A funder’s journey

Imagine being in a position where you have the potential to change thousands of lives through philanthropy. Perhaps you’ve sold a successful business, or been left a large sum of money, which you want to use to do the most good possible. But if you don’t have a strong preference about what issue you tackle or where you give—as long as your giving is high-impact—where do you start?

For many people, identifying a charity to run the marathon for can be hard enough; but when you’re looking to set up a new foundation spending £5m per year it is even more difficult, and even more important that you make the right decisions. The Stone Family Foundation came to NPC in 2005 with exactly this challenge. Set up by a British entrepreneur, John Stone, the foundation wanted to tackle disadvantage, but needed help to identify where its resources, skills and interests could be used most effectively.

Sometimes you have to learn by doing in order to identify what you’re passionate about and work out the best way to fund. Our first step with the Stones was to identify a broad portfolio of NGOs across the world, spanning microfinance in Malawi, education in Laos, water provision in Bangladesh and mental health in the UK. The trustees then spent the next three years building up their knowledge, visiting the charities, and meeting with experts and other donors, becoming aware of the challenges of being an effective funder.

Giving is most successful where there is a clear focus, so the next step was to narrow down the areas the foundation had explored to concentrate on the issues they were most passionate about and set out a strategy for the future. Focusing on a limited number of topics allows a funder to build expertise, establish strong networks, and target areas where the foundation could have a high impact.

In the end, the Stone Foundation trustees decided to put the majority of their funding into water, sanitation and hygiene (WSH). Again and again, issues around water and sanitation kept coming up in the projects the foundation funded. One in eight people worldwide cannot access safe water, while almost two fifths (2.6 billion) do not have adequate sanitation. Problems with water and sanitation have far-reaching consequences; millions of young people miss out on an education because they cannot attend school due to illnesses caused by dirty water or poor sanitation. As a direct consequence of problems with water and sanitation, 1.4 million children die every year from diarrhoea.

As well as defining a focus, it is also important to fund the most effective ways of tackling a problem. The Stone Foundation are supporting innovative and entrepreneurial work that harnesses the power of the private sector. A lot of exciting developments are emerging in water, sanitation and hygiene, where social enterprises and NGOs are helping provide low-cost, sustainable services to poor households. The potential for impact is high. Yet these projects struggle to find funders who are willing to take on the risk and help them grow and scale. The Stone Foundation’s trustees, with their business background, did not shy away from investing in riskier projects which they thought had the potential for high impact. Like many successful funders, they found a way to draw on their own skills and experience to maximise the impact of their funding.

The projects the foundation supports are varied, but all are put through a due diligence process by NPC to test the potential impact and ensure that they are well-run—particularly important when giving grants of roughly £1m each. In Cambodia the foundation supports a project that has developed a low-cost latrine that people actually want and trains local entrepreneurs to market and sell it. In urban slums in Lusaka it is funding work setting up an integrated system to empty people’s over-flowing toilets, transport and process the waste, and then sell it as fertilizer.

We’ve learnt a lot from working with the foundation, about water, sanitation and hygiene, but also about high-impact philanthropy more generally. The foundation is now taking its funding even further, and looking at ways to give smaller grants to promising early stage ideas. .One way it is doing this is through the launch of a new prize scheme: the Stone Prize for innovation and entrepreneurship in water, which NPC helped to develop. This will award up to five prizes worth £100,000 each to initiatives which have developed a sustainable and scalable way to provide clean water to those who need it.

In the past couple of years, the foundation has come far, from a relatively blank sheet of paper to an established organisation with clear funding streams and a strong portfolio of NGOs to support. We’re excited to see how it will develop, to follow the success of the foundation’s current portfolio and see the ideas that emerge through the prize.

The development of the Stone Family Foundation’s giving is the subject of a new report published by NPC today, A funder journey. For more information about the Stone Prize for innovation and entrepreneurship in water see www.thesff.com.