Ultimate Guide to Funding for UK Charities  

When people think of charities, they often think of the front-line impact, food parcels delivered, youth services run, and community spaces protected. But behind every successful project is one thing: funding.

Charity funding is the money that keeps these organisations going. It covers everything from staff salaries to emergency appeals, systems and digital tools to rent, and outreach to innovation. For most UK charities, especially small to medium ones, having stable and diverse funding streams is not just helpful, it’s essential to survival.

In 2025, the need for charity funding is greater than ever. Charities across the UK are facing a perfect storm: fewer donors, rising costs, shrinking government contracts, and severe grant competition. At the same time, expectations are growing. People want transparency, tech-savvy engagement, and proof that their donations make a difference. All of this while many charities are already stretched to the limit.

Let’s put it into perspective:

• Fewer people are giving. In 2024, only half of UK adults donated to charity, down from 61% in 2016.
• Costs are rising. Inflation and the ongoing cost-of-living crisis have made running even the smallest project more expensive.
• Funding is harder to access. With more organisations applying for grant funding for charities, success rates are falling, especially for newer or smaller charities.

Despite these challenges, the charity sector hasn’t stood still. Many organisations are adapting fast: embracing digital fundraising, forming corporate partnerships, applying for local authority grants, and exploring unrestricted funding models that allow more flexibility in how money is used.

We’re also seeing a shift in donor behaviour. While the number of givers has dropped, those who still give contribute larger donations. There’s also a growing interest in values-led giving, especially among younger supporters, and a move towards supporting fewer causes, but more deeply.

In other words, the game is changing. Charities that rely on the same methods year after year risk falling behind. Those who understand and learn how to work with the new charity funding environment are far more likely to thrive.

In this article, I will unpack where the money’s coming from, what’s changing in the way people give, and how UK charities can respond.

Where Charity Funding Stands Today

Let’s be real. Charity funding in the UK right now is full of potential and pressure. Some charities are raising record amounts, while others are shutting their doors. It all depends on how well you adapt to the shifting landscape.

1. Numbers Tell a Story

In 2024, people in the UK donated around £15.4 billion to charities. On the surface, that sounds like a win, an 11% increase compared to previous years. But zoom in, and there’s more going on.

• Only 50% of UK adults donated to charity in 2024. That’s down from 61% in 2016.
• Just 21% sponsored someone for a cause. That used to be 37%.
• The average donation is now about £20, but rising costs mean that £20 doesn’t stretch as far as it used to.

In short, fewer people are giving, but those who contribute, giving more. That’s a risky position to be in when your funding relies on a smaller group of supporters; one shift in behaviour can hit you hard.

2. Cost-of-Living Crisis Impact

It’s no surprise that the cost-of-living crisis has impacted charitable giving. Families are watching every penny, and even regular donors must make tough choices. Meanwhile, charities themselves are facing higher energy bills, rising wages, and increased demand from people in crisis.

Government support has also pulled back. Around £120 million in emergency grants were made available over two years, but that’s a drop compared to what many organisations need to survive. For some, it simply hasn’t been enough, especially for small charities with tight margins. We’ve already seen closures, downsizing, and emergency appeals on the rise.

3. Shifts in Donor Behaviour

Today, donors are more selective, more strategic, and in many cases, more generous, but only to causes they deeply care about.

Here’s what’s shifting:

• Fewer people are giving, but gifts are larger and more purpose-driven.
• Young people (16–24) are more likely to support human rights, homelessness, and mental health than traditional charity appeals.
• Regular giving is declining, while one-off donations tied to specific campaigns are increasing.
• Many people are focusing on local causes, giving to community projects where they can see the direct impact.

If your charity can’t communicate its great impact or show how donations help people, you’re likely to be passed over for someone who can.

4. Technology in Giving Habits

There’s no denying it, the way people give has gone digital.

• Online fundraising for charities is booming. More donors are giving through apps, platforms, and charity websites than ever before.
• Cash donations are in decline, especially as fewer people carry physical money.
• Platforms like JustGiving, GoFundMe, and even TikTok fundraising are becoming mainstream.
• Google Ad Grants for charities are helping some organisations get visibility, but many still aren’t taking full advantage.

Digitally confident charities, the ones using fundraising platforms, email automation, and data-led donor engagement, are significantly more likely to report income growth. Meanwhile, those who still rely on paper forms and bucket collections are falling behind.

