Will we still need grant-makers in 2068?

What’s changed since 1968?

As a group, foundations aren’t often known for their radicalism or innovation. But when you look back 50 years, it’s clear that lots of things have changed. Many are far more transparent and accessible, at least the larger, more well-resourced ones. More information about programmes and how to apply is available online. Publications like DGMT and DSC’s Guide to the Major Trusts played a crucial role in getting information out there before the digital age.

Being transparent of course comes with more scrutiny – that was a big part of the point! 50 years ago funders weren’t expected to justify their activities, they were just ‘giving to a cause’ they deemed charitable. One of DSC’s founders, Luke FitzHerbert, made it his mission to critique foundations’ practice and governance, and he demanded openness from them. Today the expectation of scrutiny is more or less accepted.

Beneficiary needs and how they were described changed over time too. Philanthropists and grant-makers responded to emerging needs or changing priorities. In the 1990s, categories such as ‘minorities’, AIDS, Alzheimer’s disease and ‘violence against children’ were added to DGMT. Other causes and terminologies were dropped. These days, no one is funding ‘homes for unmarried mothers’ or sending debtors to Australia (we hope!). Similarly, there was a drop-off in funding for overseas aid when the UK government committed to the UN millennium development goals.

Looking at the data, the 1960s appears as a kind of ‘golden age of philanthropy’. Partly because of the Charity Commission register, trusts and foundations sprung up left and right, and many of them remain big players today. But new ways of giving have sprung up too, often as a result of technological change – like crowdfunding. Are grant-makers still needed as a ‘go-between’ donors, charities and beneficiaries? How long will the model last? It’s a big question, particularly considering fewer major grant-makers were set-up recently.

What challenges do grant-makers face now and tomorrow?

It’s often said that if you’ve seen one foundation, you’ve seen one foundation. They all exist for different reasons, just like other charities. But they do face similar challenges.

Participants told us that cuts to local statutory services were resulting in causes that we thought society had solved making an unwanted comeback. Think about food poverty – where need has exploded the last 10 years. People in need are left stranded and are turning to the charity sector. How should grant-makers respond?

There was unanimous recognition that grant-makers have to make tough choices. Do they pull the grant for the sports club to fund the foodbank? Do they put everything into preventative services, or fill the gaps? Many feel pressure to redefine funding criteria, particularly the long-standing rule that they can’t fund services where the state is obligated to provide them. When the local council is closing down libraries, how should grant-makers respond?

Foundations have always had diverse aims and objectives. Some fund innovative solutions, or give grants to front-line services, or both. But with the state withdrawing on such a scale, many beneficiaries of grantees increasingly need basic kinds of support. How do you justify spending money on experimental ideas when core services are chronically underfunded? Or can you make a bigger impact by trying something different?

There have always been foundations that support unpopular causes too, but participants argued that this could become more important. Fundraising for prisoners, asylum seekers, or domestic violence for example is a tough sell for the public, and statutory support is under pressure. Being independent and often financially more stable than other funders, the value of every ‘foundation pound’ spent could be far higher.

How will the role of grant-makers change in the future?

Put yourself in the shoes of a philanthropist or donor today, and setting up a grant-making charity might start to look unnecessary. A relic of a bygone past. They could just pick excellent charities from the Charities Commission’s register and give money straight to them. Donor-advised funds can offer low overheads and higher levels of control. Or just leave out the charities, and donate directly to beneficiaries online. Why waste money on the ‘infrastructure in the middle’? What’s the added value?

Participants argued that there is a case to be made to future philanthropists about what the foundation model can offer. For corporate foundations, the same may hold true, with many companies pulling their CSR back ‘in-house’.

Demonstrating impact is clearly going to be part of the equation. Individually and as a group, foundations will need to show what they are achieving in order to convince future philanthropists that the model remains useful. However, there’s a challenge to make sure measuring impact works with the beneficiary, rather than making interactions with grantees too transactional, or imposing top-down, bureaucratic metrics.

The question of the data grant-makers collect (and use?) is also a big issue. Because of their independence, they can gather data, analyse it and use it to raise awareness of need and drive change. Also, potentially, to inform programme development and to help prospective donors make better decisions when they donate. This is an extension of the drive for transparency, now embodied in initiatives such as 360Giving and Grant Advisor.

There’s also the question of acting in a ‘convening’ role – for example by bringing organisations together with common interests, different perspectives or attributes, in order to make change happen. Some foundations do this but most remain focused on their own objectives. Should this be a bigger role for them in the future?

What can grant-makers do to improve life for applicants and grantees?

Finally, participants discussed a number of ways foundations could help grantees and applicants beyond providing money. They related that applicants often try to figure out ‘what funders want to hear’ and try to fit their work within that. Funders could flip this on its head – by encouraging grantees to say ‘what they really need’ – and then fund it. Ask: What keeps you awake at night? And fund that!

Participants wrestled with recurring questions around application processes, and agreed they needed to be online. As the authors of the first DGMT argued, being transparent actually decreases waste by helping applicants better target their bids. Participants also argued that a two-stage process helps reduce wasted effort.

The issue of feedback came up too. Often grant-makers find this difficult, but participants recognised that it could be valuable for both parties both before the application process and after. If funders are available to discuss ideas informally, this helps produce better applications. If they provide feedback to unsuccessful applicants, this helps them improve for next time, or not to come back at all if it isn’t a good fit.

Foundations are in a unique position to drive social change

Independent from government and often with control over substantial assets, foundations have the means to push for social change in many different ways. Will they grasp the opportunities? How? The answers will affect how our society evolves over the next 50 years and beyond. As well as whether we’ll need a Directory of Grant-Making Trusts in 2068, or something else!