Not fit for purpose: why I'm done with the foundation world
After a decade "sweating" in the charity sector, CEO of The Social Investment Consultancy Jake Hayman has concluded that the foundation world is not fit for purpose. He presents the '10 things foundations do that they shouldn't'...plus a few additional points about why he's done with the people that only care about 'their' money.
I’m done. I’ve spent 10 years working in the charity sector and my conclusion is that the organisations that finance it are so bad at their jobs, that they make the rest of us bad at ours.
I’ve been working for too long with people trying to achieve great things for the world and watching them degrade themselves at the feet of foundations whose structures turn brilliant thinkers into fundraisers and who reduce a highly complex world into amateur box-ticking. I’m done.
It’s soul destroying, wasteful, embarrassing and I’ve been a part of it for too long. I’m part of the problem.
Imagine a world where service users, charities, foundations, researchers, academics, frontline workers, public sector experts, commissioners and regulators were aligned and working together effectively as partners. After 10 years I’ve realised how far we are from actually achieving this.
We need a new model for funding charities that is better than Victorian style philanthropy excused by reductionist, unbenchmarked and often corrupted ‘impact assessments’.
I know it’s possible because there are some brilliant grant-makers out there – people who have transformed society with funding because they were brave, educated, understood the communities they wished to serve and were prepared to take responsibility and risks. Because they cared enough not to let great potential fail.
Truth to Power: 10 things foundations do that they shouldn’t
Or, more accurately, ‘the 19 things that some (not all) foundations do some (not all) of the time that I don’t think they should do (but what do I know?)’:
- Hoard power within a group of people who don’t give enough time (and don’t always have the expertise) to be effective – foundations should either hire staff who are able enough to make good grant decisions and delegate them power to make those decisions, and then judge performance based on those decisions, or give proper time and access for charity leaders to skilled grants committees/trustee boards;
- Only care about ‘their’ money – when you meet a foundation that won’t write references because they only want to spend time on ‘their’ money rather than leveraging other people’s, you realise that the commitment is not to social change but to ‘their’ social change. The fact that so many foundations have no reporting or monitoring of what happens to an organisation, beneficiary or field in the years after a grant period ends because they only care what happens within it is further proof of this. Foundations working together more wouldn’t hurt either;
- Base grant-making processes around their own convenience with little respect for social need or the organisations they are funding. Social need is less important than committee dates – trustees are happy to pay for frontline workers to work over their Christmases but heaven forbid a charity needs urgent support over a summer during holiday season.
- Embrace a ‘ticking’ culture – if we give a gift to an organisation, they are ‘ticked’ until the moon has rotated the earth twelve times. Should that funding prove insufficient for a specific need or opportunity during that period, nothing can be done. They cannot be considered for additional grants. If they come across some incredible new insight or opportunity to create social change this should not be backed as they have already been ‘ticked’. Ticking should stop;
- Set up funding in a way that encourages charities to compete rather than collaborate – an end to ticking would help this. Rather than ‘picking’ between charities why not use money to finance cooperation in a non-punitive way: ‘we can fund an experimental joint programme and us doing so does not make you less likely to get core programmes funded’;
- Procure programmes. Outside a few big international development funders, foundations don’t have enough money to go round buying enough impact for everyone so why not stop trying. Instead they should start fulfilling purpose by investing in real innovation to create new tools and transform systems rather than trying to mimic government, just without the bankroll;
- Procure everything through applications. Imagine a world where foundations were humble enough to seek out people doing great things, allocate budget to them, then work together on implementation plans;
- Distrust charities with money. A good business looking to grow might run on a 25% cost of sale, 75% gross margin, 25% net margin. Charities cannot be trusted and so are commissioned to run programmes at 75% cost of sale. No money is left to think. This hamstrings innovation, partnerships, advocacy and dissemination, and encourages competitive isolation amongst charities. It has permeated the sector so badly that now when a charity gets a big unrestricted grant, they worry it might harm their rations. They invest it in subsidising programmes so that other foundations won’t be put off. Failing to fund even a few things properly by preferring to funds lots of things badly, makes us all losers;
- Build decision making committees out of people without expertise to make decisions. It’s great to involve people from the financial sector in charity, the best ones have as big a contribution to make as anyone else. But when you get told that grant decisions are made by ‘the finest minds in investment banking/private equity’ without any engagement of people who have run small organisations, worked in the public sector or come from the communities they wish to serve, it just doesn’t make sense. Let’s stop assuming that being able to make money necessarily makes you uniquely gifted at giving it away;
- Make charities jump. Imagine a world where a 5-year grant was standard but foundations could use shorter grants where appropriate. They would, of course, have the right to cancel long grants if they did not see any progress or had reason to doubt the leadership or the value of the grant. In such a world foundations would have to actually be able to intelligently analyse performance rather than simply pick a pretty new partner for the next 12 moons. Maybe if they observed Point 19, this would be different;
- Turn innovators into operators. Imagine if people who came up with insights and new models of doing things were paid to keep doing that while other people were paid to operate models at scale. Innovation should not be confused with novelty; it isn’t a one off act that can then be ticked then rolled out, it should be an ongoing evolution. It requires unrestricted time, space and money;
- Turn social leaders into perpetual beggars. Short term finance + not enough finance = consignment to fundraising rather than working.
