Community transport keeps people moving when conventional public transport cannot reach them: older residents getting to the GP, disabled passengers attending appointments, isolated villages connected to the nearest town.
None of it happens without money, and for most operators, securing reliable community transport funding is the single biggest worry on the books. This guide sets out where community transport operators can apply for funding in 2026, what has changed this year, and how to build a funding mix that holds up over time.
It is written for established schemes, dial-a-ride teams and patient transport coordinators alike, and for anyone thinking of starting a community transport service from scratch.
Key takeaways
- The Bus Service Operators Grant (BSOG) remains the one continuous, universal source of central government support for eligible community transport — but you must hold a Section 19 permit to claim it.
- 2026 brings a major structural change: the new Local Transport Grant puts £2.3 billion into the hands of local authorities outside London — money operators access through their council, not directly.
- The big grant funders — the National Lottery Community Fund, the Motability Foundation and the Masonic Charitable Foundation — all support community transport, with grants ranging from £300 to over £1 million.
- Developer contributions (Section 106 and the Community Infrastructure Levy), sponsorship and earned income are widely overlooked but can provide steadier, longer-term funding.
- The safest position is a balanced funding mix. Relying on a single grant is the quickest route to a service that disappears when that grant ends.
The 2026 community transport funding landscape: what has changed
The way local transport is funded in England has been reshaped this year, and it matters for community transport operators even though most of the money does not land in your account directly.
The headline change is the Local Transport Grant (LTG): a consolidated settlement of around £2.3 billion (including £2.2 billion of capital) allocated across the four years from 2026/27 to 2029/30. It brings together the old Integrated Transport Block and earlier local transport funding into a single, longer-term pot for local transport authorities outside London and outside the big city-region settlements. You can read the allocations on GOV.UK.
The crucial point for operators is that this funding is paid to councils, who decide locally how to spend it, on anything from zero-emission buses to accessibility improvements and congestion measures.
That makes your relationship with your local authority or combined authority more important than ever. If community transport is not on their radar when they set spending priorities, it will not see a penny of it. Build the relationship now, demonstrate the social value you deliver, and make the case for community transport to be written into local transport plans.
Alongside the LTG, the government has committed roughly £750 million a year to maintain and improve bus services and extended the £3 bus fare cap. Bus reform is also gathering pace, with more areas moving towards franchising on the model pioneered by Greater Manchester's Bee Network.
Devolution means an increasing share of transport funding, including, in some areas, the local administration of BSOG, is shifting to mayoral combined authorities. The practical upshot: keep a close eye on what your regional and local decision-makers are doing, because that is increasingly where the money is directed.
Before you apply: permits and governance
Before chasing any grant, get the foundations right, they often determine what you are eligible for. Most community transport in Great Britain operates under a Section 19 or Section 22 permit (under the Transport Act 1985), which allows not-for-profit bodies to carry passengers without a full public service vehicle operator's licence. Section 19 permits cover services for specific groups of members or eligible passengers; Section 22 permits cover community bus services open to the general public.
The Community Transport Association explains the distinctions on its permits page.
This is not just red tape. Holding a Section 19 permit is a precondition for claiming BSOG, and most grant funders expect to see sound governance: a written constitution, a bank account requiring at least two signatories, and clear financial records. Sorting these out early makes every later application easier — and for a start-up, it is the very first job.
Core government funding
Bus Service Operators Grant (BSOG)
BSOG is the closest thing community transport has to a guaranteed, ongoing subsidy. It is a discretionary grant paid by the Department for Transport to eligible operators to help recover some of their fuel costs, with the amount based on the fuel used running eligible services.
To qualify in England, your organisation must be non-profit, hold a Section 19 permit, and run services used wholly or mainly by eligible passengers, for example disabled people, those aged 60 or over, or people on certain benefits.
There is a dedicated application form for community transport operators (separate from the one for commercial operators), and you can claim on a six-monthly or annual basis.
Additional incentive payments are available for greener and smarter vehicles, including for buses fitted with smartcard systems or automatic vehicle location equipment, and higher rates for low-carbon and zero-emission vehicles.
Note that DfT no longer pays BSOG for some categories, such as Section 19 services run in-house by local authorities. Full eligibility details and the claim forms are on GOV.UK, with specific guidance for community transport organisations.
One word of caution: BSOG is under long-term review as part of the wider consolidation of bus funding, and some administration is being devolved to combined authorities. The grant itself remains in place, but it is worth checking the current rates and rules before you budget around it.
Please note that In Scotland and Wales, BSOG is administered separately, by Transport Scotland and the Welsh Government respectively, so operators there should check their national arrangements.
Local Transport Grant and bus improvement funding
As covered above, the bulk of new government transport money in 2026 flows to councils through the Local Transport Grant and related bus funding. You cannot apply for the LTG directly, but you can position your service to benefit from it.
Many councils run their own community transport funding and grant schemes, rural mobility funds or transport innovation trials drawing on these settlements. Ask your local transport authority what community-facing funding pots exist, when they open, and how community transport providers can bid. Some councils ring-fence funding specifically for transport that helps vulnerable residents reach health and community services.
Major grant funders
The National Lottery Community Fund
The National Lottery Community Fund is one of the most accessible sources of community transport funding in the UK, and one most operators should consider. Its National Lottery Awards for All programme offers grants of between £300 and £20,000 for projects lasting up to two years, with a refreshingly straightforward application and minimal eligibility hurdles.
