Open and Trusting grant-making FAQs
We answer questions you may have on our Open and Trusting Grant-making initiative.
We answer questions you may have on our Open and Trusting Grant-making initiative.
The Funding Experience survey of over 1,200 charities survey provides clear evidence that open and trusting grant-making matters to charities. They experience it as reducing pressure, giving them greater control of their resources, and helping them to do a better job.
By applying the eight Open and Trusting commitments, funders of all kinds can work towards these positive outcomes in both their grant-making practices and in their relationships with funded organisations. When applying for funding, charities need funders to be clear about their priorities, proportionate in their requirements, thoughtful and efficient in their processes, open about how decisions are made, and honest in their feedback. All these are qualities that help to reduce the burden of fundraising and enable charities to make better, informed judgement about where to focus their fundraising efforts.
And in an open and trusting funding relationship, charities feel they have ‘freedom to act’. ‘The funder having faith in our organisation to deliver where the need is’ builds confidence and reduces stress. This sense of freedom and agency is not restricted to close relationships with funders. It is equally felt when a funder simply trusts the charities it supports to do a good job.
As Tim Cutts (Executive Secretary, Allen Lane Foundation) says:
We’re here to take risks. And if we don’t, then that automatically excludes certain organisations from being funded, even if they are doing good work with the groups that we are prioritising – like recently started organisations, organisations experiencing a financial blip, organisations on low reserves. If we can determine that an organisation can operate and the work is relevant to the people that they’re supporting, we should trust them to do it.”
Charities report that, as a result of open and trusting funding, they are able to:
These positive changes enable charities to make better use of their resources, to be more forward looking and to achieve better outcomes in a complex and changing environment: ‘Ultimately it means that we achieve more, help more people, and make more of an impact’.
Read more:
Get the basics right: Findings from the Funding Experience Survey
A simple ambition for grant-making: Unrestricted and light-touch
Through a common set of expectations and routines, foundations can constrain the ability of funded organisations to respond flexibly to the evolving needs of communities according to their own wisdom and expertise. These processes are stifling, and they need to change. That is why getting the basics right – captured in the eight open and trusting commitments – is so vital.
However, on a deeper level, tactical changes in the grant-making process and paperwork are only one step towards a far more transformative change that requires funders to do their own soul-searching and self-reflection.
As our partner Shaady Salehi (Executive Director, The Trust-Based Philanthropy Project) argues:
‘A trusting relationship between funder and nonprofit is ultimately about shifting power, not shifting paperwork. In the guise of risk management, due diligence, and good strategy, funders often exert high levels of control over nonprofit self-determination and decision-making’.
Requirements and restrictions can remove power and autonomy from organisations that are more experienced than foundations in reading and responding to the needs and interests of the communities they represent. For some members of the Open and Trusting community, rebalancing power begins with the type of funding awarded and approaches to risk:
We start with a recognition that we have more power and more resources, and should carry more risk ourselves. So, investing through unrestricted funding is an expression of a sense of responsibility we feel for the organisation’s wellbeing, and a belief that risk is better assessed and managed through relationships of trust and respect, rather than through restrictions.” (Amy Braier, Director, Pears Foundation)
And for IVAR, as convenor of the Open and Trusting community, the contribution of charity leaders as facilitators of the recent peer review process (completed by all funders committed to the eight Open and Trusting commitments) is pivotal to an incremental shift of power.
Read more:
A Power Reckoning on Trust in Philanthropy, From Both Sides of the Pond: Part 1
Getting the basics right: Findings from the Funding Experience Survey
Open and Trusting grantmakers are letting go of some of the restrictions and demands around funding – but they are not letting go of impact. They are deeply committed to understanding impact, and working out how to increase it. But understanding what ‘making a difference’ looks like, and who gets to decide what good looks like, is far from straightforward.
Critiques of trust-based approaches that are built around a series of polarities – including trust vs. impact – believe the true spirit and essence of this movement. Fundamentally, Open and Trusting Grant-making calls for a new mindset – one that starts from the assumption that charities know their own business and will make informed judgements about how to adapt and adjust as things change. It does not suggest that funders should settle into the role of ‘cash machine’ – simply that they must let go of the idea that they are best positioned to decide how change should happen, who is best positioned to lead that change, and perhaps even which outcomes are most important to prioritise.
And, for many, impact measurement alone is too simplistic an answer to complex questions about how best to decide what to do next (as a charity) or how to deploy future funds (as a funder). Funders can collect a whole basket of intelligence – a mix of formal evaluations with conversations and reflections, research, statistics, qualitative and quantitative outcome data, case studies, structured surveys, beneficiary views and many more – to help make decisions about the best contribution they can make to support positive outcomes. In other words a ‘strategic learning approach’, where good learning leads to action. An approach that is deeply interested in ‘impact’, but which does not privilege metrics over expertise and lived experience in the complexity of social change.