Charities that invest in digital skills and tools aren’t just keeping up — they’re building future-proof funding models.

Where Charity Funding Comes From Today  

Funding a charity isn’t about relying on a single stream. Diversifying your income is no longer optional; it’s essential. Here’s what’s happening across the main funding sources, and what your charity needs to know to stay competitive.

1. Individual Donations

Individual giving remains the backbone of the charitable sector, making up a major portion of total charity income. But the giving is shifting.

• Only 50% of UK adults gave to charity in 2024, down from 61% in 2016.
• Yet total donations hit £15.4 billion, meaning fewer donors are giving more.
• People are more focused on causes they care about and want to see substantial results.

You can’t assume loyalty. Donors are more likely to switch support if they don’t feel aligned with your values or impact.

Engage supporters with impact-driven storytelling, show them where their money goes, and personalise your donor communications. Donors want transparency and trust.

2. Government Funding

Government grants and contracts remain a major source of charity income, but recent years have seen changes.

• Some departments, like the Department for Levelling Up and BEIS, still distribute significant funds, over £1 billion annually.
• But emergency support is shrinking, and many small charities say access is harder than ever.
• New procurement rules mean more formal processes, often favouring large or well-established organisations.

If your charity wants to access government funds, it needs to get procurement-ready, with transparent policies, impact evidence, and compliance systems in place.

3. Grant-Making Trusts and Foundations

The UK has thousands of grant-making trusts, from small local funders to large national foundations like Esmee Fairbairn or Garfield Weston.

• Trusts are funding a wide range of causes, including climate, equity, poverty, and health.
• But demand is high. Some grantmakers report double the number of applications in 2024 compared to previous years.
• Many are shifting towards outcome-based giving and restricted funding for transparent, measurable projects.

Notable Funders to Watch:

• The National Lottery Community Fund
• Wolfson Foundation
• Leathersellers’ Small Grants
• Groundwork – One Stop Community Partnership
• Innovation for All Foundation

Tip: Tailor each application. Generic bids are easy to reject. Focus on clarity, outcomes, and alignment with the funder’s mission.

4. Corporate Partnerships & Sponsorships

Corporate support is changing. It’s no longer just about getting sponsorship, it’s about shared value and purpose-driven collaboration.

• Companies want to engage their staff in volunteering or fundraising.
• Many align with causes that reflect their brand, like mental health, DEI, or youth empowerment.
• Partnerships that show a transparent social impact, not just logo placement, are the most successful.

Offer ways for businesses to get involved beyond money, like project co-creation, volunteering days, or joint awareness campaigns.

5. Crowdfunding & Digital Platforms

Crowdfunding has become a powerful strategy for UK charities, especially smaller ones with specific goals.

• JustGiving, GoFundMe, and newer platforms like Enthuse allow charities to run time-limited, impact-driven campaigns.
• These platforms are ideal for urgent appeals, pilot projects, or local programmes.
• Social media plays a big role; successful crowdfunding relies on strong visuals, clear messaging, and exposure.

It’s accessible, fast, and mobile-friendly. You can reach new supporters without a big budget.

Tip: Use video and actual stories. People don’t give to “fundraising targets”, they give to humans and outcomes.

6. Social Investment & Alternative Finance

Social investment is growing, with organisations like Big Society Capital and Access – The Foundation for Social Investment offering repayable finance for impact-led projects.

• It helps charities scale their services or develop sustainable income models.
• This includes blended finance, social impact bonds, and community shares.

But for many small charities, it’s still a long way off.

Barriers:

• Lack of investment preparation
• Unfamiliarity with finance terms
• Risk of debt deterring boards or staff

Tip: If you’re exploring this space, start with grants for investment-readiness or speak to a social finance advisor. Don’t start without a plan.

What’s Changing in Charity Funding

In 2025, the way charities raise money is evolving. Traditional fundraising still matters, but success depends on adaptability, creativity, and digital confidence. These trends affect the future of funding in the UK and provide important lessons for charities of all sizes.

1. Digital Fundraising

Digital fundraising has moved from “nice to have” to non-negotiable. Whether it’s a donation form on your website or a mobile-optimised campaign on social media, digital is now core to how people give.

• Digitally mature charities are more likely to report income growth and supporter retention.
• Online platforms like JustGiving, Enthuse, and CAF Donate are widely used, but many small charities still struggle with integration, data tracking, or digital skills.
• Email remains a powerful strategy, especially when personalised and impact-led.

