Fundraising for churches in 2025: challenges, opportunities and a plan for success
Last week ‘Craigmyle in Conversation’ brought together a number of church leaders to discuss the changing funding landscape. If fundraising for churches in 2025 feels tougher than ever then you’re not alone. The funding situation for churches and charities in the UK is shifting. Economic uncertainty, rising costs and changes in charitable trusts priorities are all making fundraising more challenging. Some funders are pausing their programmes, competition for remaining grants is increasing and the expectations of funders are evolving.
But amid these challenges there are real opportunities. The National Lottery Heritage Fund has introduced a new strategy, charitable trusts are restructuring their priorities and churches are well placed to tap into their local communities for new sources of income. Now is not the time for despair. It’s a time for strategic thinking and action.
VAT changes are afoot – planning and phasing
Last month, the government announced changes to the Listed Places of Worship Grant Scheme until 31st March 2026. While churches can still reclaim VAT on essential repairs and renovations, the budget has been cut to £23 million, with claims now capped at £25,000 per year. The government anticipates that 94% of claims will remain unaffected, since most are below this threshold. However, churches planning significant restoration projects may face funding shortfalls. So it is important for church leaders to plan ahead, consider ‘phasing’ their building works and diversify their funding to cover potential gaps.
Heritage funding is changing – focus on impact
The National Lottery Heritage Fund’s ‘Heritage 2033’ strategy sets out four key investment principles that all applicants now need to meet: preserving heritage, engaging communities, considering environmental impact and building financial resilience. How you navigate through those four investment principles is important. Whilst it is normal that applications naturally lean more towards one or two principles and less towards the others, the starting point will need to be the Saving Heritage principle. A big ambition of the NLHF is to remove places of worship from Historic England’s Heritage. But simply applying for roof repairs or building maintenance won’t be enough. You will need to focus your application on the difference your work will make in the community. For example, a repaired roof enables you to provide services that reduce loneliness and isolation and improve the physical and mental health of specific groups in your community. Creating community engagement plans will be crucial. Consider how your church could be a space for learning or heritage education, for example. Showing financial resilience is also key. Through your research find which funders can support different aspects of your building and community work. Consider what income generating activities or partnerships can sustain your church long term.
The charitable trust challenge – diversify funding
Many charitable trusts are ‘pausing’ or ‘undergoing a review’ to catch up with backlogs and reevaluate their priorities. Henry Smith Charity, for example, received 3,000 applications in its final round before closing to review their strategy. This is leading to delays and increased competition, meaning applications need to be stronger, more targeted and more compelling. Churches need to stay up to date with these shifts in funding priorities.
Now is the time to explore new income streams and diversify your funding, such as renting out church spaces, launching individual giving campaigns or partnering with local businesses. Funders want to see churches that are well connected and well supported locally. Build your ‘case for support’ by demonstrating real community involvement. Ensure your applications clearly align with funders’ priorities, supported by strong evidence and a compelling ‘case for support’.
Making fundraising more doable
Church leaders are often stretched. Between running services, supporting their congregation and maintaining historic buildings, fundraising can feel overwhelming. But breaking it down into manageable steps can make it achievable.
Start by getting your house in order. Gather a strong team around to support your fundraising work. Make sure your church has a clear ‘case for support’: why does your project matter and what impact will it have? Next, identify your best funding options. Don’t waste your time applying for everything. Focus on funders where you have the strongest match. Then plan for the long term by building strong relationships with donors and funders, explore income generating opportunities and think beyond traditional fundraising.
Digital giving and online fundraising can make it easier for individuals to donate and help churches build their regular giving. Partnerships with local businesses, Councils and community groups can open up new funding opportunities. Earned income could include offering co-working spaces, hosting community events or running a café or creche to generate income.
A time for resilience, clear thinking and a plan
Yes, there are challenges ahead. But churches have weathered storms before. This is a moment to adapt, innovate and build for the future. By aligning with funders’ priorities, diversifying income streams and taking a strategic, phased approach to capital building projects, churches can secure the funding they need.
The key is starting now. The churches that prepare, plan and embrace new opportunities will be the ones best placed for the future.
So, what’s your next step? We look forward to taking it together.
Watch out for our next ‘Craigmyle in Conversation’ later this spring.
