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Looking forwards, looking backwards Stability and change in the world of UK foundations.

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It is a decade since the Centre for Civil Society at The London School of Economics coordinated a 21 country study of Visions and Roles of Foundations in Europe. Looking back at the findings, it is fascinating to reflect on what has, and has not, changed – but there is a health warning here: my reflections on today are based on personal observations, and apply only to the UK.

The original study was designed to discover how foundations in different states saw their roles; their visions of their ideal roles and constraining factors; how others saw foundations’ actual and ideal roles and visions; and, what foundations saw as the key challenges and policy issues ahead, including relationships with other foundations in Europe.

In 2003 UK foundations generally found it difficult to articulate any distinctive role, but, as in other countries, ‘innovation’ was a frequently used term. Furthermore, the majority saw their roles as complementing those of others, including government. Most foundations rejected the role of substituting for state services, but most also commented that this was difficult in practice. The issue of substitution and relationships with statutory funding was for many foundations (and in many states across Europe) the most difficult issue at the time.

The study also found that the majority of foundations did not see themselves as having much, if any, influence on social policy change. In part, this was attributed to politicians’ lack of understanding and knowledge of foundations.

The visions of foundations broadly subscribed to a liberal model in which they saw themselves as being independent of government and market, and providing alternatives to the mainstream. However, few foundations claimed to be ‘a visible force’. In 2002-03 foundations were concerned that they were being moved from a broadly liberal model towards, at best, a corporatist model or, at worst, a state-controlled model in which they are ‘encouraged’ to support government’s agenda.

So what were the emerging issues in 2002-3?

  • Monitoring, evaluation and accountability. While foundations did not believe that they should be more accountable to government, several suggested that they should be more accountable to beneficiaries.
  • Managing with declining income. For some foundations in 2002-3 the combination of issues to do with substitution and ‘doing more with less’ was leading to the consideration of new, more policy-oriented approaches, building on the foundation’s existing knowledge base. So perhaps here we have the seeds of the move towards policy influence noted below.
  • Limited public and political understanding of foundations. Foundations were almost unanimous in believing that there was widespread public and political lack of understanding of foundations.
  • European and cross-border issues. Where there were easy mechanisms for involvement and/or where there were tangible benefits, British foundations seemed to become involved in wider European fora and issues, and whilst corporates could operate freely, foundations faced a wide array of challenges.
  • Demonstrating effectiveness, relating to government, legal and tax frameworks, and responding to new needs in the light of reduced public spending were also highlighted as potential issues.

Where we are today?

What, if anything has changed in a decade? Have UK foundations found it any easier to articulate a distinctive role, and how much emphasis on ‘innovation’ do they place in these troubled times? Does innovation become a game of pass the parcel if no one is prepared to pick up the tab for those many projects that can never be self-sustaining? Are foundations really any different? Do they really care about non-profit performance or impact? Do UK foundations still see their role as complementing that of government? And would some see a place for collaborating with, and/or critiquing government? Perhaps the one point on which we can be relatively certain is that foundations today would agree that issues of substitution and relationships with statutory funding remain pressing and difficult.

Foundations’ approaches to policy involvement seem to me to be one of the areas of greatest change. My impression today is that many of the larger – and some not so large – foundations are thinking hard about if and how they can influence policy. The old confusion of ‘policy’ and ‘politics’ seems to be fading away.

Foundations’ fear that they were being moved from a liberal to a state controlled model is, I suggest, a fear that has not receded and may well have increased today. Some foundations fear that, rather than being seen as an ‘alternative’ to government, they are increasingly being looked upon as government's back pocket, or at least ‘little helper’.

Foundations’ views on accountability have probably changed rather little, although interest in performance measurement (primarily of grantees) has no doubt increased. But, as Timothy Odgen suggests concerning individual donors, this may have little practical relevance in decision making. What ‘performance measurement’ actually means to foundations, how they go about it, and what role it plays in initial and subsequent decision making are all open questions. Perhaps, as in the case of this government’s economic policy, evidence that x isn’t working is taken as a reason to do more of the same? Another equally important question, of course, is whether more ‘performance measurement’ is desirable? For example, might it simply encourage foundations to follow conventional, safe paths rather than the truly, madly, difficult ones from which most innovations emerge? But that takes us back to the deeper question of the role of foundations – is their primary role to provide services, and/or to do something different, such as to be in Paul Ylvisaker’s words ‘society’s passing gear’.

Foundations’ beliefs a decade ago that they had little public and political profile might have changed somewhat; today there is certainly greater public and political awareness of foundations, but whether that is combined with real understanding of their roles and work is another matter. The recent debates over pay out and administrative costs demonstrate a lack of understanding of the cycles and costs of good grantmaking.

In 2002-3 there were signs of greater interest in European involvement; however, I fear I this may have been misleading. UK foundations’ involvement in European Foundation Centre remains strikingly low and may even be decreasing. It is hard to think of very many of today’s major issues from the environment to education, health and crime that do not have a European, if not global, dimension. None of these issues can be seriously addressed without Europe wide co-operation – and who knows, maybe talking to colleagues in other countries might even give us some new ideas and insights?

Foundations’ perceptions of future policy issues were remarkably prescient. So ten years on, what might UK foundations add to this list? Managing reputation would be one. Foundations now have a higher profile but, arguably, that has attracted some unwelcome, and sometimes misguided, attention from both government and the media. Two other issues might be added: investment policies (including mission related investing) and spend out. While these two issues may still not be mainstream debates, they are certainly more widely discussed than they were a decade ago.

Where next?

Crystal balls are notoriously unreliable. We seem to find it comforting to believe that the future will be some version of ‘more of the same’; in fact, the major events of the last decade have been less about continuity and more about discontinuity or ‘shocks’. So I am a very reluctant crystal ball gazer – but if pushed what might I predict?

I have already mentioned the issue of reputation; will this issue ripple out into more fundamental questioning of the roles of foundations in elected democracies? Perhaps in another ten years foundations will have to work harder to defend their legitimacy. Are foundations ready to provide robust and cogent explanations of their peculiar roles and legal and tax privileges?

Equally fundamental may be the growing erosion of government, voluntary sector and business boundaries. Will we even talk about ‘sectors’ in another decade? And whether we do or not, how will foundations negotiate the fuzzy boundaries between private and public ownership and responsibilities?

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  • Trusts & foundations