Foundations can increase their effectiveness through being more transparent, according to a new report from the Association of Charitable Foundations (ACF).
Transparency and Engagement: The Pillars of Stronger Foundation Practice is the fourth report emerging from ACF’s Stronger Foundations initiative. It finds that making deliberate and intentional decisions about being transparent can enhance impact and effectiveness.
That is, enabling internal and external scrutiny can allow accountability, and can inspire confidence by beginning to balance the unequal power dynamic between foundations and others.
The report adds that communicating with internal and external audiences enables a foundation to tell its own story and share its mission and values in its own way, while having more information available can lead to more effectiveness and efficiency in the use of resources.
“Some foundations are accountable to the general public in more obvious ways than others. Those with an element of public funding or fundraising will inevitably think differently about accountability and transparency than those whose income comes from an individual or family. But all foundations have audiences and communities of interest,” the report states.
The report outlines five characteristics of excellent foundation practice, which include considering transparency across all the foundation’s activities, enabling an internal culture of transparency and engagement, and engaging external audiences including grant applicants and other foundations.
‘Greater transparency brings clear advantages’
Carol Mack, chief executive of ACF, said: “Foundations are not immune from increasing public pressure on all institutions to be open. There is a growing interest not just in what they fund, but the source of their funding, where their assets are invested, and how decisions are made.
“This has become all the more pertinent in response to the outbreak of Covid-19, which has magnified issues of power, inequality, and lack of accountability.
“Many foundations have found greater transparency brings clear advantages; it builds trust and legitimacy, promotes efficiency and results in more equitable access to information. It can improve decision-making, enhance impact and increase influence. Indeed there are examples of excellent practice in transparency across the sector already.
“But there are also limits to transparency – and like all foundation assets and decisions, it needs to be deployed intentionally and effectively.
“We hope this report offers an insightful, nuanced contribution on the theme of transparency and engagement, and, crucially, that it inspires foundations to take action that will boost their effectiveness in pursuit of social good.”