Charitable foundations are inefficient and are under no pressure to improve, and many of their grants do not achieve their aim, an NPC conference heard yesterday.
Richard Gomes, head of policy and advocacy for the Shell Foundation said that while charities are often seen as more efficient than corporate organisations, the same can’t be said for grant-giving trusts and foundations.
“I think this is probably one of the most inefficient sectors that I have worked in and a lot of the people that I have spoken to over the years would probably agree,” he said.
“There is simply no way of judging whether you are doing a good job or not and there is no real pressure on you to improve that over time.
He said the Shell Foundation had learned that it wasn't delivering "massive impact".
After analysing grants given over the first three to four years to look for evidence of movement to long-term sustainability, he said "we realised 80 per cent of the grants we deployed had failed”.
He said the realisation led the Shell Foundation to “move towards a more effective approach”.
Gomes said foundations should turn to external validation to achieve a better focus on the impact that they achieve. He said the Foundation’s rocky start was “perhaps a reflection of a lack of transparency and accountability”.
“The ability of organisations to project what they expect to achieve and report transparently against that, will really help to shift that conversation on,” he said.
"Don't give grants to paper over the cracks"
Julian Corner, the chief executive of the LankellyChase Foundation, said the biggest danger for funders came when the money they gave to charities went to “papering over the cracks.”
“When cracks emerge in systems, you usually find a charity desperately trying to paper them over. Then, after a while, you’ll find that charity start to become part of the system, the papering of the cracks becomes part of the way in which we do things.
“Charities become co-opted into that role or, even worse, charities become dependent on the cracks staying in place for their business models continue.”
Corner said that, despite the concern being driven by the suspected austerity measures to come, charities and funders both had a chance to shift the “quick fix mentality” at the heart of the problems the sector is facing.
“It’s hard to argue for change when lots of money is flowing into the ‘business as usual’ model. Now though, we can shift the ‘quick fix mentality’. Few people could argue that the status quo is sustainable and possibly this is an opportunity to disrupt some of the dynamics which have created this failed system.
“We have a burning platform to try and shift some of this.”
Additional reporting by Hugh Radojev
