New Foundation

An idea being developed by Tris Lumley (in an individual capacity) of New Philanthropy Capital.

Disruptive innovation is sweeping every industry, driven by the digital technology revolution. With the echoes of the bursting dot com bubble fading, startup fever and transformation gripping the world once again, the contours of private and public sectors are being reshaped by seismic forces. Even the social sector is starting to be drawn in by the gravitational pull of digital transformation.

Yet there is one field in which these forces are still strangely absent, and rather than sweeping winds of change there is still a curious calm. Foundations—charitable institutions giving money and other support to the charity sector—are protected from many of the forces affecting other institutions, by their independence and their endowments. They do not need to change. No-one compels them to adapt or transform. On its own, this immunity from external forces warrants attention, and exploration of whether and how innovation can be encouraged in the foundation space. But there’s more—much more—to question and challenge than just foundation’s insulation from forces driving innovation.

Philanthropy is, at its heart, undemocratic. Large sums of money are controlled by small numbers of decision-makers, with little or no external accountability. Some say this gives foundations their unique power—the freedom to make decisions that go against the grain of society in aggregate, supporting causes and organisations that would not win the popular vote, and challenging the status quo. Critics, however, can easily argue that while this indeed gives foundations the potential to operate as a balancing force in society, it is only in their actions that this potential is realised, and there is no accountability mechanism to regulate or challenge those actions.

So what can be done to challenge the status quo among foundations, when as one foundation director recently put it “there are no levers to pull to change how we work from the outside”? I believe we need to create alternatives to demonstrate the possibility of radical departures from the norm. And that digital technology gives us the tools to do so—today.

The model

The idea is to take the core principles at the heart of social justice and build a new foundation structure on them. It is inspired by examples of collaborative decision-making (from Ebbsfleet FC to Loomio), collective grant-making decision-making (from Edge Fund to Bread and Roses) and transparency (from Glasspockets to 360 Degree Giving). It is currently called New Foundation because I haven’t come up with a better name.

Equality

  • Rather than the existing norm in philanthropy, in which the wealthy or the boards of foundations make the decisions about where to give and who to give to, New Foundation will seek to give everyone involved a role in decision-making.
  • Funded primarily by direct debit donations, New Foundation will seek to give ordinary people a vehicle through which to aggregate their funding and act collectively like the most strategic of foundations. It will also seek to raise larger sums from philanthropists and foundations.

Inclusion

  • The traditional model for foundations relies on decision-making by a group of trustees far removed from the reality of the people whose lives they theoretically aim to improve. New Foundation will seek ways to empower those people themselves to have a role in decision-making, with the appropriate development and support required to help them do so.
  • New Foundation will seek to equip people and communities to take on many of the roles currently performed by ‘experts’ and ‘professionals’—from needs assessment to project assessment. Its aim will be to devolve much of the grant-making process to the communities affected by decisions.

Democracy

  • New Foundation will give everyone who donates money a vote on how that money is used. It will also give people in communities (empowered with appropriate support) a vote in how money is used.
  • New Foundation will aim to synthesise views from both donors and beneficiaries/constituents, along with the existing research literature, to inform excellent decision-making.

Transparency

  • All of New Foundation’s work will be conducted in a way that is radically transparent. Every decision will be open, accessible and transparent. Challenge and criticism will be welcomed, and completely open.
  • Feedback will be embedded at the heart of New Foundation’s approach—it will systematically listen to those whose lives it aims to improve, and be transparent in both the collection of and action driven by that feedback.

Diversity

  • New Foundation will embed diversity as a core principle through its inclusive, democratic and transparent model. It will be an experiment in whether and how it is possible to blend the perspectives of those who donate with those who are affected—as equals.

How to get started

To get this idea off the drawing board, a feasibility study is needed. This would develop the model, both technical and business model, and test with key stakeholders on both the donor and charity side. We would explore partnership with aligned organisations that could help to develop the model and explore potential demand. Ideally, this feasibility study would include a prototyping stage, that would allow us to test something concrete with donors, rather than trying to assess potential appetite for a theoretical product.

The feasibility study would also need to include a clear, and staged, development plan—it is one thing to envisage New Foundation operating at scale; it is quite different to explore its development and growth from startup to scale. We would seek significant support from pro bono partners to help develop this plan, and the feasibility study in general.