Nearly all statutory funding in the criminal justice sector goes towards large charities, a new report has found.

Research by the think tank New Philanthropy Capital, commissioned by the Lloyds Bank Foundation, shows that 94 per cent of all statutory funding that flows into the criminal justice sector goes to charities with annual incomes of more than £2m.

Charities with annual incomes of £500,000 or less received just 1.4 per cent of statutory funding, researchers found. 

This was despite 57 per cent of the total income of NPC’s sampled criminal justice sector charities coming from statutory sources – compared with just 26 per cent of the wider voluntary sector.

The research is based on analysis of Charity Commission data from more than 600 charities, interviews with sector stakeholders, a survey of 55 voluntary organisations and 10 case studies of charities working with women and racially minoritised people.

Both larger and smaller charities responding to NPC’s survey “strongly agreed” that statutory grant funders and contractors’ application processes favoured bigger organisations, with some interviewees saying that procurement practices could act as barriers to small organisations.

Smaller organisations also felt less able to meet application and reporting requirements due to a combination of having limited resources and fewer specialised roles, the report says.

Respondents also flagged other challenges associated with statutory funding, including: the need to subsidise overly prescriptive contracts with other pots of money; delays in receiving awarded funding; and difficulties securing funding for systems change initiatives.

The report also found that just 3 per cent of total income in the criminal justice sector went towards charities working with specific ethnic groups. 

Of the sampled charities, only 7 per cent identified people of a particular ethnic or racial origin as the beneficiary group they focused on.

Charities with children and young people as their beneficiary group received the highest proportion of income over the past five years. 

In 2023, charities working to support children and young people received 44 per cent of the sector’s total income, despite only making up 21 per cent of the criminal justice sector.

The report includes a series of recommendations for both statutory and philanthropic funders to improve the funding landscape for criminal justice charities, after NPC’s research found that these two funder types hold differing, and sometimes conflicting, funding priorities.

The report recommends that statutory funders should clarify, as far as possible, which initiatives fall under the remit of statutory responsibilities, in order to unlock more philanthropic funding.

“This clarity will enable philanthropic funders to target areas less well-suited to their statutory counterparts (e.g. systems change initiatives), as well as help avoid duplication in their support offers for voluntary organisations,” the report says.

It also urges statutory funders to seek collaboration across relevant government departments and to commit to minimum standards of contracting, including covering full costs of delivery.

The report also recommends that philanthropic funders should provide more opportunities for flexible and multi-year funding, as well as urging them to commit to funding more systems change initiatives.

It says that statutory and philanthropic funders should also explore pooled funding for clearly defined initiatives in ways that offer comparatively large amounts of funding, balance shared goals and flexibility and do not inadequately restrict the funds contributed to the criminal justice sector.

Both statutory and philanthropic funders should also consider aligning on an approach to fund reporting and other relevant non-delivery costs, the report urges.

Nicole Sykes, director of policy, communication and research at the Lloyds Bank Foundation, said: “Small charities working within the criminal justice system often face a tangled web of government and charitable funding sources.

“Understanding how funders can adapt and evolve to ensure vital charities can effectively access and leverage these resources is essential to delivering life-changing services to those in need.”