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Stronger Foundations blog: Choosing the right funding tool

ACF’s Stronger Foundations initiative aims to open challenging discussions about foundation practice and identify what it means to be a ‘stronger’ foundation. As part of the project, we will be publishing a series of provocations from members offering their personal views on the initiative’s themes.

This contribution comes from Anthony Tomei, member of the working group looking at funding practices. Share your thoughts on Twitter using #StrongerFoundations.

Last week I attended a meeting of the “Funding Practices” working group, one of six that make up the Stronger Foundations programme. This was our second meeting and our question for the session was: “Are grants the future or the past?” We began by reminding ourselves of the many methods that are available to foundations in pursuing their missions: grant funding in various guises, loans and other financial instruments, making use of networks and contacts, convening, lobbying, running their own programmes, collaborating with others (including government and business), and many others.

We then heard from Amy Solder (NESTA) and Alice Millest (European Venture Philanthropy Association). Both their organisations are concerned with innovation and development, and they made a persuasive case that if that is what you are trying to achieve then traditional grants are a blunt instrument. Other methods of funding, including for example loans and equity positions, are more likely to be effective; close attention to monitoring and evaluation of progress is essential; and any serious development is likely to require a high level of involvement on the part of the funder.

Variously informed, invigorated and alarmed by those ideas we got down to business and debated our examination question: Has grant funding had its day? My group quickly came to the view that it hadn’t, and that grant funding was going to be an important tool in a foundation’s box in any likely future. But we also recognised that the question embodied something of a false dichotomy, and that a deeper and more interesting question was about choosing the right funding tool for the job.

As we heard from Amy and Alice, if innovation is your aim then traditional grant funding on its own is unlikely to be effective; but if your purpose is to support individuals in poverty, or to help a local group equip a village hall, then uncomplicated traditional grant making is probably what you need.   

While there is nothing new in this insight, what the exercise has helpfully done is to focus the group’s attention on a key question that any foundation should ask itself: what are we trying to achieve? Of course our ambitions must be tempered by the available resources (meaning not just money but people, expertise, networks and so on). But being clear about our intentions means that we can make better choices about the funding practices that will best serve that need. We may decide that grants are indeed the best way forward, but if so being clear about what we want to achieve, and how we will recognise that we have achieved it, will help us design grant programmes that are fit for their purpose. In short, the big lesson is that we should design our funding practices to suit our ambitions, and not the other way around.

Like all good questions this leads to further ones. These are some that occurred to me: the experience of the foundations in our group suggests that grants are fundamental to the existence of many of the voluntary sector organisations they deal with. Those organisations find it hard to think in any other way and would struggle to work with different funding modalities. Is this an accurate picture of voluntary sector organisations as a whole or does it reflect the experience of a self-selecting group? Is the picture changing? Where is it heading? And if we believe that developing a wider range of funding methods would be beneficial to the sector, is it part of our role to encourage that change? Should we take a lead and promote funding practices that require fresh thinking, or should we simply provide what organisations say they need? That of course takes us back to the question flagged up in the previous paragraph: what is it that we are trying to achieve?

Anthony Tomei
Trustee
Bell Foundation

Views in this series are the personal views of the author, and do not necessarily reflect the views of the working group, ACF, or its wider membership. More information about Stronger Foundations can be found here.

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