You do not need to be a registered charity, constituted community groups, social enterprises and not-for-profits can apply, and groups with smaller incomes are prioritised. Applications are open year-round, with decisions typically within around three to four months.
For larger ambitions, the Fund's Reaching Communities programme supports bigger, multi-year projects worth hundreds of thousands of pounds. Browse current programmes at the National Lottery Community Fund.
The Motability Foundation
If your service benefits disabled people, the Motability Foundation is a significant funder. Its earlier Community Transport Grant programme delivered over £14 million to 33 organisations between 2022 and 2025, and the Foundation continues to fund the sector through programmes such as "Building a Resilient Community and Shared Transport Sector," which has offered grants from £50,000 up to £1 million for one- to three-year projects.
These programmes run in competitive rounds rather than continuously; the most recent application window closed in January 2026, so the practical advice is to register your interest and watch for the next round opening. Eligibility typically requires a track record of at least three years and a minimum annual income (recently set at £50,000 for each of the last three years).
Check the latest position on the Motability Foundation organisation grants pages.
The Masonic Charitable Foundation
The Masonic Charitable Foundation runs two grant schemes that suit many community transport operators: a "Children and Young People" grant and a "Later Life" grant. Smaller charities (income roughly £25,000 to £500,000) can apply for up to £5,000, while larger charities (income £500,000 to £5 million) can apply for up to £60,000.
If your passengers are predominantly older or younger people, these are well worth a look. Details are on the Masonic Charitable Foundation website.
The Energy Resilience Fund
If your priorities include replacing ageing vehicles with more energy-efficient ones or cutting your running costs, the Energy Resilience Fund offers a blended package of loan (60%) and grant (40%) to charities and social enterprises in England looking to improve their energy resilience. It is a useful option for capital-heavy projects such as fleet renewal.
Local and developer-linked funding
Section 106 and the Community Infrastructure Levy
These two sources are routinely overlooked, yet both can fund community transport. A Section 106 agreement is a legal obligation on a developer to mitigate the impact of a new development on the local community, and improving transport access can be part of that mitigation. The Community Infrastructure Levy (CIL) is a charge some councils levy on qualifying developments, which can then be spent on community infrastructure and the needs a new development creates.
When you hear of a significant development in your area, contact both the council and the developer to ask whether your organisation could benefit. Not every authority charges CIL, and funds are sometimes reserved for other priorities, but it costs nothing to ask.
Councils, combined authorities and parish councils
Beyond the headline transport settlements, local and combined authorities frequently run community funding grants, rural development funds and wellbeing pots that community transport schemes can tap.
Smaller still, but often forgotten, are parish and town councils, many hold discretionary budgets and are willing to support a local transport scheme, especially once they have seen it in action. Service clubs such as Rotary, the Women's Institute and local sports and activity groups can also donate or fundraise on your behalf. A short presentation at one of their meetings often does more than a written bid.
Income you generate and partnerships
Grants are not the only answer, and over-reliance on them is risky. Many of the most resilient operators earn a portion of their income directly. Paid services such as group hires and day trips can generate a surplus that subsidises free or low-cost journeys for those who need them most.
Sponsorship from local businesses, logos on a minibus or your website, is another steady stream, though if you operate under a Section 19 permit you must be careful that a sponsor does not incidentally profit from the service you provide, as that would breach the permit's conditions.
It is also worth looking at charitable trusts and foundations beyond the big national funders, and at social investment or loan finance for larger capital projects.
For patient transport and health-related journeys, explore partnerships with your local NHS bodies and integrated care board, which have a clear interest in helping patients reach appointments. Local community-based fundraising does more than raise money: it builds community ownership, raises your profile, and attracts the volunteers every scheme depends on.
Funding a brand-new community transport service
If you are setting up from scratch, the order of play matters. First, sort your legal structure and apply for the appropriate Section 19 or Section 22 permit, without it, much of the funding above is closed to you.
Second, target the accessible, lower-barrier grants to get moving: National Lottery Awards for All is designed for exactly this kind of grassroots start, and you do not need charitable status to apply. Third, talk to your local authority and parish councils early; they can offer both grant funding and the local credibility that helps later bids.
Once your service is running and you can evidence demand, you become eligible for BSOG and a stronger candidate for the larger competitive grants such as those from the Motability Foundation.
Building a sustainable funding mix
The single most important principle in community transport funding is diversification. Pinning all your hopes on one grant puts the whole service at risk the moment that grant ends, and grant rounds open and close, deadlines move, and priorities shift.
A resilient model blends several sources: an ongoing subsidy like BSOG, one or two project grants, earned income from hires and trips, sponsorship, and regular local fundraising. Be clear about what each pound is for: core running costs, vehicle replacement, or a specific new project. Funders respond well to organisations that can show a balanced, realistic plan rather than a single point of failure.
Finally, a practical reminder: the details in this guide, amounts, deadlines and eligibility, change regularly. Always confirm the current position on the funder's own website before you apply, and check whether a scheme's application window is currently open.
Where to get help
You do not have to navigate community transport funding alone. The Community Transport Association (CTA) maintains up-to-date funding guidance for England, Scotland and Wales, and its development officers actively track new funds that community transport providers can take advantage of, a strong reason to consider membership.
Start with the CTA's funding support pages, and keep an eye on the National Lottery Community Fund for new programmes as they open. With the right permits in place, a clear sense of who you serve, and a balanced funding mix, community transport funding is very much within reach, whether you are sustaining a long-established dial-a-ride or getting a brand-new service on the road.
