Charitable foundations should take more risks, argues report

The Institute for Voluntary Action Research (IVAR) says charitable foundations should take more risks with their grant-making practices in response to the circumstances and needs of small to medium voluntary organisations.

In Duty to Care? How to ensure grant-making helps and doesn’t hinder, IVAR looks at examples of foundation practice from applications through to reporting, and propose actions and questions that other funders might consider.

The report says voluntary organisations’ ability to adapt is hampered by precarious balance sheets and uncertainty about their future, adding that foundations’ resources allow them to view the long term with confidence, and by funding these organisations, foundations are taking on some of the key risks the sector faces, buying fragile organisations time to change and supporting new, untested ideas and ways of working.

It adds that funders have a responsibility to carry out due diligence on the organisations they fund and account for the way resources are used. However, increasingly funders are finding ways of making processes more proportionate and less repetitive.

According to the report, one of the ways in which bureaucracy can be trimmed is by taking a more ‘relational’ approach to grant-making because direct contact with grant-holders can give the reassurance that money is being well used.

The report also calls on funders to put ‘conversations’ at the heart of their processes for grant relationships as they can learn more about their grantees.

‘Building relationships takes time but it can also be the very best use of time,’ says the report.

Eliza Buckley, Head of Research and Development at the Institute for Voluntary Action Research (IVAR): ‘As the day-to-day existence of voluntary organisations continues to be precarious, we are calling for UK trusts and foundations to consider taking more risks, simplifying their processes and having better conversations with the organisations they fund.

‘We have seen first-hand how some grant makers are responding to the new social realities, and we hope that all funders will hear our call to action: ensure your grant-making helps and doesn’t hinder’

Read the report here.