In March 2022, Governance & Leadership featured a report on a groundbreaking initiative – the Foundation Practice Rating (FPR), which assessed 100 UK grantmaking trusts and foundations on their diversity, accountability and transparency. The research was done without the foundations’ consent or involvement, and used only information that is in the public domain.
It is unlike anything else in the foundation sector, in that foundations that are examined in the research cannot opt out, and have no influence over the results. Therefore, it gives a more representative view of the sector.
The FPR establishes a framework that can be applied across the huge variety of UK trusts and foundations. Some of these work at the hyper-local level, others globally. The FPR applies a set of criteria, derived from other existing standards, ratings and best practices.
Although the year one research found significant room for improvement among many of the organisations scrutinised, the response from the foundation sector and the wider world of non-profits was largely positive. The research has now been repeated for a second year, with a somewhat different random selection of foundations from the sample list.
Genesis of the project
Charities play an important role in national life, and the foundations that support them are crucial to that. By taking a long-term view, foundations can respond to crises such as Covid-19 or the cost of living by increasing their giving even when their income falls.
Trusts and foundations value highly their independence from government, and many do not need to raise funds – therefore they do not depend on others. This enables them to operate with little transparency about what they do and how they do it. This can be a strength – it allows them to fund important but possibly unpopular causes, and can unlock charitable funding from people who wish to give but are not comfortable with publicity. Foundations’ independence allows them to stay true to their missions and gives them the ability to speak truth to power, regardless of fashions or political interests. But such independence can also be a weakness, and means foundations are relatively powerful in the relationships in which they operate.
As a group, charitable foundations are weak on diversity. The adage of “male, stale and pale” is supported by research in 2018 into trustees of foundations in England and Wales, which found that men outnumber women 2:1; 60% are over 65 years old; two-thirds are recruited informally; and 92% are white (against 87% nationally).
Numerous studies have found that less diverse groups make less good decisions than more diverse groups. The FPR report notes that foundations often seek to support disadvantaged people, and a lack of diversity within their teams could prevent them from finding, recognising or funding the best work and organisations to help them do this. Equally, if foundations’ materials and processes are not accessible to diverse groups, the foundation will be impeded in supporting these groups. This is why the FPR assesses foundations’ accessibility and the diversity of their teams and governance.
The authors of the research report state: “Because of the ability of foundations to do good, and because they are facilitated to do so by the taxpayer, we all have a stake in how well they do. However, foundations lack accountability to donors or the public, other than through charity law and their regulators. Beside regulators, most foundations are accountable only to their boards, which do not always reflect the population as a whole or the communities they serve. Among other effects, this weak accountability reduces the potential for learning and improvement.”
The lack of transparency about what foundations do can leave charities and individuals in the dark about how they work. Currently, only 233 UK funders (including public sector ones) publish their grant data in a readily accessible format through 360 Giving. Additionally, there are no common standards for reporting on grants, investment holdings or other activities, other than the regulatory standards.
Organisations seeking funds are less likely to be able to question the source of funds, or the legitimacy of the funder. “However, in the era of big data and increasing democratisation of information, these traditional relationships are shifting,” the FPR researchers concluded. “Foundations are beginning to recognise that charities’ effectiveness and responsibility are based on increasing diversity and inclusivity, being accountable to the organisations that they seek to support and to society more widely, and increasing their transparency.”
Danielle Walker Palmour, chief executive of Friends Provident Foundation which led the initiative, says the FPR arises from a belief that UK trusts and foundations have an important role to play in addressing the many challenges facing our society today. “Indeed, these feel even more pressing as the Domesday clock ticks. In contrast, research on charitable foundations suggests that we are not fit to meet those challenges. Indeed, in some ways we may reflect more the problems we fight: inequality and lack of engagement in decision-making of whole swathes of people, lack of a capacity to listen or be accountable to those we serve, and a lack of transparency about who makes decisions, how and why.”
And yet, as a collection, foundations are surrounded by excellent resources, networks and expertise, that can advise them on how and why to do better. She continues: “An important goal of the Foundation Practice Rating is to incentivise foundation staff and trustees to engage with that material in a way that matters to those who come to us for funding. Our work suggests that this may be happening but there is far to go to normalise even some of the basics.”
