Read the final report:
Transparency and Engagement: The Pillars of Stronger Foundation Practice
The group is comprised of senior foundation representatives drawn from across ACF's membership, who will meet 7 times over an 18 month period. The meetings, which will vary in format depending on the topic and desired content, will include presentation of evidence (by experts from within and beyond the foundation sector), small group discussions, whole group exercises and visits. The group's full terms of reference can be found here.
The members of the group are: Paul Ramsbottom, Wolfson Foundation (group chair); Nick Acland, The Henry Smith Charity (ACF trustee); David Hynes, Norwich Charitable Trust; Bridget McGing, Pears Foundationp; Joseph Howes, Buttle UK; Clare Beavan, DWF Foundation; Andrew Wright, Arcadia Fund (Lund Trust); Ciorsdan Brown, Goldsmiths' Company; Anna de Pulford, Dulverton Trust; Nicola Wilson, trustee of St Giles & William Shelton Educational Charity; Matt Young, GrantScape; Lucy Bardner, Harpur Trust; Esther Hughes, Global Dialogue
Meeting #2 (February 2019) - Why should foundations be transparent?
At this second meeting, we heard from Janet Camarena, Director of the Glass Pockets initiative in the US, a programme at Foundation Centre. Glass Pockets provides a self-assessment tool for foundations that provides 26 indicators of transparent practice, and provides an evidence base in support of transparency.
Janet described the progress made to date in supporting foundations to demonstrate their commitment to and implementation of transparency in practice, from grant-making decisions to grantee feedback, to recruitment of trustees to investment strategies. While nearly 100 foundations in the US (and some other jurisdictions) have signed up to date, this is a small proportion of the sector and there is a long way to go. For example, in the US, still only 10% of foundations have a website.
The initiative has its origins in the 1950s, during the period of McCarthyism, when foundation leaders found themselves in the uncomfortable position of being brought in for questioning as part of McCarthy-era inquisitions, with one foundation leader noting that: "'The foundation should have glass pockets,” so that anyone could easily look inside foundations and understand their value to society, thereby inspiring confidence rather than suspicion" (see more here about the history).
The full schedule of transparency indicators used in the assessment tool is here. The group considered these in terms of their own foundations' practice, and found that many of the indicators were already a requirement of charity law and reporting (e.g. annual accounts, mission statement), but others were some way beyond where they or the foundation sector is as a whole (e.g. independent impact assessment of foundation performance, social media presence, diversity statements).
In conclusion, Janet proposed that there is far more risk to a foundation in opacity rather than transparency, both in terms of public scrutiny/trust and performance. She also acknowledged that there will be valid reasons for some foundations to be private about certain grant decisions, such as sensitive human rights projects, but that this should be an anomaly rather than an overall approach. In the UK, initiatives such as 360 Giving are gaining momentum, and the potential arrival of Grant Advisor may accelerate the UK foundation sector's move towards greater openness and engagement. These are issues that the group will consider further in future meetings.
- Who are you being transparent for and why?
- Do you know what information people would find useful about you?
- Why wouldn’t you make some information available?
- Do you have a duty to be open about where your money comes from as well as what you’re funding?
- Could you be more open about what you think rather than just what you do?
For the second half of the session, the group divided into two teams to debate the motion: has momentum towards transparency increased or stalled?
Those arguing that it had increased looked at foundation transparency in the context of a wider cultural shift towards transparency, including heightened expectations from grantees, the regulators, and the public, as well as developments in technology and regulation that encourage and facilitate transparency.
Those arguing that it had stalled considered: the conspicuous absence of investments in debates on transparency; philanthropists opting for less transparent alternatives to establishing foundations; and the relatively limited number of foundations engaging in transparency initiatives and conversations. By the end, several members of each team commented that they had been convinced by the other side!