As Caroline Mason (Chief Executive of Esmée Fairbairn Foundation) says:
In Open and Trusting Grant-making, it is no longer in the gift of funders to dictate outcomes or prescribe methods. Expert organisations, initiatives and collaborations can be trusted to know best, and can be freed to adapt and adjust as things change. They can also be trusted to be thoughtful and reflective, to collect useful data, and to share it as part of their own commitment to improve the quality of what they do. And funders can then be trusted to apply the principles of strategic learning to their own judgements about what, where and how to fund. Let’s move together towards learning systems that are genuinely useful and, most importantly, don’t set funders up as auditors of social progress.”
Read more:
Trusting funders are not letting go of impact
What is open and trusting reporting, and why does it matter?
Funders and charities should be equal players in a collective effort
Adoption of unrestricted funding is not an essential criterion for participation in the Open and Trusting initiative. Across the breadth of the community, there is a range of attitudes and practices.
The Covid-19 emergency saw many more foundations offering unrestricted funding to free the organisations they support to respond to unprecedented demand and uncertainty. Approaching three years on, that uncertainty and upheaval is not going away. During the cost of living crisis, charities know that they must remain highly adaptable and fleet of foot if they are to meet the needs of the communities and causes that they serve. Through our research, we have concluded that unrestricted funding is ‘the holy grail of funding’ that will give them the best chance of success. This calls for a new mindset – one that starts from the assumption that charities ‘know their own business and can be trusted to spend wisely’, adding constraints only by mutual agreement or where absolutely essential.
As Philippa Charles (Director, Garfield Weston Foundation) says:
Those closest to the issue trying to be solved are the best-placed to design and understand what’s needed, and how to adapt and change. If an organisation’s core is secure, that will create opportunities for them to experiment, take their own risks, form new relationships and continue to improve.”
For small and medium-sized organisations in particular, this change would be transformational: 88% of the 1,200 charity respondents to our Funding Experience survey agreed or strongly agreed that ‘Giving us unrestricted funding – money that we can spend on anything within our charitable objects – would make a huge difference to our ability to respond to changing circumstances and the things that matter most to our community/cause’.
We recognise, though, that this raises many considerations for funders, especially those who feel sceptical about the case for unrestricted funding. Some are practical – like whether it is permitted by your legal powers. Others are more philosophical – like being clear about your attitude to risk. Whatever your constraints, and however far along the journey you are, we do believe that it is worth asking: can we go further in offering unrestricted funding?
Read more:
Getting the basics right: Findings from the Funding Experience Survey
The holy grail of funding: Why and how foundations give unrestricted funding
Open and Trusting funders recognise that a core element of reporting is concerned with compliance, providing assurance to trustees that a foundation’s resources are being used responsibly and in line with the terms of the grant. But they also recognise that engaging with funded organisations is essential, enabling foundations to balance their own information needs against the value and cost to charities of meeting them. It also helps foundations understand how best to communicate their requirements to charities – and how to build trust that they will live up to their promises about how reports will be used.
Our research has shown that funded organisations spend too much time and energy second guessing what funders want or need. The more foundations can make their thinking and intent visible, the easier it is for charities ‘to operate confidently in the funding relationship and get on with the work’. Foundations, too, feel liberated by a clear and shared view of what matters to them: ‘We can’t prioritise everything. We need to be clear about what is really important to us’.
So, if funders start from a position of confidence in their own application and assessment processes, and in the integrity and skills of the charities they are supporting, the responsibilities of good stewardship can be exercised very lightly. Funders are not auditors. And the trustees of the charities they support have their own duties of responsible management under charity law.
A commitment to more flexible, lighter-touch reporting does not mean Open and Trusting funders are giving up their responsibility to make purposeful, intelligence-informed decisions about strategy and practice. But it does mean they are not ‘pushing down the responsibility for “Are we doing a good job?” to the people we are funding’. Rather, they are taking responsibility for thinking deeply about the critical questions that will help them to make informed judgements about how to improve their contribution to the complex ecosystem they inhabit.
In the words of Paul Streets (Chief Executive, Lloyds Bank Foundation for England and Wales):
We have moved away from the idea that we are accountable for the performance of grantees, [so that] instead of being accountable to the people you want them to be, they have to focus on delivering against grant terms and contracts. Our Board do believe that the risk in an individual charity needs to be managed by its board locally. Staff are accountable to their trustees, not to us.”
Read more:
With thanks to Darren James for the photo used.