How this idea was developed
Our idea for new ways of measuring the impact of flexible funding is based on conversations, workshops and research with numerous charities and funders who have taken part in our Rethink Rebuild initiative. Here’s what we’ve learnt from this work.
How grant-making is changing
Within the social sector, the systems and cultures around grant-making have been one of the most significant shifts brought about by the pandemic. Our research, workshops and conversations with both funders and grantees have highlighted the significant changes underway in grant-making.
Flexibility: The pandemic emphasised the importance of charities having autonomy and flexibility to use their resources to respond to changing needs as the situation requires. Although accentuated in times of crisis, uncertainty is always a facet of working with complex problems. Therefore, giving charities the agency to respond flexibly to changing circumstances should always be a principle of grant-making. So far, at least 70 funders and charities have signed up to the Flexible Funders initiative which sets out eight principles for adopting more open, trusting, and flexible funding practices. The movement is mirrored in the US through the Trust Based Philanthropy movement.
Shifting power through participation: The murder of George Floyd greatly accelerated the debate about the shortcomings of the sector in addressing racial injustice, something which has been the focus of the #charitysowhite movement for some time. One response has been a growth in more participatory grant-making approaches that directly involve minoritized groups and communities when allocating resources. We have previously profiled the Baobab Foundation’s ambitious and potentially ground-breaking model for this, which is seeking to recruit over 1,000 ethnic minority member organisations from across Britain to make funding decisions and set the direction for the foundation.
Opening up: During the crisis, grantees were pleased to report that funders had increased and improved their communication by having more honest conversations about grantee needs, as well as soliciting and acting on feedback. Many took important steps to be more transparent about their opportunities, limitations, processes and decisions, something grantees had long been asking for. Openness is vital to rebalancing traditional power structures, and we have set out a vision for Open Philanthropy on our NPC Labs site.
Grant-making has sped up and been streamlined: At least in the initial phases of the pandemic, funders made decisions more quickly and reduced the burden of application and reporting requirements on their grantees. This was arguably easier while the pandemic was still in the initial ‘crisis’ phase, and it remains to be seen whether this will become a more permanent change.
Grant-making in collaboration: There was already a movement towards greater collaboration in grant-making. For example, London Funders was already well established, and LocalMotion is a good example of funders collaborating within a specific place. Two notable initiatives from the past 18 months illustrate a further shift in this direction:
- The London Community Response brought together 67 funders, offering charities a single application form. Participating funders decided which charities to support and shared their decisions with the rest of the group. This offers a promising template for continued joined-up grant-making processes.
- ACF’s Funders Collaborative Hub offers great potential for funders to streamline effort, expand networks, reduce duplication, learn from one another, and ultimately increase the impact of their funding.
The shift towards more flexible and trust-based approaches is very welcome, but impact measurement is still a crucial part of the effective grant-making cycle.
Our Rethinking grant-making work will focus on how charities and funders could adapt their impact measurement to give flexibility to grantees while still having access to the data they need to target funding to the people and places who need it most.
We need to strike the right balance between flexibility and rigour.