for offering restricted funding, the review found insufficient evidence in support of ‘Funders exert enlightened strategic control’ – a central driver behind making restricted grants. It also found weak and/or contradictory evidence in support of ‘strengthens accountability’ as a rationale, but strong evidence in support of lawful compliance with a funder’s object.
In comparison, the review shows that there is more evidence showing the benefits of unrestricted funding. This includes strong evidence in support of ‘enhances adaptability’ as a rationale for unrestricted funding, good evidence in support of ‘Strengthens funded organisations’, and reasonable assurance that enabling funded organisations to exercise greater control over strategy means they make better choices when judged in the light of their own mission, priorities and changing context.
For funders interested in offering unrestricted funding, common obstacles and how 12 foundations have navigated them are explored in The Holy Grail of Funding: Why and how foundations give unrestricted.
Over the next few months, IVAR will produce a resource that supports foundation staff to make the case for unrestricted funding. This will draw from this Evidence Review and its wider work, including Get the basics right, which captures what more than 1,200 funded organisations think about how funders can reduce the time, effort and stress of applying for and managing grants.
It will also be working with partners to explore how it could collect reliable quantitative data on the split between unrestricted and restricted income across the UK.