A Funder Conundrum

Gina Anderson, Philanthropy Fellow at the Centre for Social Impact, looks at how philanthropists and donors can bring about positive social change. This article is from the CSI blog. 

OPINION: How can funders (philanthropists and donors) bring about positive social change? Does supporting grant-seekers over and above cash grants really add value or is it more trouble than it’s worth? Does working in collaboration with each other make funders more effective?

These questions and more are wrestled with in the very recent and excellent report entitled “A funder conundrum: choices that funders face in bringing about positive social change” published by the Association of Charitable Foundations UK in September 2012. This independent research report is based on the experience of The Diana, Princess of Wales Memorial Fund, together with interviews with philanthropists and funders, partners and grant-seekers.

The report will be of interest to anyone who wants to make a positive social impact, whether a funder or philanthropist, an intermediary or grant-seeker. It is particularly useful for those new to philanthropy either as individual funders, trustees or those working in philanthropy as practitioners.

It canvases the different issues funders face in discovering that philanthropy is challenging and that the difficult choices it entails really do constitute a funder conundrum. They admit that they have not been able to formulate nice neat answers because the issues are complex. For many questions they discover there is no easy answer, nor is there a right or wrong answer. However the insights and concepts included in the report, along with information and tools contained in the supporting resource materials, are extremely useful.

The authors explore areas that are important to funders and raise questions on issues such as attribution and contribution and the legitimacy of non-elected bodies to identify and address society’s ills. They discuss the motivation to improve the world through systemic change versus the desire to respond to current need; the proactive selection of projects and grant-seekers versus the more reactive receiving of grant applications; close engagement with the projects funded versus the preference to maintain a distance and concentrate of advising and monitoring; risk-taking; and the vexed issue of collaboration versus working alone.

To support the analysis of the issues the authors developed “The Funder Spectrum Framework” to help capture the complicated nature of the funding field. This spectrum is divided into two areas:

Mindset: what motivates a funder

• Motivation – what do you want to achieve?
• Theory of Change – how do you believe change happens?
• Role of the Funder – what is the role of the funder?

Ways of Working: how this mindset translates into the way a funder goes about their work

• Funding Process – how do you allocate funding?
• Relationship with grant-seekers – how are you engaged with grant-seekers?
• Attitude to Risk – how much risk are you prepared to take?
• Collaboration – how much funder collaboration do you seek?

They use this framework to differentiate between various types of funders, their approaches to funding, and to reflect the fact that there are a number of stances or approaches that funders can take.

In this very thorough, thoughtful and honest analysis of funder choices and options, they do make an important point about the role of the funder. It may be obvious, but money is important. If funders cease to provide funding then they have become something else; NGOs, think-tanks or pressure groups. The money at their disposal and the power and responsibility this brings is very significant.

The report makes some key high-level recommendations to funders and philanthropists:

1. Be clear about who you are and what you’re about and make sure others know
2. Align your mindset and your ways of working
3. Consider supporting grant-seekers with more than money but not necessarily as an agent of change
4. Consider collaboration, but only do it when appropriate and ensure you do it right
5. Keep an open mind and keep reflecting and debating.

The report concludes that whatever the funder’s motivation or whatever their objectives, it is more likely that they will be effective in bringing about positive change, whether for individuals or at a societal level, if they are clear about their approach. Whichever approach the funder takes they should do it intentionally – being clear about what they are trying to achieve, about why they want to work in a particular way and what implications that has for operational details. And ensure that they have communicated this clearly to their applicants, grant-seekers, staff and trustees.