Funding risk tool
A tool to review your organisation’s attitude to risk in grant-making
‘We’re all in the risk business when we make grants.’
Funders often talk about taking ‘good risks’ but how clear are we about what that actually means? IVAR’s Funding Risk Tool is a practical tool to help funders:
- Start a conversation about risk in grant-making within your organisation;
- Define and articulate your attitude to risk in grant-making;
- Ensure alignment between your grant-making practices and your attitude to risk;
- Consider how taking better risks might help you to achieve more effective grant-making.
Designed to support the commitments of Open and Trusting grant-making, the tool encourages funders to be clearer, more realistic, and more intentional in how they approach risk.
How to use the tool
The tool aims to be comprehensive about risk in grant-making, but if you’re just starting out it could be used to initiate conversations about risk internally as well as to review changes to risk attitudes and grant-making practices over time.
You can use this tool as an individual, with your grant-making team, or with your wider organisation, discussing and comparing your responses as you complete the questions. It is intended to prompt reflection and discussion and not to be used comparatively with other funders.
Why it’s important
The freedom of independent foundations to take risks in grant-making is a vital to effective social action. But funders’ desire to embrace ‘good risk’ can easily become mired in confusion and anxiety. Evidence suggests that, without a greater shared understanding of what funding risk looks like and who carries it, many efforts to mitigate risk are misdirected and much of the social value of risk-taking unrealised.
To fully implement the eight commitments at the heart of the Open and Trusting approach, we need funders to be clearer and more realistic about their attitude to risk in grant-making and more balanced in their attempts to manage it.
Open and Trusting commitment 3: Accept risk
We will accept our share of risk – we will be realistic about how much assurance applicants can reasonably give us; we will clearly explain how we assess risk when we make our funding decisions.
How we got here
In early 2020, IVAR published Thinking about… risk: Developing a framework to help funders think about their approaches to risk in grant-making.
Then the pandemic happened. In many ways, this was the ultimate worst-case scenario – suddenly countless charities could not deliver their services and support in the usual ways. Many funders responded by throwing out the playbook and adopting practices that were previously considered ‘too risky’.
In 2024, IVAR returned to the issue of risk to build on this work and respond to some of the positive disruptions of the pandemic. We updated the paper on risk: Accepting risk in funding practice, and developed the framework into a tool for funders to better understand their attitude to risk and enable closer alignment with grant-making practices.
To ensure that the tool would be useful, we convened three workshops with funders over 2024 and early 2025 to test and review the content and functionality of the tool. We also hosted a conversation with funded partners to understand how funders’ attitudes to risk affect their work and funding experience. All those who participated in these workshops were invaluable to the development of the tool and we’d like to thank them for their time and input.
In partnership with…
