How Trusts and Foundations Fit into the System

TL;DR Trusts and foundations are charities that give money to other organisations rather than delivering services themselves. They range from tiny family trusts giving a few thousand pounds a year to major endowed foundations distributing hundreds of millions. Understanding how they work, how they make decisions, and what drives their behaviour is essential knowledge for anyone working in the sector.

Why this matters

Trusts and foundations are one of the most important sources of grant funding for UK charities, but they are often poorly understood, even by people who apply to them regularly. They are not a monolith. They vary enormously in size, approach, governance, and philosophy. Treating them as a single category leads to bad applications, misaligned expectations, and wasted time on both sides.

360Giving, the open grants data platform, publishes data on over 1 million grants from hundreds of UK funders. The headline combined value exceeds £300 billion, though that figure is inflated by the inclusion of local government block grants and other very large allocations that are not grants in the conventional sense. Coverage of charitable grantmaking is useful but incomplete — many funders do not yet publish, and the data skews towards larger, more transparent institutions. Despite these limitations, the platform reveals significant variation in who funds what, how much they give, and what they expect in return.

If you are going to work in the charity sector, you need to understand trusts and foundations not just as a funding source but as institutional actors with their own incentives, constraints, and politics.

The 5 things to know

1. Trusts and foundations are charities themselves

This is the bit that trips people up. A charitable foundation is itself a registered charity. It has trustees, a charitable purpose, and obligations under charity law. The difference is that its charitable purpose is fulfilled by giving money away rather than running programmes directly. This matters because it means foundations are regulated by the Charity Commission, must act in accordance with their objects, and face many of the same governance challenges as any other charity.

2. Endowed foundations and fundraising trusts work differently

There is an important structural distinction. An endowed foundation has an investment portfolio (an endowment) and distributes a proportion of the returns each year. Wellcome, with an endowment of roughly £38 billion, is the most extreme UK example. The Garfield Weston Foundation, Esmee Fairbairn Foundation, and the Wolfson Foundation are other significant endowed funders.

A fundraising trust, by contrast, raises money from other sources and distributes it. The National Lottery Community Fund is the largest example, distributing money raised through lottery ticket sales. Lloyds Bank Foundation is funded through a profit donation arrangement with Lloyds Banking Group. Comic Relief raises money through public fundraising campaigns.

The distinction matters because it shapes behaviour. Endowed foundations can take a long view and fund less fashionable causes without worrying about donor sentiment. Fundraising trusts are more connected to public priorities — which can be a strength (they respond to what people care about) or a constraint (they may find it harder to fund unpopular or unfamiliar work).

3. The application process varies wildly

Some foundations run open, competitive funding rounds with published criteria, deadlines, and detailed application forms. Others work by invitation only. Some accept a two-page letter. Some require full theories of change, logic models, and detailed budgets.

There is no standard process. The Association of Charitable Foundations (ACF), the membership body for UK foundations, has published good practice principles encouraging transparency, proportionality, and clear communication. But compliance is voluntary and uneven.

The single most common mistake in fundraising is applying to a foundation without properly researching what it actually funds. Published guidelines exist for a reason. Read them.

4. Foundations sit in a wider funding ecosystem

Trusts and foundations are one part of a much larger picture. UK charities are funded through a mix of government contracts, earned income, individual donations, corporate giving, and grant funding. According to NCVO's UK Civil Society Almanac, grant income from trusts and foundations makes up a meaningful but minority share of total voluntary sector income.

Foundations often see themselves as providing risk capital, funding innovation, or supporting work that statutory funders will not cover. In practice, many foundations end up funding core delivery that government has withdrawn from. The gap between how foundations describe their role and what they actually fund is one of the sector's persistent tensions.

5. Regranting is a growing part of how foundations work

Rather than making grants directly to frontline organisations, some foundations give money to intermediary bodies, which then distribute it onwards. This is called regranting. It is increasingly common, particularly for reaching smaller or grassroots organisations that foundations struggle to identify or support directly.

