Introducing the Alliance Breakfast Club on 25 July, held in London and hosted by the Shell Foundation, Anthony Tomei, guest editor for the June special feature on ‘Philanthropy in a changing world economy’ and former director of the Nuffield Foundation, mentioned three themes that had emerged from the special feature: hand in hand with economic growth, rising inequality – something that is all too evident in the UK; a greater emphasis on investment rather than grants; and a greater interest in partnership and cooperation, especially with government.

Watch Anthony Tomei’s introductory speech

Watch Bharat Mehta’s introductory speech

Watch Julian Corner’s introductory speech

One particular issue relating to government is who holds government to account. As funds become tighter and government becomes the main paymaster for many voluntary organizations, is the voluntary sector less able to challenge governments? And do foundations need to step into the breach?

Has the role of government and foundations in the UK changed since 2008?
This was the question put to panellist Julian Corner of the LankellyChase Foundation. Pre-2008 the government had a lot of money to spend, he said, which meant it could drive at social results which it could achieve within the length of a parliament. The model was to identify evidence-based practice and roll it out quickly. Foundations were part of the delivery chain. Now the model is bust because the money has gone. The ‘what works’ agenda no longer works – if it ever did. Rather we need problem solving, and long-term, sophisticated models. Foundations have to take a step back and ask themselves if they want to be a part of it any more.

In the view of Bharat Mehta of Trust for London, also a panellist, what is happening amounts to a rewriting of the social contract. Growing inequality will lead to growing stress and strife in society. This changes the whole landscape for foundations. This is not just about provision of services, but about the essential ingredients of being a citizen. As others pointed out, the expectation that things like youth clubs and community halls will be provided by local authorities is gone. Do we as a society any longer see poverty and homelessness as our responsibility, asked Anthony Tomei. Someone suggested that the UK is moving towards the American system where the primary role of government is regulation.

But we need to make sure we recognize what is gained when things are lost, said Cliff Prior of UnLtd, rather than just bemoaning what is lost. He pointed to the growth in vibrant youth-created, youth-led services, replacing more top-down youth provision. This may work for youth services, as young people typically have time and energy, but what about services for more vulnerable groups such as homeless or disabled people?

Foundation legitimacy a key issue
When the audience was asked whether foundations should take more of a role in challenging governments, the emphasis seemed to shift to foundation legitimacy and foundations’ role in a democratic society.

Foundations are fundamentally undemocratic and allow people to buy influence with money, said philanthropy consultant Diana Leat. Why do we give organizations with money (foundations) levels of influence not given to individuals? If you are an undemocratic institution, what responsibility do you have to be democratic, she asked. Another participant suggested that maybe government should be challenging foundations more than the other way around – including their tax exemptions, payouts to executives, etc.

How can foundations counter the charge that they are unaccountable and undemocratic? Greater transparency and more diverse board representation were suggested. But Leat warned of the need to be careful about transparency: ‘one day newspapers such as the Mirror and the Mail could find out that they don’t like what foundations do …’ For her, the legitimacy of foundations lies in the fact that they’re outside of government – they can support tiny organizations or big organizations, take a long-term view, be creative, and not get sucked into the whole ‘impact/performance’ debate; they can at least in theory raise issues that nobody else is prepared to raise.

Legitimacy is not something that adheres to an organization, suggested Anthony Tomei, but to what they do. ‘It’s something in the eye of the beholder.’ The Diana, Princess of Wales Memorial Fund’s work on immigration – a highlight of good practice, in his view – had legitimacy in the eyes of the third sector but not the Daily Mail. If you’re trying to make a large-scale difference, you need legitimacy in the eyes of many different players, including politicians and media.

‘Of course foundations are unequal and undemocratic, but far from alone in that,’ said Cliff Prior. For him the key point is that they should always be in the corner of the poor and underprivileged rather than being in the corner of the wealthy. In a democratic society all sorts of things are going on in terms of influence, lobbying and ideas. If you just leave things to people in government, they don’t always do the things that will help the neediest – which is undemocratic in itself. We shouldn’t be apologetic about this, said another participant.

Prior also stressed the role of foundations in the ‘market’ for information and ideas. There is no leadership on societal values from government, said another participant. Julian Corner emphasized the critical role foundations can play in ‘ventilating’ the system. The present government is bringing in ‘markets with no ventilation’, he said. It says that the non-profit sector is a source for ‘innovation’ but doesn’t invest in the sector.

How to influence government?
How do you influence government, asked Anthony Tomei. You can fund a campaign and have other people knocking on doors etc, but you can also do it directly. The Nuffield Foundation looked into different types of research, but to get it on to the desks of policymakers you have to work at it. ‘You need to have a good relationship with government and work with the grain in order to have influence,’ he said. A key reason why foundations can get access to government is that they are seen by politicians as a potential source of money, unlike the voluntary sector. Another factor may be having a reputation for fair dealing and independence.

Bharat Mehta found the idea that ‘influence is all’ a worrying one, emphasizing the need for smaller organizations that will snap at the heels of larger ones. Often unexposed and untalked about issues are dealt with by these smaller organizations. He gave the example of a programme to fund 20 small organizations working on female genital mutilation, an issue that affects a large number of young women in migrant communities in the UK and elsewhere in Europe. Government had no particular view on it, but the programme enabled these organizations to communicate with government and has resulted in increased money for the issue.

In his days as a grantseeker, said Julian Corner, he hadn’t thought of foundations as the principle conduit of knowledge to Government, and had mainly viewed them in their role as grant givers. ‘They can help by putting “welly”/energy behind an idea which would otherwise take ages to come about.’ Foundations can take more risks, make sure organizations have a proper evidence base and can make a solid case to show where cost savings are. He advocated a pincer movement – turning up the heat on governments as well as offering solutions.

Have foundations changed the way they operate over the last five years?
Are they using their assets in different ways, for example, more open to social investment? As so often, no one was very forthcoming on this – an area where there is still more hype than substance perhaps, though one participant did offer the view that social investment is an area where government is expecting foundations to step in.

But several participants said that foundations are collaborating much more, emphasizing how rewarding this can be, but also the absolute need for a base level of shared values and mission and shared risk, ‘otherwise you might as well not be doing it’.

Amidst much talk about the role of foundations, Russell Prior from HSBC wondered how this conversation would have struck philanthropists with say £10 million or £15 million thinking of endowing a foundation. How would they react to discussions over issues like legitimacy? Bharat Mehta for one insisted that the discussion was a sign of a healthy, self-questioning sector. He’d encourage them to go ahead, but he wouldn’t apologize to the philanthropists.

‘There is a crisis of confidence in the sector about legitimacy,’ he concluded, ‘but right now is not the time to falter. It’s really difficult for people on the streets, we need alternative ways of thinking.’
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