The role of funders in tackling social problems is increasingly under public scrutiny. People rightly want to know where money is going and where it comes from. In this climate, it is perhaps unsurprising that questions are asked about how funders build, wield and share power.

The first thing to make clear is that power is not in itself a bad thing. How we use it is what matters. With power comes responsibility, but you must recognise you have power before you can be fully aware of how far your responsibilities extend.

We recently hosted a seminar at NPC exploring how funders can recognise their power and wield it well. Our two speakers, Rhiannon Bearne, Chair at Millfield House Foundation, and Colin Baines, Investment Engagement Manager at Friends Provident Foundation, shared with us their experience of using their power as a funder to influence change.

Funders hold different types of power. Some visible, like wealth, status, privilege, and authority. Some less so, like the independence that comes with investing private money, the knowledge and data they hold from grant-making, access to stakeholders, and the way they set values and norms through their funding criteria and programmes.

Here are three ways funders can wield this power well:

 

One: Share power

Funders are uniquely placed to shape change in communities. By choosing to fund they can ensure good charities flourish. Funders set the norms, language and tone of engagement and can promote good practice like ensuring user involvement across the sector.

Rhiannon Bearne, our speaker from The Millfield House Foundation (MHF), chairs a relatively small funder (£300K annual spending). MHF seeks lasting change in the North East by empowering communities to overcome social deprivation. Through a dedicated place-based approach, the foundation developed a rich understanding of the issues and priorities in the North East.

It was great to hear Rhiannon talk about MHF’s journey; how they’ve recognised the extent and limitations of their grant-making power. After careful reflection, MHF adopted a relational funding model, working closely with six strategic partners and giving each £40K per annum for three years, essentially as unrestricted funds. Through this money, MHF support the voice of marginalised communities via the work of their partners. The different components of policy change their partners are pursing are represented in their change mosaic below:

Diagram showing how policies sit together

Two: Speak up

We’ve all heard that money talks. By using their power as a shareholder, funders with assets can use their voice to influence corporate behaviour for social good.

Colin Baines, our speaker from Friends Provident Foundation (FPF), works to align FPF’s investment portfolio with their mission. As an independent charity, FPF makes grants and uses its endowment to champion a fair, resilient and sustainable economy that serves society.

It was enlightening to hear Colin explain how FPF’s recent examination of grants and investments found a misalignment between the two, with only 5% of assets effectively supporting their mission. Colin was hired to change this and ensure the Foundation’s £35m endowment is used as a tool for change, generating social and environmental reward alongside financial returns.

FPF now use their influence as a shareholder, whether alone or with others, to challenge privilege, encourage behavioural change, and work towards wider systems change and values that support their mission. The Foundation uses its influence as an asset owner to engage with asset managers and the market more broadly on responsible investment; environmental, social and governance issues; and shareholder engagement with investee companies.

To maximise impact, FPF targets priority areas like the energy market. Their engagement with utility companies on their business models and their funding for research into the issues around investor risk are great examples of how funders can wield their power as shareholders to meet charitable goals, and influence systems change in the process.

 

Three: Lift burdens

In shaping their relational funding model, MHF were keen for outcomes to be shaped by the perspectives of their strategic partners (grantees). MHF recognises policy change is complex, so their strategic partners’ insights are powerful. Strategic partners also share and grow their power by collaborating as a network of policy-led organisations. This gives their partners a protected space to discuss the unique challenges of regional policy work. Rhiannon explained how this led to a fairly light-touch application process, with a focus on partner dialogue around policy change. Money is seen as a means to an end, and the end is shared by all involved.

The burdens faced by charities in applying for grants were repeatedly raised at this seminar. Applications take time, time which could be spent serving beneficiaries. By simplifying and standardising applications, developing digital solutions like shared application platforms, and providing constructive feedback with rejections, funders could help charities optimise time and resources.

 

Continuing the conversation

At NPC we think encouraging open conversations about the power funders wield, both individually and collectively, could help achieve enormous social impact. This seminar was the second of a series of three looking at power dynamics in grant-making. You can read the blog from the first one on sharing power here.

We’d love to invite you to our next seminar on this topic on the 16th of July, which you can sign up to here. How funders use their power will also be a hot topic at our upcoming Ignites Conference on the 10th of October. Book now.

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