Following the FPR’s first year, Walker Palmour says: “The power is in the repetition, and we want to keep going in a largely positive direction.”
Reflections on the first year
The funders of the FPR and the research team were delighted with the response after the first-year results were published. Though there was close questioning of the process, methods and motives underpinning the FPR, the feedback from the more than 200 people who attended the launch event, or invited the authors to speak at their seminars and conferences, was overwhelmingly positive, as were comments on social media. Three new funders have since come on board. Across the foundation sector, there appears to be acceptance of the FPR as a way to improve the practice of all foundations, rather than setting impossible standards from outside.
It has also furthered what Walker Palmour describes as “joining a wider movement for change”. The FPR has joined a broad set of interventions designed to improve funding practice, which includes 360Giving, the Institute of Voluntary Action Research’s Open and Trusting Funders initiative and Grant Advisor. “What has emerged from more intensive contact and support for these initiatives over the past months has been a realisation that the FPR shares many of the goals of the initiatives, but there is an important difference: many approaches to change in this part of the sector require funders’ permission as an input – they are coalitions of the willing, open to individuals/ organisations that are interested in change or learning about the issues. The FPR does not need foundations’ permission. It encourages a discussion about practices where the grantmaker does not control its evaluation and where the perspective of people seeking funds is central.”
Changes since year one
Caroline Fiennes, director of Giving Evidence which carried out the research, says: “Most of the hard work of establishing the method and converting it into research was done last year. Taking and defining abstract concepts such as diversity, accountability and transparency and turning them into a spreadsheet that a group of researchers could complete was an enormous undertaking: having done it, we made very few changes for year two.”
She adds: “The fact that all of our criteria have been met within the set of foundations shows we are not looking for something impossible.”
The random sampling method was refined to enable better representation of UK foundations by size. A second public consultation ran in May 2022. The public were invited to respond to the question, ‘‘What suggestions do you have about how the Foundation Practice Rating could better measure foundations’ diversity practice?”, and to comment on any other aspect of the FPR.
Several respondents suggested including measures of class or socio-economic status of foundation boards and staff. Consequently, this year the researchers gathered data about which foundations report on lived experience for both trustees and staff. Although this information was not used as a criterion in year two, it may be added in the future.
The exemption rule for reporting on staff diversity, and for publishing diversity plans for staff, was modified. In year one, the rule was that foundations were exempted from those if they had 10 or fewer staff members. This year, the cut-off was lowered to five or fewer staff members. This was to reflect the fact that if a foundation has 10 staff who are demographically identical, the chance of that being random is low, and the foundation should have a plan for dealing with that.
Year two results
More than twice as many foundations achieved an A overall in year two (seven) than did so in year one (three). The foundations scoring A in year two included six endowed foundations – Wellcome, Blagrave Trust (which both achieved A in year one), John Ellerman Foundation, Paul Hamlyn Foundation, Esmée Fairbairn Foundation, and the Walcot Educational Foundation; and a community foundation: Oxfordshire. Between them, they cover a wide range of giving budgets – Wellcome is huge, whereas Blagrave Trust is relatively small.
Fiennes says the fact that the “A team” includes a range of organisations proves that this is “not a closet way of measuring by richness”. She explains: “We could easily – accidentally – have ended up with a system where you can only score well if you are big and well-resourced.”
Walker Palmour says that though the results are generally encouraging, she is struck by the persistence of D ratings, and the number of foundations that are still not engaging with the initiative and its aims.
As in year one, the weakest pillar by a long way was diversity. Again, no foundation scored an A on this pillar, and nearly half (48%) scored the lowest mark of D. The strongest pillar was transparency, on which more than half (57%) scored an A. A rating for accountability was achieved by 19%.
Those foundations with lower overall grades tended to perform less well on individual pillars, as you might expect. However, the report’s authors point out that, interestingly, in year two, there were a few foundations that scored a B in diversity, yet still a B overall. This is a notable change from year one, when no foundations that scored B overall received higher than a C in diversity.
