Foundations should be aware of the power they hold over their grantees and work to minimise it, a report from the Association of Charitable Foundations (ACF) says.
Funding Practices: The Pillars of Stronger Foundation Practice is the final report from Stronger Foundations, an ACF initiative involving a series of focus groups and reports to identify excellent funding practices.
The report says: “In its essence, where a relationship exists between one party that has something and another party that needs something, it will affect the nature of that relationship.
“A stronger foundation recognises any power imbalance that exists between it and those it funds and seeks to minimise it. Instead it seeks to build and share its power.”
This can be done by trying to influence government policies, the report says.
The report also encourages foundations to “align” their values with their funding processes. This means thinking about how to make application processes accessible, questioning whether restricting grants is really necessary and reviewing reporting processes to make them simpler if possible.
The report sets out five characteristics of excellent practice in the distribution of funds: identifying the best funding practices to fulfil a funder’s mission, recognising the existence of a variety of grant types, seeking positive impact beyond financial contribution, understanding the effect of funding practices and reviewing them regularly.
‘Funding practices are where the rubber hits the road’
Chris Llewellyn, chair of the ACF's funding practices working group, said in his introduction to the report: “Two recurrent themes have been intentionality and proportionality. It is important that each individual foundation can examine its own operations and be sure that each decision, and in particular each imposition it makes on an external organisation, both helps fulfil the foundation’s own mission and does not impose undue obligations on the limited resources of others.”
Carol Mack, chief executive of ACF, said: “We launched our Stronger Foundations initiative at the end of 2017, with the aim of identifying excellent practice for foundations in everything they do, from their grant-making to their governance to their investments. It has been inspiring to work with over 100 members from across the UK, all of whom have been enthusiastic about making the foundation sector stronger, more ambitious and more effective in its pursuit of social good.
“Funding practices is a fitting theme with which to draw this phase to a close. Funding practices are where the rubber hits the road; the interface through which foundations interact most intimately with those that they fund.”