Meeting #4 (June 2019) - Using transparency to drive change
The Transparency and Engagement working group met for the fourth time to discuss ‘using transparency to drive change’. The speaker for this meeting was Pamela Dow from Catch22, and previously of the Ministry of Justice. Pamela shared her experience of using transparency to drive changes in public policy, and about Catch22’s approach to transparency in its work. Pamela shared lessons learn from the US, where a state education department had adopted a strategy underpinned by transparency in order to drive improvements in schools. Pamela reflected on how this approach could be applied in any sector, including foundations: ‘transparency changes practices and incentivises people to do more and better’.
Pamela’s observation that ‘no system was ever made worse by shining a light on it’ struck a chord with the group was and this set the scene for subsequent discussions. The group reflected on their relationships with applicants and grantees and how greater transparency in a number of areas may change that.
The group considered some hypothetical scenarios in which greater transparency on the part of foundations might be required in the future. The groups reflected on four scenarios covering:
- Publishing their approach to addressing issues of diversity, equity and inclusion.
- Providing fair and honest feedback to applicants.
- Being open about their decision-making processes and giving communities a greater say in how and where they spend their funds.
- Applicants carrying our due diligence on donors.
In relation to the scenarios, comments from group members covered the importance of having DEI issues on the agenda as a minimum, emphasising the value of foundation independence, and the need for culture change to embed progress and transparency.
Meeting #5 (September 2019) – A critique of foundations’ lack of transparency
For its fifth meeting, the group welcomed Professor Tobias Jung, Director and founder of the Centre for the Study of Philanthropy & Public Good at St. Andrews University. Tobias gave a provocative presentation, challenging foundations on their lack of transparency by looking at their public image and the idea that they are a ‘black box’ (first discussed in this article), and also setting out ways that foundations could be more transparent bodies.
Tobias provided insights into how perceptions of foundations have changed very little from as far back as the 1500s, when foundations were viewed with suspicion and seen as warehouses of wealth. The lack of current and available data on foundations perpetuates this.
Tobias posed a series of thought-provoking questions for foundations: where is your critical discourse? Who are you critical friends? Are critiques from other countries relevant to the UK? He argued that foundations need to identify who is best placed to fill this role of critical friend.
The group observed that academia doesn’t feature prominently in foundation thinking, and perhaps there could be opportunities in building these links in pursuing transparency. There was discussion about the independence of an institution being paid to research, whether that’s a university or a consultancy, and who has the power to set the questions being asked. Comparisons were drawn with the US, where academic study of philanthropy is advanced and many foundations fund research centres that act independently.
It was also debated whether there is willingness on both the part of foundations and of academics to work together, and whether the issue is really one of transparency. Other factors might be a lack of ‘supply’ (i.e. research centres), and where foundations are perceived to sit in relation to existing fields of study.
The group discussed what more foundations could be doing in this regard, including keeping better archives and managing knowledge better. There may also be a lack of funding for this work; the group noted foundations can be unwilling to fund the research and infrastructure of philanthropy.
There was a widely held view that foundations are not inherently lacking in transparency, rather it is about the choices they make (e.g. on use of resources) and a lack of structures or external drivers setting standards or expectations. As well as resources, other important factors included the organisation’s values and culture, and ultimately how the learning is applied to improve practice.
Without external drivers for change, the theme of accountability emerged. To whom are foundations accountable and transparent? A primary audience – one that is perhaps sometimes forgotten – is foundations’ accountability to themselves and their peers in order to drive up standards. It was noted that while foundations have a lot of ‘friends’, very few are critical friends that can hold a mirror to the sector.
Meeting #6 (November 2019) - Investment transparency
The transparency and engagement group’s sixth meeting focused on transparency in investment, namely revealing information regarding where and how the foundation has its money invested. The working group were joined by Chris Saltmarsh from People and Planet, the largest student network in the UK campaigning for social and environmental justice. People and Planet has particularly focused on fossil fuel divestment recently and has created a University League that scores and ranks universities on ethical and environmental criteria.
The group reflected on the University League and considered whether a similar table might be applied to the foundation sector. The representation of students in university investment committees prompted discussion about the poor representation of communities of interest on their own boards and committees. Group members felt that, particularly for endowed charities, it is more difficult to identify the stakeholders they are accountable to than it is for a university.