Lack of digital skills, outdated systems, and staff capacity are holding some charities back.

Simple improvements like mobile-friendly donation pages, A/B testing emails, or using video in campaigns can lead to better results without major cost.

2. Crowdfunding’s Resurgence

Crowdfunding has gained new traction since 2023, especially for local causes, crisis appeals, or one-off projects.

• It allows charities to tell specific stories, connect with new audiences, and build momentum quickly.
• Platforms like Crowdfunder UK and GoFundMe offer matching schemes or local authority support.
• Successful campaigns tend to focus on strong outcomes (“£3,000 to buy school equipment”) rather than vague goals.

Best Practices for Crowdfunding:

• Have a strong central message, not just “we need money.”
• Use photos or short videos to build an emotional connection.
• Set achievable targets and show progress visually.
• Follow up with donors and turn them into long-term supporters.

3. Engaging Younger Donors

Gen Z and younger Millennials (ages 16–34) give differently. They’re values-driven, socially conscious, and expect charities to communicate authentically.

• Younger donors are more likely to give to human rights, homelessness, and climate action.
• They prefer to give online, via mobile, or as part of a community-led campaign.
• What they want is transparency, stories, and action, not just charity jargon.

How to Reach Them:

• Show the human face of your work through YouTube, Instagram Reels, TikTok videos, or impact stories.
• Offer ways to take part beyond giving: advocacy, volunteering, or content creation.

• Communicate your values; they’re not just giving to your work, they’re giving to what you stand for.

4. Diversifying Income Streams

Relying on one or two sources of income puts any charity at risk. In 2025, income diversification is a strategic priority.

• Funders come and go. Donors change habits. Policies shift.
• A mix of income, from grants, donations, trading, and partnerships, increases stability.
• It enables long-term planning, not just survival mode.

How to diversify:

• Add corporate partnerships or service delivery contracts.
• Develop a membership model or community lottery.
• Monetise training, resources, or space hire if relevant to your mission.
• Explore social enterprise models where appropriate.

Tip: Don’t try everything at once. Choose one or two realistic streams to test and scale.

5. Cost Efficiency and Fundraising ROI

Rising costs mean every penny counts. More funders are asking charities to show efficiency, not just impact.

• Fundraising Return on Investment (ROI), how much you raise for each pound spent, is under greater scrutiny.
• Digital campaigns can reduce costs, but only when well-targeted.
• Automated systems (e.g., email journeys, donor CRM) help save staff time and improve supporter experience.

Ideas to maximise ROI:

• Focus on retention; keeping a donor is 5x cheaper than acquiring a new one.
• Invest in systems that save time (e.g. automated gift aid claims, analytics dashboards).
• Track what’s working and stop what isn’t. Analytics isn’t a luxury, it’s how you survive.

Charities that thrive in this sector will be those that embrace digital, tell powerful stories, and build resilience through varied income streams. Innovation doesn’t always mean big budgets; it means being smart, strategic, and responsive to how people give today.

Funding Challenges for UK Charities

Despite examples of resilience and innovation across the UK charity sector, the road to financial sustainability remains steep. Many organisations, especially small and community-based charities, face structural and economic barriers that limit their ability to fund their work effectively.

1. Declining Donor Base

While the total amount given to charity in 2024 reached £15.4 billion, the number of people donating has continued to fall. Only 50% of UK adults gave to charity in 2024, down from 61% in 2016. At the same time, more charities are applying for a smaller pool of available funds.

• Fewer donors, larger gifts: A smaller donor base is giving more, which creates dependency on fewer individuals.
• Grantmakers report record application volumes: Some funders have seen applications double over the past 12 months, making funding increasingly competitive, especially for charities without dedicated bid writers.

2. Government Funding Cuts

The government remains a major funder of the charity sector, but many organisations are grappling with:

• Cuts to local authority budgets and fewer grant schemes.
• A shift toward commissioning and contracting, often requiring complex procurement processes.
• Underfunded contracts, where the funding received doesn’t cover the true cost of delivery, leaving charities to plug the gap or stretch their resources unsustainably.

Even with temporary government programmes, such as the £120 million cost-of-living support fund, many charities report that this is not enough to meet rising demand.

3. Rising Operational Costs

Inflation, higher utility bills, and increased demand for services are pushing charities to breaking point.