- Rely on grantees to do all the work. Imagine you have an idea that has the potential to change the world. Foundations will have no interest in it until you have sweated your guts out to prove the model, pilot, test, impact assess. To register as a charity you now need £5k in a bank account. If you are poor you are unlikely to have £5k to put in the bank account. Most foundations won’t back you before you are registered. Such processes are a kick in the teeth to diversity. Imagine if foundations backed people who needed it most, when they most needed it;
- Think in binary (apologies for grammar). Proposals tend to get ‘yes’s or ‘no’s because (see point 3) there are inflexible and infrequent opportunities to engage with the people who actually make decisions. Very rarely is there a ‘yes if…’ or ‘how about we do this together instead as it’s a better fit…’. Foundation granting structures are generally set up to judge rather than provide intelligent input;
- Fail to share insight. Foundations know so much more than they ever let on. Foundation teams should be calling new charity CEOs and saying ‘I love your proposal but I’ve seen 100 of these over the past 10 years and you are likely to need 5 times as much as you’ve asked for and if you change your model to a more intensive version, we’d love to fund that as that’s what we’ve seen work. Can I share some sample budgets and programmes of comparative organisations and see if you want to re-assess as if you do, we’ll fund it.’ Suffice to say, they tend not to do this. It’s even ok for foundations to disagree with and criticise strategy. That would be better than quietly judging people and leaving them to underperform. Expert honesty may lead to active disagreement, but we need that;
- Define sustainability as the growth of an organisation through revenue rather than the dissemination of an idea, concept or approach into the mainstream beyond the organisation. Defining goals as organisational/programmatic growth may be an easy way to showcase success but it’s a far less important metric than broader market penetration of a solution against a problem or widespread improvement in existing practice and whether the problem has actually been impacted. It also discourages sharing between charities. In international development they learned this one a while ago but most domestic foundations are miles off;
- Make loads of money out of porn, arms, tobacco, gambling and killing the environment via their endowments* (*they don’t necessarily make that much profit out of these things despite spending a lot of time and money trying). Many people – charity CEOs and service users alike – don’t realise that foundations are perpetuating themselves not insignificantly through investments in the world’s most harmful industries. I’m not talking about where the money came from originally before it was donated, I’m talking about where the money, once donated and officially ‘charitable’ sits. Some foundations are making concerted efforts at using investments in companies that should be doing better, to influence them to do so. Most however either simply don’t care or have started excusing profiteering as ‘engagement’ regardless of whether or not they actually ‘engage’ or how effectively they do so. The non-engaging ‘engagers’ should be particularly ashamed of themselves. As should those hiding behind a purposeful misinterpretation of ‘fiduciary duty’ (see Point 18);
- Hire conservative lawyers and financial managers in order to excuse risk aversion – foundations excuse away poor practice through referencing fear of that aggressively interventionist body (this is sarcastic), the Charities Commission. Please someone make them stop;
- Exclude service users and front-line workers. There are many circumstances where those with the closest proximity to a problem (as frontline workers or service users) are best placed to provide insight into useful solutions, but may not be best placed, inclined or, given Point 13 feel unable to lead a social sector organisation. Imagine if foundations found space to back them through backing their ideas, without relying on them as organisation-builders.
- And one thing they don’t do that they should: Try to achieve something. Imagine if foundations tried to achieve something. To end social problems. Not to ‘do’ lots of things (evenly distributed round the country) and not to have a vision or mission disconnected from reality, but to set some concrete, stretching objectives about the change they wanted to see in society within a firm timescale on which they judged themselves. In such a mad world they might even hire staff, trustees and leadership with relevant capabilities and replace them if they did not perform.
My personal view after a decade sweating in this sector is that the foundation world is not fit for purpose and that the relationships between the various stakeholders is not an effective one. In many cases and indeed in my experience, it is completely false and based on an incentive structure that does not best serve our communal mission.
I’d love to see foundations become less risk averse, share power, share learning, show flexibility and take a systems approach. I’d love to see them come to hate the disadvantages they engage with. To lead the fight against them not just to hang around them. This is a plea to the foundation world to step up.
There is already some amazing practice out there – and many foundations who rightly won’t recognise themselves in the points above. I’ve worked and still work with some brilliant grant givers. Indeed, all the blame should not lie with foundations – charities have been complicit in this too. I’ve been guilty as anyone both in my grant giving roles and my charity leadership roles. We all have.
This won’t be fixed by foundations getting some service users on boards and having a more flexible grants policy – we are where we are because of a historical context rather than foundation fault or individual malice. The system has to change more fundamentally.
While the above represents only my insight, none of it is original. Indeed the Panaphur Foundation published their brilliant ‘End of Charity’ report 4 years ago to smiles, nods and inaction. Tris Lumley’s ‘anti-social sector’ speeches sum up many of the ideas above better than I ever could.
Today there are a number of people more intelligent and by now more popular than me who want to do some serious research and constructive work around what a great service user-charity-foundation-public sector-government relationship looks like. I hope foundation leaders seek them out to work with as peers, and don’t make them jump through any soul destroying hoops.
I’d like to thank Adam O’Boyle for his support in making this more intelligent and constructive and hopefully therefore, slightly less likely to be career-suicide for me personally; and indeed less harmful to the organisations I’m involved with that need foundation funding today and in the future.
I’d welcome any responses, either by comments below or by you taking a couple of minutes to register your agreement/disagreement with the ideas above on this short survey.
This article was originally published on The Brookfield Group blog here.
Photo credit: Astrid van Veen