Funders suggest they want to fund innovation but are often risk averse even though risk is inevitable. At the same time, charities may dress up maintenance work as innovation. Foundations have great freedom in the way they distribute their funds and the opportunity to approach risk in different ways.

Key findings:

  • Funding models turn innovators into operators.
  • Charities think grant-makers want to fund innovative new projects while at the same time not wanting the risk of failure that comes with them. So they dress up existing work as new and exciting.
  • Most trusts and foundations assert that they are keen to support pilot projects or innovative work – but many of them struggle subsequently to ensure that the lessons learnt are applied elsewhere and, if the project is a success, to work out how they can help replicate it.
  • There is a need to test things that are intuitive – supporting programmes whose impact is oblique to their initial intent.
  • Risk is ever-present and comes in different forms. All grant-making is a matter of choices and trade-offs, with all options carrying both negative and positive risks.
  • Foundations may see themselves as risk-takers but are not always clear about what this means. Rather than seeking to anticipate every risk or danger, it may be a more effective approach to develop the capacity to respond resiliently to untoward events and to learn from experience.
  • There is need for both ‘programmatic risk’ – testing things that are too off beat or experimental to be comfortable – and ‘structural risk’ – funding whatever it takes to have impact on the chosen issue – including research, lobbying, social investment and commercial activity.
  • Foundations have great freedom in the way they distribute their funds. Different types of risk can be addressed by grant-makers in different ways. For instance, checks and controls can be increased, although by reducing potential harm, benefit is likely to be reduced too.

“In my experience the worst aspect of this whole world is my own experience of being turned from an innovative and strategic thinker into a fundraiser – the stress of repackaging really important work into projects over and over again to keep a small organisation going and its brilliant staff employed has led to my own decision to leave the field.” – Charity Employee.

“Instead of seeing risk in terms of ‘the potential for harm’, it is more appropriate to define risk in terms of its potential for both harm and safety. Nothing is under all circumstances and for all people risk-free; but nothing, or very little, is under all circumstances and for all people without benefit/desirable consequences.” – Diana Leat, BLF Discussion Paper on risk and good grant-making.


2.    Co-operating And The Wider Interest

Many funders are stuck in thinking in ‘silos’ while funding positive change in a complex world necessitates collaboration. Funders could do more to foster collaboration. A few foundations are trying to move beyond investing their endowments for maximum financial return.

Key findings

  • Many funders are stuck in thinking in ‘silos’ and could do more to recognise the interconnectedness of society. Funding positive change in a complex world requires collaboration not isolated interventions of individual organisations.
  • Funders could do more to fund groups of partners or bring collaborations together. Foundations can convene alliances and play a brokerage role. Yet not many funders seek genuinely collaborative proposals.
  • Many trusts continue to be reluctant to step in for, or subsidise, the state.
  • Too often grant-makers behaviour drives competition instead of co-operation. But some funders think collaboration is costly or self-indulgent.
  • Funding strategies are often developed in isolation rather than with the people they seek to benefit. While non-profit leaders say the best foundations are truly collaborative.
  • A number of foundations are reviewing their investment strategies to move beyond thinking about the value of the endowment and towards impact investing opportunities that deliver financial and social returns. While this is still a minority sport, it is not only large foundations exploring this field.
  • The idea of “strategic philanthropy” emerged and gained some popularity but has also had much criticism, partly as there is little evidence it has improved the impact of grant-making practice

“We have repeatedly felt a nagging suspicion that the conventional tools of strategic philanthropy just don’t fit the realities of social change in a complex world. If funders are to make greater progress in meeting society’s urgent challenges, they must move beyond today’s rigid and predictive model of strategy to a more nuanced model of emergent strategy that better aligns with the complex nature of social progress.” – John Kania, Mark Kramer, and Patty Russell Summer[1].

“One area in which philanthropy is getting stronger is collaboration. Funders increasingly encourage and/or require collaboration amongst their grantees, and are also starting to adopt the practice themselves, with an eye towards leveraging greater impact in the ecosystems in which they work.” – Shauna Nep, Goldhirsh Foundation[2].