Foundations must embrace the spirit of transparency


Cathy Pharoah


Foundations today live in a climate of increased public distrust and increased scrutiny of major social and political agencies, and it does not look as if this is going to change any time soon. Charities have faced an unprecedentedly hostile media environment, and we have seen increased regulatory control across the globe. In this context, it is absolutely vital that foundations  take control of the information agenda, and get onto the front foot to ensure that they retain public respect through openness about their activities. Yet, data on foundation grant-making can be hard to obtain, and is patchy and fragmented. Collectively the foundation sector is not moving fast enough.

Foundations have access to almost unimaginable opportunity for information-collecting and sharing through global communications technology. Many are now using the web effectively to open up and share information about their funding, but efforts to compile information from across the foundation world into a coherent picture of the sector’s contribution to social challenges remain embryonic. The new edition of Foundation Giving Trends 2016 published in the UK by the Association of Charitable Foundations, highlights initiatives to compile foundations’ grants on open, common and standard platforms. In the UK, these include 360Giving, set up by Indigo Trust to encourage trusts to share open grants data, the Environmental Funders Network which publishes the environmental grants of 180 funders, the Directory of Social Change database which provides details on grant-making practices and preferences of 2500  trusts and Factary, which maintains a large international database of philanthropic grants made by individuals, independent trusts and other funders, and is widely used by fundraisers in many countries. In the US, the Foundation Center’s Glasspockets initiative provides informed discussion on foundation transparency. as well as highlighting good practice.

The grants data analysed in this year’s Foundation Giving Trends for the first time provides evidence of foundations’ concern not only about today’s needs but about investing in future healthy and sustainable societies through the education, research and training which empowers individuals, science and other fields of knowledge to grow and develop. The Foundation Giving Trends reports in the UK were supported by the Pears Foundation specifically to make information about institutional philanthropy and their annual spending more open and accessible. Now into its eighth year, this research on the largest foundations is not intended as a roll-call of the most powerful foundations but as a tool for understanding what private wealth contributes to society through philanthropy.

Its original intention to be a tool for international comparison foundered when regular data outside the UK and the US proved too hard to obtain. The challenges facing open data should not be underestimated. Though access to shared information is the bedrock of openness, we still have a long way to go. Many UK funders provide no more than the absolute minimum of information required by the UK regulator, the Charity Commission. Across the globe little systematic, regulated and up-to-date data on foundations’ spending is available. The lack of regulated national reporting systems on foundations’ annual finances, and little research capacity means we are still a long way from being able to roll-out the model of having regular or even standardised national ‘state of the foundation sector’ reports. Without these we are unable to assess or compare the contribution of foundation philanthropy globally.

Providing good information requires investment and commitment. Its rewards, such as better information on the activities of other foundations and funders, are matched by its risks, such as beneficiary exposure, which were highlighted in a European Foundation Centre event earlier this year on the impact of the internet on philanthropy.

Transparency is about values not just practice, and about a commitment to openness and accountability in the processes of decision-making. Publishing details of grants and other spending is not just about good governance, or observing the letter of transparency. What matters is observing the spirit of transparency, building accountability and investing in shared knowledge of how foundation philanthropy across the world does and can contribute to  society. Articles and advice on what foundations should be doing abound, evidence on what they are doing remains scanty.

Professor Cathy Pharoah is co-director of the Centre for Giving and Philanthropy, Cass Business School, City University London

For more information, see the full report here.

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