This change occurred despite the small change to one exemption in diversity. The questions on which foundations collectively scored highest were:
- Does the foundation give any information on who or what it funded?
- Does the foundation have an investment policy and coverage of investment policy?
- For approximately what percentage of the foundation’s funding programmes is information given on who made funding decisions (either a panel or a person)?
- Does the foundation publish who its staff are on its website?
The areas which collectively scored lowest were:
- Inclusion of specific numerical targets to improve diversity of trustees or board members.
- Use of ethnicity, disability and gender targets that are in any diversity plan for trustees.
- Whether any staff diversity plan includes specific, numerical targets.
- Coverage of targets in any diversity plan for staff.
- Having various ways for contacting the foundation concerning malpractice.
Year one and year two comparisons
At first glance, comparing average and pillar scores in year one and year two suggests that there might have been a small improvement. However, this could be because the foundations assessed in year one differed from those assessed in year two, rather than any change being statistically significant. Even so, examining those foundations that were included in both years shows that this “included both years” set did improve their scores both overall and on each pillar from year one to year two. In fact, the rise in the three pillar scores and the overall scores are similar.
When comparing the ratings of the 10 foundations which have funded the FPR in both years, most improved their performance. Last year only one scored an A overall, but this year four did so. The exception was Lankelly Chase, which dropped from a B overall to a C.
On diversity, last year, all foundations funding FPR scored either B or C. The average diversity score for all included foundations was on the D/C borderline. This year was similar, although Lankelly Chase moved to a D.
On accountability, last year most of the foundations funding FPR scored either A or B, with the exception of Barrow Cadbury Trust and Joseph Rowntree Reform Trust, which scored C. By contrast, the average across all foundations for accountability was C. This year, the pattern was similar.
On transparency, in year one, all foundations funding FPR scored A, whereas the average across all included foundations was B. This was the same in year two.
The questions which saw the biggest increase in scores were:
- Are funding success rates provided, or is there a reason given why not?
- Is it possible to submit funding proposals in a range of different formats?
- Does the foundation cite any evidence that it has consulted the communities it seeks to support in determining its funding priorities?
- Has the foundation made a public commitment to be a Living Wage Employer?
- Does the foundation cite any criteria on which its funding decisions are made?
The biggest decreases were when answering:
- Does the foundation publish its recruitment policy for board members?
- Can you navigate its website using only the keyboard (without a mouse)?
- Does the foundation provide a biography for its senior staff?
- Does the foundation have an investment policy?
- Does the foundation have a plan to improve the diversity of its staff?
Diversity
One of the headline findings from year one was that practice on diversity was weaker than practice on the other pillars, and this was maintained in year two. Although more foundations received a B grade for diversity in the second year, there were also more foundations that scored a D in this area.
The research report authors say: “Though many foundations had diversity statements, stating that they have a commitment to equality and diversity within their organisations and in their funding, very few had a diversity plan with targets. Across the foundations assessed in year two, 14 had diversity plans for their staff (as in year one), yet only two of these contained any specific targets for gender, ethnicity or disability.
Fifteen foundations had a diversity plan for their trustees (up from 10 in year one), but none had a diversity plan with specific diversity targets for its trustees for gender, ethnicity or disability.” Walker Palmour points out that the FPR is not the last word on diversity in the foundation sector. “The FPR’s diversity criteria is largely an assessment of a foundation’s disclosure about its governance and management on diversity. It does not review what or who a foundation funds, nor how it selects them. The FPR also does not assess funding practices in terms of assessment structures or processes. Addressing this would involve complex and in-depth evaluation including business process re-engineering, and equity and diversity audits, which the FPR cannot do.”
Thrisha Haldar, lead executive at the Indigo Trust, which now funds the FPR, says she was surprised at her trust’s low rating for diversity, given it has a board with several non-family members and her own background. “However, the FPR’s methodology shone a light on where we could be clear about our strategy on diversity and set targets by which to measure our progress. We are working on these but we haven’t published our approach yet. This is an area we can certainly improve on.”