For a full explanation of how regranting works and why it matters, see What regranting is and why it confuses people.

Common misunderstandings

"Foundations are just banks with nicer logos." Foundations have their own charitable purposes, strategies, and governance structures. They are not neutral dispensers of money. Their priorities, risk appetites, and internal politics shape what gets funded and what does not.

"If your work is good enough, you'll get funded." Quality of work is necessary but not sufficient. Timing, fit with funder priorities, relationships, geography, and sheer luck all play a role. The sector's rhetoric about meritocratic funding does not match the reality.

"Big foundations are all the same." Wellcome (focused on health research, enormous endowment, global scope) and Lloyds Bank Foundation (focused on small and medium charities tackling complex social issues, funded by Lloyds Banking Group) could hardly be more different in approach, despite both being major funders. Always research the specific funder.

"Foundations are accountable to the people they fund." Foundations are legally accountable to the Charity Commission and, arguably, to the public interest. They are not formally accountable to their grantees. This power imbalance is one of the most debated dynamics in the sector.

How it works in practice

A typical grant application journey looks something like this:

1. Research: Identify foundations whose published priorities match your work. Use 360Giving's GrantNav tool to see what they have funded before.
2. Eligibility check: Confirm you meet basic criteria (charity registration, geographic focus, income thresholds, eligible activities).
3. First approach: Submit an expression of interest, letter, or full application depending on the funder's process.
4. Assessment: The foundation's grants team reviews applications, may request additional information, and may visit.
5. Decision: Trustees (or a delegated committee) make funding decisions, often on a quarterly cycle.
6. Grant management: If funded, you receive a grant agreement, report on progress, and manage the relationship over the grant period.

The whole process can take anywhere from six weeks to twelve months. Plan accordingly.

What people disagree about

The biggest area of disagreement is power. Foundations hold structural power over the organisations they fund. They set the terms, define the criteria, and make the decisions. Grantees are, by definition, in a dependent position. Whether and how foundations should redistribute that power is one of the sector's most active debates. For more, see Power dynamics in grantmaking.

There is also significant debate about transparency. How much should foundations publish about their decision-making, rejection rates, and funding patterns? 360Giving has pushed the sector towards greater openness, but many foundations still publish relatively little about how they make decisions.

Finally, there is the question of perpetuity versus spend-down. Should endowed foundations exist forever, spending only investment income? Or should they spend their capital and close, getting more money to where it is needed now? The Atlantic Philanthropies chose to spend down. Most UK foundations have chosen perpetuity. Neither answer is obviously correct.

What to read next

• What regranting is and why it confuses people
• Why full cost recovery matters
• Why core costs are always political

FAQs

How many trusts and foundations are there in the UK?

Estimates vary, but there are roughly 10,000 grant-making trusts and foundations registered with the Charity Commission. The vast majority are small, with a few hundred making grants of over £1 million per year. ACF's membership alone includes around 400 foundations, collectively distributing several billion pounds annually.

What is the difference between a trust and a foundation?

In UK law, there is no formal distinction. "Trust" and "foundation" are used loosely and often interchangeably. In practice, "foundation" tends to be used by larger, more formally structured organisations with endowments, while "trust" is used more broadly. The legal structure (trust, company limited by guarantee, or charitable incorporated organisation) matters more than the name.

How do I find out which trusts fund work like mine?

Start with 360Giving's GrantNav (grantnav.threesixtygiving.org), which lets you search published grants data. Use funder directories and databases. Read published annual reports and funding guidelines. Talk to peers in your field. And never apply to a funder without checking their published criteria first.

Do foundations fund core costs or just projects?

It depends entirely on the foundation. Some fund only specific projects. Others, including Lloyds Bank Foundation and Esmee Fairbairn Foundation, explicitly fund core costs and unrestricted grants. The sector has been moving, slowly, towards greater willingness to fund core costs, but project funding still dominates. See Why full cost recovery matters for more on this.