A changing view of grantees
Funders are questioning how they see the organisations and individuals they support and fund. Some forward-thinking foundations are moving way from a narrative that sees their grantees as ‘dependents’, and instead re-positions them as key partners (or even the central players) in how funders actually achieve impact and change. Civil society organisations (CSOs), meanwhile, are assessing how language introduces power dynamics that may be detrimental to achieving their goals (for example, questioning the use of the term ‘beneficiaries’).
This will influence how philanthropy is organised. For example, funders may take on less central roles and see themselves instead at the periphery of a process. Or they may become more attuned to the needs of grantees, focus on building partnerships, or change their funding approaches in response to different trends in such a way that provides a framework for which practices they continue to embrace. In this sense, a change in language that reflects a mind-set shift can affect operational practices as well.
Increased demands around transparency and accountability
Individuals are demanding more information on how different institutions and organisations act, and philanthropy is not immune from these demands. There will be higher levels of scrutiny as people, more and more, want to know where money is coming from and where it is going; particularly in light of the fact that a lot of it receives generous subsidies in the form of tax relief. Increasingly, opacity and withholding information will not be an option as digital technology and the internet gives people the power to find information for themselves - or, to identify where there are gaps and bring these to light. This can be hugely empowering for citizens, but does bring for philanthropic funders new risks of misinterpretation or ill-founded speculation that could affect their reputations. The funder community is addressing this topic already, with transparency being a key element in the accountability discussion for all types of non-profits.
One of the advantages often claimed for philanthropy is its independence; the argument being that because it is not beholden to voters or shareholders it can take risks and experiment where others might not dare to engage for various reasons. (Although, there are valid questions about how much philanthropy genuinely fits this description). One paradoxical result of greater transparency – if done in the wrong way ─ is that it could reduce the freedom and independence of philanthropic funders and thus constrain their ability to take risks. Which is not to say that greater openness and accountability is not the right ambition to have for philanthropy, but rather that we must acknowledge that there may be trade-offs to take into account. We explored this issue in greater detail in a Giving Thought podcast interview with philanthropist Fran Perrin.
Trust and legitimacy being contested
This is a discussion closely linked to the transparency issue. A funder can be completely transparent about its activities, yet not be trusted by the wider population for a whole variety of reasons, or experience an erosion in trust in its organisation. There is no longer room for complacency, and many funders may find that they constantly need to renew the case for their legitimacy and “license to operate”. We are already seeing this play out on the political level, with states trying to curtail the activities of particular large funders not predominately on the basis of a lack of transparency, but the very nature of their activities and objectives (for example, the Open Society Foundation stated that it moved offices from Budapest to Berlin due to an “increasingly repressive political and legal environment” in Hungary). Nor do funders exist in isolation, and many are increasingly considering how their actions not only affect trust in them but in philanthropy as a whole.
Where the money comes from (and how it is invested)
Recent scandals around the philanthropic donations of the Sackler family and the disgraced financier Jeffrey Epstein have brought to light the ethical issues over whether some money should be seen as “tainted”. This is far from a new question, as we explored in an episode of the CAF Giving Thought podcast last year and also in a blog looking at the lessons for philanthropy from the toppling of the long-controversial effigy of Edward Colston into Bristol Harbour by Black Lives Matter protestors this year). As a result, a wider debate has emerged around the provenance of philanthropic funds and how it ties into the legitimacy of philanthropic actors. And it is not just where the money comes from that matter these days - we also need to look at how it is spent and invested, because in our highly interconnected financial world the same issues apply across all these contexts.
The question of what is acceptable is also not straightforward, as multiple tensions between different factors come into play: it is not just what is legally permissible, but what aligns with the ethics values and charitable mission of an organisation (and, increasingly, its supporters). These questions have been addressed in a wide range of reports (e.g. ACF’s Intentional Investing and the latest report on investment from emerging from ACF’s Stronger Foundations initiative). There is still an outstanding High Court ruling on whether charities must align their investments with their charitable objects. Large banks are increasingly applying ESG criteria - UBS recently made sustainable investments its preferred solution for clients of its global wealth management business (worth USD 2.6 trillion). Philanthropy (in particular from the perspective of being a financial services client) is taking note of these developments.