Does size matter?
In year one, the FPR data found that financial size did not correlate with foundations’ ratings, but that there was a positive and reasonably strong correlation between the number of staff and trustees, and performance on all three pillars.
In year two, the overall Ds were confined to foundations with under 10 staff, and no foundation with more than 10 staff got a D overall.
For trustees, the overall Ds are pretty much confined to foundations with fewer than 10, and only one foundation with over 10 trustees got a D overall. Though low scores were not exclusively confined to foundations with few staff and trustees, it does appear that foundations with few personnel score badly. The report’s authors suspect that this is because disclosing the information which FPR requires, and establishing good practices, takes work, and having too few personnel means there aren’t enough people to do that work. “We appreciate that funds spent on staff are funds not available for grants, but we also recognise that there are false economies – perhaps foundations which have decided to have few staff could improve their performance and impact by having more.”
The authors also note that the sample is mainly taken from the largest 300 foundations in the country, and excludes the really tiny foundations.
Websites
Disappointingly, 22 foundations assessed in year two had no website at all. This is “astonishing in 2023”, says Fiennes.
In general, foundations with websites were good at publishing their funding priorities, eligibility criteria, and information about who and what they have funded. Having a website is essential to performing well. No foundation without a website scored above a D overall. Only one of the foundations that scored D overall had a website, and none that scored D on all three pillars had one.
Where foundations did have a website, many could be much better. For example, one foundation required registration in order to get information from its website. That required a postal address. Once registered, the only information available was a donation page.
The websites of many foundations were difficult to navigate, with many lacking a functional search feature. Some websites were overly cluttered, making it challenging to locate information quickly and efficiently. Potential applicants may also face similar difficulties in finding the information they require.
Other websites shared only very limited information. Two of the foundations included this year had just a single webpage, and another foundation had a website which contained only broken links.
Not all the websites were easy to find. Surprisingly, the website of one of the five largest foundations (by giving budget) was missed by researchers using Google and was only found at all by a team member using a different search engine.
Evidence of impact
A key part of demonstrating accountability and transparency is the degree to which foundations publish analyses of their own effectiveness, or show evidence of having consulted with the communities they intend to serve. The degree to which foundations in the sample did this varied greatly. Great foundation practice included conducting surveys of grantees and publishing the results in full, along with identification of some areas where the foundation intends to improve as a result.
Researchers noted a really nice example of this from the Buttle Trust. It has used feedback from recipients to identify practical ways that it can improve: “The information we receive through our surveying allows us to get feedback on where we can improve. From this we are aware that a very small number of families report that they have not received their grant in full. This is typically because items are not being delivered or grants are not spent in their entirety. Some of this is being compounded by supply chain issues, and the ongoing impact of the Covid-19 pandemic. The feedback allows us to identify such issues and look for ways to mitigate or fix them, so that our impact continues to remain as high as it can for all who need a grant.”
Several foundations cited some feedback from grantees but were vague about the exact details. The Gloucestershire Community Foundation was an example of citing feedback but not publishing it in full. It said: “We surveyed 100 Gloucestershire organisations”, but was unclear how those 100 were chosen.
In terms of consulting with communities to determine their funding needs and approaches, the researchers saw various examples here, and highlighted the City Bridge Trust, which “unusually, in formulating its current strategy (which runs 2018-23) it consulted with a range of internal and external audiences, including via in-person events”.
A few foundations state that they have analysed their work but do not publish it, a fact the researchers described as “a shame, because obviously it precludes others from learning from their analysis, methods, and findings”.
Some foundations have evidently consulted with stakeholders in (at least) some of their programmes. For instance, John Ellerman Foundation funds – among other things – work with museums, and published notes from a conference with curators about issues that they face and how funding helps them and could help more.
While the researchers note that very few foundations publish the kind of analysis of their effectiveness which is required of many operational charities – quantitative, experimental, and covering all of the organisation’s work – one which does is Wellcome. “It publishes a detailed quantitative analysis of the effectiveness of its grants, using its Success Framework. Laudably this includes comparators, eg the proportion of outputs funded by Wellcome which are accessible compared to those funded by other funders; and the success/influence of research outputs measured by bibliometric indicators.”
