3: Adapting philanthropic funding approaches and behaviour

CAF’s polling of its charity customers showed overwhelmingly that the number one thing they need is unconditional cash grants (53%) – followed by extra people to deliver services (19%). Demonstrating that charities need money immediately.

This insight also has a bearing on the kind of funding and funding processes that are needed at this time and going forward.

The approaches and behaviour of philanthropic funders will greatly impact charities’ ability to respond quickly and effectively to the situation they find themselves in – and, furthermore, could be an opportunity to hone best practice for the future of grant-making.

  
Covid-19  |  Philanthropy Stimulus Package index

Briefing paper introduction

  1. Government support for giving
  2. Re-purposing public and private charitable assets
  3. Adapting philanthropic funding approaches and behaviour
  4. Leveraging endowed assets
  5. The response from business
  6. The regulatory response

     

Download the paper as a .pdf
    

Key Ideas

Additional funding from philanthropists

Philanthropic funders could provide additional funding to assist with charities’ unforeseen cash-flow issues. Given that income has broken down for many charities overnight (due to cancelled fundraising events, suspended trading etc.) this will likely be a priority in the short-run.

A survey by the Directory of Social Change showed that many charities cannot access government schemes that could help them with immediate cash-flow issues. Just 7% of charities surveyed said they qualified for the Business Interruption Loan Scheme and just under a half said they did not qualify; over 40% said they did not know.

Funders are already stepping up, but it remains true that few are in a position to fully address the immense need in the sector (which still remains high even after the latest support package that the Government announced). Arguably, every pound spent now is a pound less going forward, but dealing with the immediate cash-flows and upfront spending is needed now in order to buffer the impact of the crisis. This will (hopefully) reduce the rebuilding efforts needed down the line and bridge charities over until other measures can kick in.

Hampshire Search and Rescue charity 500
Search dog from Hampshire Search and Rescue, one of the thousands of emergency charities saving lives every day, along with lifeboat charities, mountain rescue teams and more.

Agile funding

Funders could provide agile, unrestricted and flexible funding and application processes. At a time when the last thing charities need is greater administrative burdens, many funders have already committed to being open to what grantees say they need, not withdrawing funds when outcomes change, maintaining dialogue, relaxing reporting requirements in the short term and adopting a trust-based approach with grantees. A wide range of funder pledges reflect this new flexibility.

The Ford Foundation, together with the Council of Foundations, set up a #PhilanthropyPledge2020 to which over 400 organisations have signed up. The pledge calls, among other things, for loosening or eliminating restrictions on current grants, making new grants as unrestricted as possible and contributing to community-based emergency response funds. 
 
London Funders issued a statement signed by 250 funders recognising the need to stand with civil society and calling for financial flexibility and further action depending on the shocks caused to charities’ income streams. The European Philanthropy Statement on COVID-19 coordinated by DAFNE and EFC also speaks of grantees being able to repurpose earmarked funding and move it between budget headings in order to continue their work.
   
The Association of Charitable Foundations’ (ACF) early findings from their member polling showed 92% being more flexible, 61% realigning grants/setting up new funds, 43% allowing restricted funding to be unrestricted and 38% inciting requests for advanced payments.  Public authorities need to follow this approach as well and take a more flexible approach to reporting from foundations, trusts and charities as a whole.

Funder collaboration

Funders should collaborate more (also with public and private sector stakeholders), take an ecosystem view and coordinate activities to maximise impact, including through pooled funds where appropriate.

Funders should also publish all data on grants made to coronavirus response in an open format (e.g. via 360Giving) so that others can use the information to coordinate their activities. Many umbrella bodies and other institutions, such as ACF, the Institute for Voluntary Action Research, the Council on Foundations, the Center for Effective Philanthropy, GrantCraft, FSG and others, as well as funders themselves, have widely publicised the benefits of funder collaboration and collective impact approaches.

The current crisis could be an incentive for more funders to put these concepts into practice. Via 360Giving, over 120 funders have already shared information on their grant-making - which means that over £30bn of grant data can be now accessed, compared and analysed.

More funders embracing the open grants movement and sharing their data through 360Giving would benefit a coordinated response to the coronavirus crisis.

Further ideas

Keep the new behaviours

  • Take these behaviours forward, recognising their transferability e.g. to the climate crisis.

   
Insist on resilience

  • Make resilience a criteria of funding provided (different from restricted funding) – e.g. a certain % of funding has to be used to improve IT/digital, implement ‘green’ procurement, and support the recruitment of trustees with diverse skills and backgrounds.

   
Fund digital skills

  • Fund civil society organisations to develop digital skills and infrastructure to build on the rapid changes many have had to make through necessity.

 
Fund ahead

  • Fund foundation and civil society foresight groups to ensure that civil society is better prepared for future social and economic shocks, and that CSOs are able to inform wider planning for future challenges.
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