Five key challenges for grant funders from our new report on the future of the grantmaking sector

This week's blog summarises key findings from research we carried out earlier this year to determine what leaders from the grant-making sector perceive as the biggest challenges currently facing the sector, and their outlook on the future.

Rosie Burrells & Tim Harrison-Byrne

Earlier this year John Ellerman Foundation asked us to conduct a piece of stakeholder research, which involved interviewing thirteen leaders from the grantmaking sector. During these conversations we asked our interviewees for their opinions on the biggest challenges facing the grantmaking sector and their outlook on the future. Today we have released a report grouping together the main themes from these interviews, whilst allowing the many thought-provoking quotes to speak for themselves. The full report is a fascinating read and can be downloaded on the report page.

In this blog we have picked out five key challenges facing the grantmaking sector, as raised by our interviewees. These include the need for funders to reframe their attitude to risk-taking, adapt to the needs of a new breed of changemakers, understand where and when they are best placed to campaign, the potential for a split happening within the sector, and the need to instigate real cultural change in order to maintain their credibility. 

We would like to extend our thanks to the interviewees (a list of whom can be found within the main report) for sharing their thought-provoking reflections with us, and for showing real commitment to tackling these challenges head on.

1. Increasing the sector’s appetite for risk
 

When we asked interviewees about the topic of risk-taking, many felt the appetite for risk in the sector was lower than it should be. One even stated: “I can’t name you a foundation or a trust that is supporting activism, and that might say a lot about us as a whole.”  

Interviewees also recognised the duty of the sector to become more open to risk-taking, particularly given the magnitude of the societal challenges we are currently facing, many of which have accelerated over the course of the pandemic. When asked about barriers to risk-taking, one interviewee said, it's often not the charitable law that's constraining, it's the fear of it”. Another felt that funders (and charities) need to be better at conceptualising risk as a balance between the reputational risks of entering a more contentious space versus the moral risks of inaction, with better emphasis placed on the latter:

“Of course there are risks. […] But there's also the risk of living in a world where people die because of bad policy, and we are sat on billions in the bank and could have done something about it. The moral element of risk management doesn’t often come into it. […] I do think the risks to the sector is a lot less than we think it is.”

 

2. Providing tools that are fit for 21st century changemakers
 

Interviewees spoke of the pressure that the rise of social movements will continue to put on the funding sector over the coming years – and some conceded that funders still operate under a 19th century philanthropic model that is becoming increasingly unfit to serve today’s changemakers. When asked for their opinions on funding social movements, one interviewee said that the risk comes from not funding them, and that funders need to consider the ease of the tools they provide for people to enact change. The interviewee recognised that the people acting on the big issues we are currently facing are from within social movements and suggested:

“I suppose that there is a risk that funders become obsolete if they're not meeting that appetite. Young people are active through different methods; they want to get stuff done in their communities and globally. Funders are standing in the way with their 40-page form. We probably are more prosaic about how funding works, but we probably need to innovate over the next five years to make sure we're not preventing people. People can raise money in lots of different ways. Why would you get involved with our bureaucratic funder in order to fund your social action or your change?”

 

Of course, there are also many practicalities that can stand in the way of funding social movements, such as - what do funders do when there is a lack of traditional organisational structure, or questions around the limits on the types of activity a funder can resource?

“There's an interesting space about movements that I think funders haven't quite worked out. Extinction Rebellion; do you fund work that leads to someone gluing themselves to the top of a tube train? It's not clear where the outer limits are.”

 

Likewise, the organic, grassroots nature of movements and their need for independence can act as a barrier:

“Funding movements is difficult because movements of their very nature are organic, and what they need is support over a long period of time, and very often that’s not about money. Then there is a whole contested area in movements, always, about leadership, and so that brings us straight to the heart of the issue of funding power. Because movements by their definition don’t want to be driven by external forces, if you like. That’s the whole point of them is that they bubble up from below.”

 

3. Knowing your place in the campaigning space
 

When we asked interviewees about their attitudes towards the role of funders in the campaigning space, many emphasised that funders should act as enablers for the most experienced and well-connected voices on the ground. As this interviewee suggested:

“We ought to say, have we done every single thing that we can do to support an organisation to use its voice effectively? And if all of those abilities have been exploited - and it [still] seems that we are well placed to add, then I think we should pick up that challenge, but I don't think we should get in the way. My preference is to put all our effort behind supporting organisations and causes to do that effectively for themselves."

 

Likewise, other interviewees agreed that it is important for funders to be clear about why they are entering a particular space, and to recognise whether they have the right expertise and resources to do so. In particular, this interviewee mentioned how credibility can be linked to the origins of a funder’s wealth:

"I think if you have a base of operations, so it's driven by what you see - I'm thinking about Barrow Cadbury Trust and Transition to Adulthood where they know about that stuff - or it's directly linked to what you fund, what you see on the ground; you really understand what it is that you are feeling [then] you are well placed to have a view.”

 

4. Forecasting different tiers emerging within sector
 

When thinking about what the funding sector may look like in five years’ time, some interviewees foresaw a split occurring, whereby organisations who are drivers of change distinguish themselves from funders taking a more passive stance:

“If I was in charge of the grantmaking sector then it would look really different. It would be a driver of change, it would be focusing on where funds are needed most and who needs funds most to recover post pandemic and to build the world or the UK that we want to see. But there are an awful lot of foundations that wouldn't see themselves in that space. They'd see themselves as passive and reactive and they will wait on applications. They might not change their terms. They might not change their trustees, they might not look at the world outside. They might just continue looking at what they've always done. So my hunch is that there will be a group that will fracture off and move faster than others and change shape; I'm not convinced that others will follow.”

 

Other interviewees suggested that new kinds of foundations are already starting to emerge and challenge existing practice, and that new money might not even enter the traditional foundation structure if the sector fails to keep up with the pace of change.

5. Cultural change is needed to maintain credibility and relevance
 

Finally, interviewees recognised that there are many challenges that the sector must grapple with in order to maintain its credibility. But also, that “the many sharp knives in our backs at the moment” are offering real opportunities to step up.

“Dealing with last year with what’s happening with the NCVO and some of the complaints coming out, whether it’s with the #MeToo movement or Black Lives Matter. If the sector doesn’t take hold of this now, then it won’t look credible to a group of people under the age of 30 who are quite vocal and who do use Twitter very quickly.”

 

A particular theme was representation, including the need to change the make-up of trustee boards and recognise the ways that they very often fail to reflect the communities they serve:

“Board leadership tends [to be] 99% white, two-thirds male and another high percentage over the age of 60 or something, so they're typically older white men. There is a resistance to giving up power; giving up those spaces to create space for new leadership and new processes and practices.”

 

Increasing diversity and moving more towards participatory grantmaking involve cultural changes that will not happen overnight, and won’t be without difficulty:

“[The image of the sector is] what needs to change, because it cannot really be seen as a 19th century philanthropic sector [anymore]. [Particularly] in terms of the people who need it and how decisions are made, the tools or the lack of digital tools it uses to engage with people […], the 21st century is going to be more about relational transactions, and it needs to move towards that culture, and that’s the hardest bit is to change the culture.”

 

Nevertheless, the inspiring sector leaders we spoke to in our interviews reassured us that the sector is certainly up to these challenges. You can read more of their wisdom by downloading the full report here, including an executive summary and a foreword from Sufina Ahmad, Director of John Ellerman Foundation.

If you would like to talk more about our research with funders, please get in touch with Tim Harrison-Byrne on timothy.harrison-byrne@nfpsynergy.net 

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