Lived experience: a toe in the water
For year two, the researchers noted whether the included foundations reported about the lived experience and/or social class of their staff and trustees. Though this was not used in the FPR rating, it was gathered to see whether this could be a criterion in future, and what definitions might work. Specifically, the team examined whether such information was included in an organisation’s staff and trustee biographies, in the staff and trustee diversity reporting, and/or as targets for staff and trustees in diversity plans.
Seven foundations provided lived experience information in their staff biographies (Blagrave Trust, Joseph Rowntree Charitable Trust, Wellcome, African Medical & Research Foundation, Health Foundation, Jack Petchey Foundation and Womankind Worldwide). No foundation included lived experience for its staff in its diversity report.
Four foundations provided lived experience information in their trustee biographies (Blagrave Trust, Paul Hamlyn Foundation, Health Foundation and Jack Petchey Foundation). Only Blagrave Trust reported in its diversity report on lived experience of its board members.
No information on social class was provided by any assessed foundation in its staff or trustee biographies. One foundation, Garfield Weston, reported on social class for its staff members (as first-generation university graduates) in its diversity report.
No foundation assessed as part of this year’s cohort reported on the social class of its board, nor included it in trustee biographies. That said, one foundation that opted in to be assessed as part of the research – the KPMG Foundation – does report on the social class of its trustees.
In terms of targets in diversity plans for staff and for trustees, no foundation reported specific targets for either lived experience or social class. However, three foundations did mention within their diversity plans an aim to hire staff with lived experience.
Impetus for change
Walker Palmour says that the FPR can guide and encourage foundations to improve their practices, to better use their resources to serve society. “The results from the FPR’s first year held up a mirror reflecting our current practices. Despite uncomfortable findings, foundations’ reactions were remarkably positive; many said that it highlighted areas where they can improve and provided an impetus for them to act, and some began to use it themselves as a tool for self-assessment.”
Dr Ambreen Shah, interim director of external relations at the Association of Charitable Foundations (ACF), says the FPR is interesting because it was set up and funded by foundations. “It is an example of the foundation sector putting itself under scrutiny. At ACF, we see this as part of a wider trend of foundations challenging themselves and each other to continually develop their practice and raise their game.”
Walker Palmour points out that all of the FPR’s findings are mediated through transparency. “If you are thinking great thoughts but not actually communicating them, they will not be captured by the rating process. We want the FPR to be an incentive to improve the practices of foundations – what we do, not just what we think about.”
As with year one, researchers heard of foundations using the FPR criteria as a checklist for self-assessment. “One told us that the FPR had highlighted areas where they needed to improve. Another foundation director told us that he had found the FPR criteria useful for gaining commitment among colleagues and trustees for some changes, and he had heard other foundations talking about the same, and being spurred by the FPR to make changes.”
For Haldar at Indigo Trust, the FPR has identified areas to focus on for improvement. “At a recent board meeting, my trustees used the report to review our approach in certain areas. In other sectors, this degree of external scrutiny and feedback would be welcomed as improving performance. At Indigo Trust, we want our organisation to use the rating as a tool to move forward and hope that other foundations will recognise that the rating offers vital feedback for philanthropy to be more effective. To this end, we have been working on improving our public-facing communications so that we are more approachable and accountable. We are also figuring out how we define success in diversity, accountability and transparency and how we measure and communicate this. Watch this space for a new website and for the policies and processes to back these up.”
Sufina Ahmad, director of John Ellerman Foundation, one of the 10 original funders, says: “There have been many benefits to us of being part of the FPR. We have particularly valued the fact that if an organisation simply sits with its results and works through the suggestions made, it can make real progress within the rating. This is very motivating, and incredibly helpful for smaller organisations like ours. The FPR essentially provides us with additional resource and expertise that enable us to make meaningful improvements and become better grantmakers.”
Examples of the changes the foundation has made over the last 12 months include:
- Producing funding guidelines in Welsh.
