Funding capital projects offers funders a powerful opportunity to support long-term organisational strength. However, key to successful delivery is strong and thoughtful assessment due diligence and a relational approach to grant management.

When approached this way, capital funding doesn’t just deliver new buildings and spaces – it helps charities and social enterprises achieve extraordinary things, become more resilient and sustainable organisations, and better able to serve their communities  into the future.

Be Clear Why You’re Funding Capital

Start with your purpose. Are you funding just the construction of a space - or enabling a charity or social enterprise to deliver better or reach more people, and to strengthen its long-term future?

If your grants support minor refurbishments that will not significantly change how an organisation operates, there’s scope for a lighter-touch approach. But for new builds or major redevelopments that expand services, increase staffing, or reshape delivery models, you’ll need more rigorous assessment – which can create a stronger shared foundation for success - and ongoing support to ensure the impact lasts beyond the ribbon cutting.

Invest in Application and Assessment Support

One of the most valuable things a funder can do is invest in experienced grants managers and upfront assessment support. Capital projects are full of pitfalls, and it is important to pre-empt as many of them as you can early on.

Good capital grants managers help applicants think through issues such as:

• Legal responsibilities around leases, title, and ownership
• Credibility of pre-development budget and costings
• Reliability of their project budget – particularly challenging who has costed it
• VAT implications and potential non-recoverable costs
• Under-resourcing or unrealistic timelines
• Poor understanding of procurement and its importance
• Compliance, insurance, and CDM responsibilities

Get On Board Early

If you’re funding most or all of a project, try to get involved early rather than waiting until the organisation has raised a set percentage of its capital need.

Rules like “you can’t apply until you’ve raised 50%” make sense on paper, but in reality, early funders can improve feasibility and speed up delivery by helping shape viable plans from the start. Being an early, engaged funder might be more resource intensive but it also opens up opportunities for collaborative problem-solving and allows you to build trust and ensure the right technical and organisational support is in place to avoid issues later such as cost escalation.

Fund Technical Assistance and Capacity-Building

Your grantees won’t always know what they don’t know. As a funder, you’ll see patterns - common issues around project management, procurement, or internal capacity. Don’t just spot them: help resource them and enable grantees to share learning.

Provide or fund additional support to help organisations navigate the project successfully, including:

• Their dedicated in-house resource to monitor and manage the build
• Access to experienced project managers who understand the charity sector
• Financial oversight and planning support
• Ensure trustee engagement and accountability

This support can be funded through revenue grants, adopting a ‘funder-plus’ model, or a combination of both. Each has advantages - but a ‘funder-plus’ approach can allow you to support the grantee while also holding their professional advisers to account, ensuring consistent quality and a joined-up delivery team.

These elements often determine whether a project leaves behind a strong, confident organisation — or one that’s overstretched and burnt out – and helps minimize the risk of organisations becoming overstretched during the process.

Anticipate Problems — and Resource Flexibility

The best-planned capital projects can still face delays, cost increases, and moments of crisis. Ensure there’s a realistic contingency in every grant award, and be clear that grantees can come to you early if problems arise.

Where possible, hold a funder-managed contingency so you can intervene if costs escalate unexpectedly. Otherwise, you risk exhausted grantees, disrupted services, and a breakdown in transparency when things are most tough - at the very moments when partnership matters most.

Make Reporting Useful, Not Burdensome

Set expectations on reporting from the start help grantees understand the benefits of sharing certain information. Use reporting formats that help grantees strengthen their own oversight of cashflow and delivery, not just satisfy your own requirements.

You can use IVAR’s Open and Trusting grantmaking principles to ensure your reporting approach brings value to you and your grantee.

Think Beyond the Build

After completion, organisations face new challenges: higher running costs, maintenance, and the need to fill, use, and sustain their new space. Consider providing revenue funding and other support when the building opens. Other support might include:

• Peer networks of grantees who’ve completed capital builds
• Guidance on operating and maintaining assets
• Support for income generation or fundraising, especially since the capital grant may push charities temporarily over some funder income threshold.

Capital funding should help create long-term viability, not short-term strain.

Build Relationships and Trust

Relationships underpin all your funding activity, and you should be clear in your commitment to walk alongside grantees through the journey.

When grants managers are empowered, empathetic, and genuinely invested in a project’s success, you build trust.

Shared values and alignment if you’re a regranting funder

If you’re an intermediary delivering funds on behalf of another organisation, invest time early on in establishing a shared understanding.

Key discussions that need to take place:

• Eligibility criteria
• Conversations on equity should take place early on
• Evidence and reporting expectations both for grantees and the regranting funder
• Flexibility for variations and cost changes

Clear, honest collaboration keeps the focus on delivering - both for the grantees and funder – and strengthens the overall effectiveness of the programme.

Design for Equity

Equity and inclusion don’t happen by accident. By adopting the approaches above - early support, flexible funding, capacity-building, and trust-based relationships - you’re already beginning to dismantle structural barriers and create a more inclusive programme.

But equity also extends to how decisions are made. Reflect on who is involved in designing and assessing your funding programmes and create space for diverse perspectives in the decision-making.

Final Thoughts

Our experience at Resonance has shown just how transformative well-supported capital funding can be and we have seen some impressive examples of what this funding can achieve. Over time, our team has refined our approach and learnt which practices strengthen organisations, foster trust - including recognising when a more engaged, collaborative approach leads to far stronger outcomes - and help projects deliver lasting value for their communities.

Ultimately, helpful capital funding does more than create buildings; it helps build confident, resilient and sustainable organisations that create lasting impact for their communities. It’s a privilege to support charity leaders and volunteers whose commitment and vision drive meaningful change every day, for the people they serve.

We have supported funders to design, assess, deliver, and monitor capital grants programme, and delivered them on their behalf, and are happy to share our learning with others and/or discuss how we might be able to support them - let me know if you'd like to learn more about funding capital partnerships by clicking on my details below.