Foundational Thinking is intended to explore the ways in which grant-making trusts and foundations can adapt to better serve the needs of the organisations they support.
Ahead of the Foundational Thinking Hack in Oxford in April we have commissioned an independent, comprehensive and critical overview of the evidence of the practice of grant-making trusts and foundations’ in the UK. Our findings are divided into six sections:
- Communications and transparency
- Trust and understanding
- Conditions and costs
- Innovation and risk
- Co-operating and the wider interest
- Capacity and capability.
Overall, the literature review suggests:
- More open communication, more feedback and greater transparency could improve the practice of grant-making. Yet funders do not always recognise the potential benefits of thinking about what they could do to develop more honest and open relationships. Those calling for greater transparency are talking, in particular, about funders’ priorities, processes and decisions.
- Funders want to understand their impact. But the evidence they gather is not always what they need. Funders often take a narrow, short-term, linear approach to thinking about impact yet they operate in a complex environment. Most impact measurement is done for the sake of funders yet they don’t pay for it. The imbalance of power between funded and funder could be improved for mutual benefit.
- Funders may find it more effective to use unrestricted grants more often, as well as longer-term funding and covering core costs. Application processes and transactions costs are too high. Foundations can offer more than money, such as expertise, experience and contacts.
- 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.
- 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.
- Funders often have limited in-house capacity and rely on trustees who tend not to be very diverse. Trusts and foundations could be more effective through developing their own in-house capacity and capability. They are not as accountable as other types of organisation and almost uniquely independent to develop their own strategies.
Aside from these findings, our research also reinforced in our minds how few of these ideas are new. Much of the evidence and many of the arguments have been around for years, if not decades. Yet there is little evidence of significant progress. As David Carrington wrote a decade ago, funders appear to be “uniquely resistant to change”. The tango continues.