- Including the diversity of trustees in the annual report.
- Publishing its diversity, equity and inclusion (DEI) policy on its website (although this was done for other reasons too). It includes its approach to diversity across grantmaking, investing and wider operations.
- Including information on its website about when funds will be distributed after a grant is made, and all the details about what is requested in progress and final reports.
- Making it clearer that it is trustees who make decisions on grants.
- Publishing its gender pay gap in the annual report.
- Adding ReciteMe – an accessibility tool – to its website.
- Updating FAQs to include one about what to do if you’re not happy about any aspect of the funding process.
Dr Lynne Guyton, CEO at John Lyon’s Charity, knew that when her organisation participated in the FPR it was unlikely to receive A ratings across the board. “We were interested to better understand areas where we could improve, particularly for a grantee accessing our website (represented by the 90-minute assessment period used by researchers). Diversity has emerged as a key area for us to improve, which is feeding into ongoing discussions in this area, particularly within policy. It is also helpful and reassuring to know that we are on the right track in relation to our accessibility and transparency.
“The circa-70 FPR criteria remain at the forefront of our new website’s creation in line with our strategy from 1 April 2023. As a direct result of the FPR, we will be introducing accessibility tools with features such as changing font size, contrast, highlighting links and more. The website will also, for the first time, have a dedicated section for what equity, diversity and inclusion look like at John Lyon’s Charity. This will more clearly articulate what we do in this space and how we prioritise it, both internally as funder, and externally in relation to our grantmaking and support of both the children and young people’s sector, and trusts and foundations. We are also considering areas for policy improvement and how we more clearly feature policies on our website.”
City Bridge Trust is also using the FPR as a tool to inform improvements to its website, along with other aspects of its activities including diversity. Giles Shilson, chairman at the trust, said: “Our new website has already addressed some of the issues raised, including by improving accessibility and enhancing navigation.
“We will soon be appointing an external facilitator to work with us to design and deliver comprehensive DEI training for all staff, and using the DEI Data Standard to understand better the impact of our grants programmes. We will also work to diversify our teams and will publish data on this in due course.”
New funders
For 2023, three new funders – Indigo Trust, John Lyon’s Charity and City Bridge Trust – joined the 10 from year one. So what prompted them to get involved?
Haldar at Indigo Trust said she cried several times when reading Edgar Villanueva’s Decolonising Wealth. “When he described his first day of working for a philanthropic institution, he was basically describing my experience as the only person of colour in a senior grantmaking role arriving to an ivory tower – a place that looks and feels very different from the spaces that I was used to. I came to grantmaking after helping unincorporated grassroots, diaspora, women and refugee groups to fundraise from housing estates, gurdwaras and community centres. They were at once dilapidated and full of life – with an abundance of chatter in various mother tongues, prayer, dancing, laughter and tears.
“But these groups didn’t speak the same language as donors – literally and metaphorically – and I used to bridge this gap because, well, I’ve been educated in ivory towers (with degrees from top universities) but I grew up in communities that don’t resemble my professional world at all. In being inaccessible, the funding systems were replicating the very injustices they claimed to be addressing. I wanted to change the way grantmaking is done so that those who need resources and are experts on their own lives and communities, can do so on their own terms. And there is plenty of evidence to show that when grantmaking is more equitable, it is more effective.
“So being a proactive supporter of the FPR was an easy decision to make for me personally. But this work is also very aligned with Indigo board members’ vision and values, each of whom have worked in a range of sectors (from journalism to government) where the principles of accountability and transparency are well established. My trustees also recognise their own power and privilege and welcome the scrutiny of the FPR, even if this comes with a degree of vulnerability.”
Haldar highlights wider imperatives for philanthropy to be more accountable, transparent and diverse, adding that by supporting the FPR, Indigo sees itself as part of a wider movement to spur philanthropy to be better. “During the pandemic, while most people faced devastating losses, the number of millionaires rose by 5.2 million to over 56 million, according to the Global Wealth Report. With inequality so stark, the social licence of philanthropy is being questioned. We see this in the removal of the Sackler name from a number of famous art galleries and museums following protests over the source of the funds; and the Gates Foundation, the largest foundation by far, responding to criticisms of undue power and influence by expanding its board to hold the foundation accountable and to ensure decisions incorporate diverse perspectives.”
