Mifsud Nathan 1020608 — Dr Nathan Mifsud has analysed the funding trends on the SmartyGrants platform over the past eight years.

An analysis of more than 500,000 SmartyGrants grant applications, representing at least $6 billion of funding by more than 440 grantmakers over eight years, reveals funders making radical shifts in spending as covid-19 hit.

The report, The Future of Funding: What are the priorities and directions of Australian grantmakers?, analyses funds distributed on the SmartyGrants platform between 2013 and 2020.

The study used the platform’s powerful classification system CLASSIE to separate grants into social sector subject areas to show how the money flowed.

This graph shows the proportion of all applications by subject area over the 2019-2020 years, and tracks a shift in grant demand.

SmartyStats — Demand for grants related to economic development and information and communications increased significantly in 2020, year on year, while sport and recreation grants dipped in the same period. (The percentages show the proportions of applications tagged with that subject area. In some cases, grants cross over multiple subject areas, such as a cricket app, which could be tagged as "sport" and ICT.)

Overall, the study found that at the height of covid-19 responses in 2020:

there was a massive spike in demand for information and communications grant applications, as applications tripled, far outpacing supply
state and federal grant approvals leapt as governments moved to distribute smaller grants in the $1,000 to $5,000 range
local government grant approvals slumped for grants of the same ($1,000 to $5,000) value
the proportion of grants allocated to economic development, arts and culture, and education rose significantly
overall funding for sport and recreation slumped as a proportion of grants.

Future of Funding Priorities and Directions cover2 — Our Community’s The Future of Funding, published in January 2022, tracks the flow of funding from grantmakers using SmartyGrants data.

According to the Our Community study by Innovation Lab data scientist Dr Nathan Mifsud, approvals for information and communications grants dropped to just 25% as applications trebled in one year to more than 34,000 in 2020.

He said the spike reflected “a need for organisations to respond to changing service delivery and, for some workers, remote work requirements”.

The state, territory and federal grants approval spike was concentrated in grants worth less than $50,000 and especially in small grants in the $1,000 to $5,000 range. Whereas grant approvals hovered around 53% in 2019, that leapt to 75% as governments raced to get funds out the door.

The reverse was true in local government, where approvals dropped from 70% in 2019 to 54% in 2020, with a dramatic drop in approvals in the $1,000 to $5,000 range. That drop was offset by a moderate rise in approvals for grants worth more than $50,000.

Dr Mifsud said the changed approval rates may reflect a change in local government priorities as a result of covid-19, or a change in the number and kind of applications being submitted, or both. For instance, there may have been a reduction in applications in subject areas associated with smaller grants, and an increase from organisations in subject areas that typically apply for large grants.

The study also saw significant changes in priority spending for economic development, arts and culture, and education. That trend aligned with the support given to businesses, artists, performers and students in the first nine months of the covid-19 crisis.

Despite the increase in funding, demand for grants in key areas continued to outstrip supply. For example, education applications more than doubled to 20,070; health applications rose more than 50% to 15,153; and arts and culture applications spiked at 30,424, up more than 12,000 on the previous year.

Sport and recreation funding dropped down the priority list for funders during the period, losing out as a proportion of total funds allocated, while approval rates dipped from 37% to 29% of applications in 2020.

The study also shows philanthropic foundations and trusts slashed overall grants expenditure during the crisis, diverting funds from large grants to smaller ones.

Approvals for grants worth more than $1 million slumped from 65% to 34% in 2020, while approvals rose for grants worth less than $50,000.

The report is expected to be released in early 2022 and will show a detailed breakdown of priority areas for funders, including top subject and beneficiary groups.

Earlier this year, the SmartyGrants Covid-19 Grantmaking Survey, revealed that in response to the pandemic:

94% of grantmakers surveyed provided extra support to existing grantees
81% supported new applicants with their applications
75% varied funding agreements
55% added a new pandemic-focused grants program
32% boosted funding levels.

That study also revealed a greater emphasis on community and economic development and a reduction in help for sport and recreation; arts and culture; and environmental causes.