• £94 billion was spent by UK charities in 2024, nearly matching income levels.
• Staff wages, rent, energy, and insurance have all gone up, while core funding has often stayed flat or declined.
• The need for core cost coverage and unrestricted income is more urgent than ever. Yet many funders still focus on short-term, project-based support.

Charities need sustainable, multi-year funding to plan, grow, and respond to community needs, not just survive year to year.

4. New Funding Stream Access Barriers

Newer sources of funding, like social investment, digital fundraising, and earned income, offer promise but come with hurdles:

• Digital fundraising requires technical skills, marketing knowledge, and upfront investment, not always available to small teams.
• Social investment (loans and repayable finance) often excludes charities that can’t offer repayment guarantees or meet eligibility criteria.
• Corporate giving tends to favour larger, well-known organisations with strong branding and networks.

Smaller charities, especially those serving marginalised communities, often struggle to compete for attention in these newer funding spaces.

5. Relying on Single Funding Sources

Many charities still depend heavily on one main income stream, whether that’s a large grant, a major donor, or a government contract.

• This creates a fragile financial model; if that source disappears, the charity may not survive.
• Diversifying income streams takes time, skill, and capacity, but it is essential for long-term resilience.

Example: Some charities have successfully balanced grant funding with earned income (e.g. training delivery or consultancy). Others are testing community shares, charity lotteries, or subscription models to reduce reliance on traditional donations.

How to Secure Funding for Your Charity

While UK charities continue to face financial pressures, 2025 and beyond also present different opportunities for those ready to adapt, innovate, and engage their communities. By combining proven practices with new approaches, charities can increase their chances of securing sustainable funding.

1. Build Strong Grant Applications

Grants remain one of the most accessible forms of funding, but success depends on the strength of your application.

Tips for stronger applications:

• Be transparent and concise: Funders read hundreds of applications. Get to the point and avoid jargon.
• Demonstrate need: Use data and community input to show why your project matters.
• Show impact: Be specific about the outcomes you expect, how you’ll measure success, and who will benefit.
• Align with funder priorities: Customise your application to reflect the aims and criteria of the funder.
• Include sustainability: Show how your work will continue after the grant period ends.

Common pitfalls:

• Vague budgets or unclear cost breakdowns
• Weak evidence of need or duplication of services
• Failing to answer every question or follow formatting rules

2. Leverage Digital Platforms

Digital platforms provide powerful, low-cost ways to reach new donors, especially younger audiences.

Opportunities:

• Online giving platforms (e.g., JustGiving, Localgiving) are easy to set up and can quickly scale.
• Social media campaigns and email fundraising help charities tell their story and engage supporters emotionally.
• QR codes on printed materials, community spaces, and events allow instant giving.
• Automated donation systems (e.g., monthly giving or roundup donations) provide recurring income.

Digital success doesn’t require advanced tech, just consistency, creativity, and a willingness to learn.

3. Form Partnerships

Collaborating with external stakeholders can unlock funding, in-kind support, and wider reach.

Business partnerships:

• Offer opportunities for sponsorship, match funding, and employee volunteering.
• Many companies look for social value impact and ESG (Environmental, Social, Governance) outcomes, making charity partnerships attractive.

Local authority partnerships:

• Can open access to public grants, community spaces, and shared programmes.
• Demonstrating alignment with local plans or outcomes (e.g., tackling isolation, improving health) can increase eligibility.

Strong partnerships are built on shared values, defined roles, and mutual benefit, not just funding.

4. Tap into Underutilised Funding Sources

Charities often overlook funding streams that require long-term thinking or different skill sets.

Social investment:

• Loans and repayable finance are available for charities that generate income (e.g., training, venues, products).
• While not suitable for all, social investment can help scale services or launch new ventures.
• Examples: Big Society Capital, Resonance, and Social Investment Business.

Legacy giving:

• Bequests in wills represent a huge untapped opportunity, especially for causes with older supporters.
• Simple messaging (“leave a gift in your will”) and supporter stories can start the conversation.
• Legacies provide unrestricted, long-term income, vital for sustainability.

Dormant assets, match funding, and charity lotteries are also worth exploring, depending on your size and scope.

5. Engage Community

Some of the most successful fundraising happens close to home, built on trust and shared identity.

Strategies:

• Host small community events: fun runs, coffee mornings, or local challenges.
• Create “Friends of” groups to fundraise regularly and spread awareness.
• Use storytelling to show the difference donations make locally.
• Encourage peer-to-peer fundraising: empower supporters to raise money on your behalf.