On seeing the FPR’s first-year report, Guyton at John Lyon’s Charity recognised it as an initiative that would prompt foundations to improve.
“We particularly liked the fact that the FPR is not opt-in, because it is based on information made available by funders in the public domain. This means that it can provide a more accurate reflection of the sector, and will hopefully lead some to prioritise this important work more highly than they might otherwise. As it is a rating, not a ranking, we hope that other funders see it as an opportunity and a tool to support positive change. For us, the FPR has done exactly that. It has helped to drive constructive conversations and provide additional direction in our equity, diversity and inclusion journey, and we look forward to seeing how this develops.”
Shilson explained that as a long-time funder of civil society infrastructure, City Bridge Trust’s own approach to equity, diversity, and inclusion includes funding work which promotes transparency, accountability and diversity in the funding world, and in the voluntary sector more broadly. “Our mission is to reduce inequality, and that starts with supporting a more representative and inclusive funding sector,” he said. “The FPR was created in consultation with key sector stakeholders, and we encourage all grantmakers to use it to review themselves and to contribute towards better practices in the sector.”
Looking ahead
The FPR will run again in 2023-24, as well as thereafter. The set of foundations that it will assess will again comprise: the foundations funding the work; the five largest foundations by giving budget; and a fresh stratified random sample of other foundations drawn from the ACF’s most recently published list of UK grantmaking foundations, plus UK community foundations.
There is a good chance that any foundation which was assessed this year will be assessed again next year (even if they are not funding this work nor in the five largest), simply by weight of numbers. While it is likely that the criteria for year three will be largely the same, for reasons of continuity and direct comparison, researchers will continue to refine them in the light of experience and feedback. They may also add a stipulation in terms of the recency of material counts, and the quality of analysis of a foundation’s own effectiveness. Further consultation on the criteria is planned for later this year.
Walker Palmour concludes: “Our intention is to encourage funders to provide the information to enable prospective applicants to make informed decisions. Meaningful disclosure may include difficult truths about successes and failures, but it also encourages people who share our missions to hold us to account.”
Ian Allsop is a freelance journalist and editor
The full report will be launched at an event on Thursday 23 March, from 1.30pm – 4pm at Conway Hall, London WC1R 4RL. Sign up to attend at bit.ly/FPR2023Launch.
After that, the report can be downloaded from foundationpracticerating.org.uk.
Figure 1: how it works
Each included foundation is assigned a rating (of A, B, C or D) on each of the three pillars of diversity, accountability and transparency – A being top – and is also given an overall rating. The project was originated by Friends Provident Foundation, and the research and assessment was carried out by Giving Evidence. The results are presented as ratings, not rankings.
The research team looked at 100 UK-based charitable grantmaking foundations. The 2023 sample comprised:
- The 13 foundations funding the work;
- The five largest UK foundations by giving budget; and
- A random sample of community foundations and charitable foundations, as listed in the Association of Charitable Foundation’s (ACF) Giving Trends report 2021, which includes only the top 300 largest UK charitable grantmaking foundations.
The 100 foundations included in the year two sample collectively had:
- Net assets of £68.1bn, compared with £44.4bn in year one;
- Annual giving of £1.8bn, compared with £1.25bn in year one; and
- An average payout rate (the amount given annually as a proportion of assets) of 2.6% (year one 3%).
Some 28 foundations were included in both years: 10 which funded it in year one; one which was selected randomly in year one and started funding the project this year; three large foundations that were in the top five by size in both years; and 14 which were randomly selected for inclusion in both years.