Aside from commercial sensitivity – which was a concern shared by many members – the variety of the foundation sector was also identified as a challenge in investment transparency. Some members suggested that it would be easier to track funds for non-endowed foundations than those with large endowments, private equities or illiquid funds. Equally, the group felt that public scrutiny that comes with investment transparency may be more important for larger foundations that are known to the public. Members proposed that rather than looking solely at investment transparency, all sources of income should be considered.
Investment transparency was viewed as a journey, with individual foundations at their own different points. Each foundation determines its own pace and assesses what to make public and when. The important first step for all foundations – and the point that many members took away from the session – is internal transparency regarding investments. It was felt that staff and trustees have a lot to learn and understand about their foundation’s investments before they can be made public.
The working group found the topic of investment more sensitive and nuanced than previous topics, which led to important reflections. With increasing public pressure and scrutiny, members saw investment transparency as a key way of telling their own stories rather than waiting for someone else to tell it. Some members considered investment transparency a moral imperative, while others stressed that intentionality is an important consideration in the journey to investment transparency. This means reflecting on the foundation’s purpose, mission and how all resources can be put to public benefit. It also means being transparent about investments in a way that the public and other stakeholders will understand and engage with.
Meeting #7 (January 2020) - Strategic Opacity
For its final meeting, the working group considered how opacity might help a foundation work towards its charitable aims or mission. Bob Reid, CEO of the JF Maddox Foundation in the US, joined the group to offer a perspective based on his research into foundation practice.
Bob discussed the pressures on foundations for greater transparency, accountability, power sharing and distribution. His research consisted of interviews with foundation professionals as well as grantees from across the US, contributing evidence to a conversation that can often be led by principles.. Bob challenged the assumption that entitlement and arrogance act as drivers of opacity, as his research found a myriad of motivations behind opaque practice, including the ability to take risks, innovate and experiment. The majority of foundations Bob interviewed were neither wholly opaque nor wholly transparent. Instead, most practiced what he termed ‘situational transparency’, which allowed for intentional, strategic opacity by weighing up each decision and its context.
Following Bob’s presentation, the group reflected on the concept of strategic opacity in their own organisations. Members argued that strategic opacity might be necessary, for example in protecting grantees and other partner organisations in sensitive contexts, as well as sometimes protecting internal stakeholders.
It was agreed that the challenge for foundations is determining and being able to justify the right level of transparency for their model, considering each stakeholder’s different expectations. Bob’s emphasis on building an individual relationship with each grantee prompted the group to conclude that it is the quality, not quantity, of transparency that matters in each relationship.
The group highlighted proportionality as a key theme running through its meetings. This means recognising and taking into account the variety of different types of foundations in the sector and how their specific size, organisational structure, stakeholders or mission will affect the level of transparency or opacity a foundation might practice. Members also pointed out that different activities brings different issues in transparency. For example, processes may be more straightforward to explain, while decisions made with a human element might be more difficult.
The group debated whether transparency is best understood as a philosophical goal or a practical tool. Bob’s view was that transparency is both of these things at different times, and members agreed that – both as a goal and a tool – transparency implies a process and a journey, rather than a fixed state.
The meeting ended with the group reflecting on the complexity and nuance of the topic. Some concluded that questions around transparency are existential, and get to the heart of who foundations are, the work they do and how they relate to their audiences and stakeholders.
- Foundation Transparency – how far should we go? (2018) Alliance Magazine comment piece
- History of Foundation Transparency (in the US)
- Foundation Transparency: Why it matters (Fran Perrin, Indigo Trust 2014)
- Lankelly Chase, 360giving and foundation transparency (January 2018)
- Glass Pockets - website and self-assessment tool
- Sharing data responsibly - A conversation guide for funders (2018) Ariadne
- 'Philanthropy is at a turning point. Here are 6 ways it could go' (2019) Rhodri Davies writing for World Economic Forum