Local giving builds more than income, it strengthens relationships, visibility, and long-term resilience.

What’s Next for Charity Funding

The UK charity funding is in constant progress. As we look beyond 2025, several trends, technologies, and policy developments are affecting the future of charitable income. Charities that stay informed and proactive will be best positioned to navigate uncertainty and secure long-term financial sustainability.

1. Donor and Funding Predictions

Donors will become more intentional and values-driven: Rather than giving out of habit, future donors, especially Gen Z and millennials, will support causes that align with their personal beliefs, such as social justice, climate action, and community-led development.

Major donor and high-net-worth giving will grow: While the overall number of donors may continue to fall, those who give will likely contribute larger amounts, especially through major gifts, philanthropy networks, and legacy giving.

Recurring giving will increase: Monthly or subscription-style donations will become more popular, offering stability for charities and convenience for donors.

Corporate and community funding will diversify: Businesses will continue to embed social impact into their strategies, and more localised grant-making may emerge from regional funds or donor-advised platforms.

2. Rise of Digital and Data-Driven Giving

Digital transformation will no longer be optional, it will be a key driver of success.

Digital-first fundraising: From social media storytelling and influencer campaigns to contactless donations and integrated CRMs, charities must meet donors where they are online.

Data-driven decision-making: Understanding donor behaviours, segmenting audiences, and tracking engagement will be essential for building lasting relationships and increasing donor lifetime value.

AI and automation: Tools that personalise communications, optimise fundraising campaigns, and improve operational efficiency will be increasingly accessible, even for small charities.

Virtual events and hybrid fundraising: These will remain effective ways to reduce costs, reach wider audiences, and engage supporters beyond geographic boundaries.

3. Policy Shifts and Funding Impact

UK policy and regulatory changes could shift how charities access and manage funding.

Procurement reform: Ongoing changes to public sector procurement may create new pathways for charities to deliver public services, but also raise barriers for smaller organisations without bidding capacity.

Charity Commission and HMRC updates: Adjustments to reporting requirements, Gift Aid rules, or tax reliefs could affect compliance workloads and fundraising incentives.

Dormant assets scheme expansion: Future phases of this programme may release hundreds of millions in funding to social causes, especially those addressing youth, financial inclusion, and community resilience.

Local devolution and funding control: As more financial power shifts to local authorities or metro mayors, charities may need to build new relationships to access regional funding.

4. How Charities Can Future-Proof Funding

UK charities should take proactive steps to build resilience and sustainability to thrive in the years ahead.

Diversify income streams: Avoid over-reliance on a single source, balance grants, donations, trading income and partnerships.

Invest in digital skills and tools: Train staff and volunteers in digital fundraising, CRM use, and social media engagement.

Prioritise donor retention: Build strong, personalised relationships with existing supporters rather than chasing constant new acquisition.

Build reserves and financial resilience: Where possible, develop a buffer to withstand future shocks or cash flow dips.

Strengthen local relationships: Collaborate with local authorities, businesses, and communities to embed your organisation in the local funding ecosystem.

Embed impact measurement: Funders increasingly want to see measurable outcomes and ensure your charity can articulate and evidence its impact.

My Final Thoughts

As I’ve explored throughout this guide, charity funding in the UK is at a pivotal point. While the total amount of charitable giving has increased, this growth conceals deeper issues, such as a shrinking donor base, increased competition for grants, and mounting economic pressures. Many organisations are also grappling with government funding cuts and the challenge of embracing digital innovation fast enough to keep up with donor expectations.

Yet, despite these hurdles, opportunities abound.

The rise of digital fundraising platforms, the potential of social investment, and the growing appetite for values-driven giving, specifically among younger generations, signal that the sector is evolving. Charities that are willing to diversify income streams, embrace technology, and tell compelling stories are far more likely to thrive. Collaborations with local authorities, businesses, and funders are also proving to be powerful ways to extend impact and unlock new sources of support.

Success will depend on three key qualities: adaptability, innovation, and collaboration. It’s not enough to stick with what has always worked; the most resilient organisations will be those that experiment, evaluate, and evolve.

Need Support?

If your charity is ready to strengthen its funding strategy, build capacity, or explore new income streams, we’re happy to help.

Book your free consultation today to discover how we can support your growth and sustainability.