Figure 2: Project funders
- Friends Provident Foundation
- Barrow Cadbury Trust
- Blagrave Trust
- Esmée Fairbairn Foundation
- John Ellerman Foundation
- Joseph Rowntree Reform Trust
- Joseph Rowntree Charitable Trust
- Lankelly Chase Foundation
- Paul Hamlyn Foundation
- Power to Change
- Indigo Trust*
- City Bridge Trust*
- John Lyon’s Charity* *New funders in year two
Figure 4: Criteria used for assessment
Broadly, the principles set out for the three pillars were:
Diversity: The extent to which a foundation reports on the diversity of its staff and trustees; the extent to which a foundation reports on its plans to improve its diversity; and how well it caters for people who prefer or need to communicate in different ways, ie how accessible it is.
Accountability: The extent to which it is possible to examine the work or decisions of a foundation after the event, and to communicate with that foundation about these.
Transparency: The extent to which a foundation publishes the information which a prospective applicant would need in order to contact the foundation, decide whether to apply for funding, or learn about it more generally in advance of any grant.
The final criteria had to meet both of the following requirements:
In scope: The criteria all relate to at least one of the three pillars: diversity, accountability and transparency. Therefore, criteria only about, for example, environmental sustainability were out of scope, as is assessing a foundation’s impact or strategy.
Observable and measurable: The rating process only used information in the public domain. So, it must be possible to see from the outside whether a foundation meets a criterion, and not require (for instance) talking to foundation staff or insider knowledge.
Exemptions
Foundations were exempted from criteria which were not relevant to them. For example, a foundation that funds only by invitation is exempt from publishing eligibility criteria. Foundations with fewer than 49 staff were exempted from publishing gender pay gap data.
Limits of scope
The research did not examine what the foundations actually fund. It did not look at issues such as how well foundations capture views from a diverse set of stakeholders to inform their work, nor the diversity of the work they fund.
Investment policies
On investment policies, the analysts used Glasspockets’ criterion for whether foundations should have one, plus the criteria from the Charity Commission on what the investment policies should contain.
Figure 5: Key findings in 2023
In year two, seven foundations scored an A overall, up from three in year one. They are: Wellcome, Blagrave Trust, John Ellerman Foundation, Paul Hamlyn Foundation, Esmée Fairbairn Foundation, Walcot Educational Foundation and Oxfordshire Community Foundation.
As in year one, the foundations scoring A overall are diverse in size and structure.
The main findings in year two are:
- Diversity was the again the weakest pillar.
- Scores on the three pillars are not always correlated.
- Financial size was not an automatic indicator of a higher rating.
- Performance does correlate with the number of personnel (staff and trustees).
- All the community foundations assessed scored above average.
- More of the foundations that were assessed in both years improved than deteriorated.
- 22 of the 100 foundations had no website at all, and others have overly cluttered or limited websites that impede finding simple information.
- The criteria used proved reasonable.
- Few foundations publish analysis of their own effectiveness.
Figure 6: Opting in
The aim of the FPR is to encourage all trusts and foundations to make improvements in how they operate in the areas of diversity, accountability and transparency. However, it isn’t possible to rate all foundations, which is why a sampling method is used to select those for inclusion. After year one, feedback from a number of foundations indicated that some would like to ensure they were included in subsequent samples so they could track their progress against the three pillars over time.
For year two, therefore, foundations not included in the sample could opt in by paying a small fee to cover research costs. These results are made public in the final report, as part of the random overall sample.
Figure 7: Examples of great practice
The research found some particularly strong practices. Some are cited here to inspire other foundations and to show what is possible.
- Specific diversity, equality and inclusion committee working with other committees within the trust to ensure accountability and transparency – British Record Industry Trust
- Very good website from the point of view of the grantee. Easy to find information, clearly set out – Paul Hamlyn Foundation
- Annual report provides breakdown of trustee diversity, which is rare among foundations. Rare foundation to publish its recruitment policy for staff and trustees – John Ellerman Foundation
- Homelessness Deep Dive series report is a good example of understanding the problem(s) which the foundation is trying to address, and consulting communities – Mercers’ Charitable Foundation
- Foundation is a Disability Confident employer, committed to the recruitment, progression, and retention of individuals with disabilities – Joseph Rowntree Foundation
- Has both trustees and staff who had been recipients of its achievement awards and internship programme – Jack Petchey Foundation
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