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Understanding types of funding

This is the first of a three-part series, looking at making effective grant applications. Our thanks to Lakhbir Bhandal, our Charity Development Manager in Spelthorne, for her work and insights from supporting charities to make applications over the last two years.

We’ll begin by asking: what kind of grant do you need? Understanding there are different types of funds available, and which type fits your needs is the first step to a successful application.

• Core/Operating Grants

Think of these as grants that keep your lights on. Core grants help pay for the everyday costs of running your organisation: rent, bills, salaries, and all those essential but unglamorous expenses. Some funders call these ‘revenue grants’.

The beauty of core grants is their flexibility, but they can be competitive. Each funder sets their own criteria, often specifying what percentage of your total costs they’ll cover, so always read the guidelines carefully.

Don’t forget: Even when applying for project grants, you can often build in core costs (also called overheads or indirect costs). Many funders allow you to include a proportion of your rent, admin staff time, or IT support – typically 10-20% of your project budget. Just make sure you justify why these costs are essential for delivering your project.

• Capital Grants

Capital grants are for physical things – building repairs, renovations, or equipment your organisation needs. Planning to extend your community centre or buy essential equipment? This is the funding route for you.

Before applying, funders typically expect you to have planning permissions in place and at least 20 years left on your lease. They’ll want recent quotes (no more than three months old) and evidence that you’ve thought about environmental efficiency. Remember to include photos of your building and explain who will manage the project.

• Project/Activity Grants

These are probably what most people think of when they think of grant funding. Project grants support specific pieces of work with clear aims, timelines, and outcomes.

The key here is specificity. Funders want to know exactly what you’ll do, when you’ll do it, who will benefit, and how you’ll measure success. Think of your application as telling the story of your project from start to finish, including what will happen when the funding ends.

Which type is right for you?

Consider what your organisation needs most urgently. Are you stretched thin covering basic running costs? A core grant might give you breathing room. Have you identified a specific community need you want to address? A project grant could be perfect. Need to fix your roof or buy new equipment? Look for capital funding.

Many organisations use a mix of all three types to build financial sustainability – and that’s a healthy approach.