Foundation grant-making at record level

Expert opinion
Visiting Professor, CGAP, Cass Business School
New results from the annual Foundation Giving Trends*1 show that in spite of a volatile economic environment, grant-making by the Top 300 foundations grew by a real 10.9% in 2016/17. It reached a record £3.3 billion, in a fourth year of ongoing positive growth. 
The new high level of grant-making was derived from almost equal growth in income from investments and from donations, increasing by a real 10.7% and 10.3% respectively. These findings highlight the success and strength of foundations’ unique two-way role –as both flexible vehicle for major donor philanthropy, and sustainable source of support for civil society.
Income from investments was worth £1.5 billion. This came on the back of assets whose net value also hit a new record at £65 billion, an increase of 10.7%.  Over the last few years we have seen some foundations drawing on total capital returns as well as income from investments to maintain or increase their spending, and total Top 300 spending in 2016/17 was £4.5 billion, against annual income of £3.7 billion. 
The value of foundations’ assets tends to grab the headlines, but this should not obscure the equal importance of new donations in maintaining foundations’ funds, worth £1.8 billion in 2016/17. The growth mainly reflected donations into existing foundations. Giving into corporate foundations was exceptionally high due to a gift of shares in Redrow plc worth over £202 million to the Steve Morgan Foundation by its eponymous founder. Just over half of the family foundations funded through annual giving saw an increase this year, and two received gifts of £50 million or more. The Denise Coates Foundation (formerly Bet365 Foundation) received £50 million from its founder in 2017 (following £20 million in 2016) to create an expendable endowment. 
But the headline growth figures tell a mixed story. They reflect choices for a limited life-span and spending out, such as Gatsby Foundation, which received £55.4 million from the settlor, Lord David Sainsbury. Spend-out pushed up grant-making levels, for example in The Queen’s Trust, which closes this year.
A small cluster of foundations at least doubled their giving, including Arcadia, The Basil Larsen 1999 Charitable Trust, the Rothschild Foundation and Winton Philanthropies (funded by Winton Capital Management and company founder David Harding, who also funds a family trust, The David and Claudia Harding Foundation). Some single large grants, such as by the Horne Foundation and the Lancaster-Taylor Trust, both for educational purposes, also pushed up grant-making.
These cases illustrate the wonderful flexibility of foundation philanthropy, for example enabling nationally -important one-off major multi-million investments in one year, followed by spending retrenchment in the next. This makes it tricky to track trends. 
Despite record results, the net asset growth rate across the top foundations (excluding the giant Wellcome Trust), was a modest 2.5%. But the evidence of slowing asset growth and some highly individualised foundation spending patterns mean we should not see this year’s results as necessarily portentous of a new age of growth.  Several foundations expressed anxiety about the uncertainties in the financial and social environment in their annual reports, and this may lead to spending caution and greater prioritisation.
The increasingly visible impact of social inequalities and public spending reductions also continue to prompt debate on how foundations can best allocate resources. Many reflect on spending policies in their annual reports. Some are adopting more strategic approaches, or a stronger thematic focus such as on poverty and social justice, or ‘place-based’ grant-making.
Others believe that despite immediate pressures it is vital to maintain the flexibility to make very major national investments, or alternatively stay ‘responsive’ to fund-seekers. Some foundations are focussing on community cohesion in the face of polarisation, rising hate crime and extremism, and one commented*2 , ‘The Brexit vote and all that it revealed about our nation has made us take stock and understand what we might do differently'. The Social Investment funding space in the Top 300 grew to £120 million this year, an 18% increase. 
There is no right way to ‘do philanthropy’. The drive for impact continues to be expressed in diverse and individual ways, from the Wolfson Foundation’s emphasis on excellence in all forms, whether progressing scientific development or social care, to the Resolution Trust’s focus on poverty and the distribution of resources. To encourage more new foundations, we need to highlight how they are - and can be – uniquely moulded to fulfil donors’ philanthropic aspirations. 
 *2  Esmée Fairbairn Foundation Annual Report and Accounts 2016
Please find the following link to the report by The Association of Charitable Foundations (ACF)