What is an effective funder and how do you become one? This is one of the questions I get asked the most. But, unfortunately, it is also one of the hardest. Although it’s easy to trot out the standard responses ‒ identify areas of need, focus on impact, fund flexibly ‒ it’s hard not to sound too simplistic, providing advice from the sidelines, without ever getting into the game.
One of the issues is that there isn’t a one-size-fits-all template for ‘effective funders’. Each funder will be influenced and shaped by their different resources, size, priorities and objectives. What is right for a Gates Foundation will not be right for a medium-sized funder in the UK, or a high net worth individual. And then when it comes to the day-to-day work and the reality of managing a grant programme, with all the constraints and competing pressures involved, it becomes a much messier story.
I’ve had the benefit of seeing this up close, with the work I’ve been doing for the Stone Family Foundation. Over the past year and a half, NPC has been providing strategic advice to the foundation’s trustees including the day-to-day management as it has scaled-up its funding to £5 million each year ‒ the bulk of this focusing on Water, Sanitation and Hygiene (WSH). This has been a fascinating journey, and we hope that by sharing our experiences and some of the lessons learned, our new report will prove useful to others.
One main lesson is that planning is key. One of the most valuable things we did was to take the time to set a clear strategic direction for the foundation. This made sure the foundation’s funding and skills were focused on where they could have most impact. And it also carved out a manageable area where the foundation built up its expertise and networks ‒ which was invaluable when it came to sourcing and analysing potential grantees.
For the Stone Family Foundation, the decision was made to help scale up market-based solutions to provide WSH services to low-income households in Sub-Saharan Africa and South and South East Asia. Initiatives that sold low-cost latrines to rural households or purified water to urban slums promise a way to provide sustainable, efficient, responsive services. Yet they need grant-funding to help really scale and develop. With the foundation’s appetite for risk and the business background of its trustee board, it seemed like a natural fit.
A second lesson was the importance of being flexible and continuously learning and adapting. The foundation’s first WSH grant programme was focused on providing six £1 million grants across three target countries: Zambia, Cambodia and Tanzania. This allowed us to build up our expertise, and establish a really strong portfolio of organisations to support and learn from. But for the next stage of funding, the foundation decided to take a different approach. This included looking for more early-stage and emerging ideas, and as part of this we have set up the Stone Prize for innovation and entrepreneurship in water, to help find promising ideas from around the world. The foundation is also experimenting with ways to help organisations access social investment and better business support.
Finally, one thing that can’t be stressed enough is how important it is to build relationships and networks with other funders, academics and experts. This can sometimes seem like an awful lot of work with many meetings and phone calls, but in the end it has been invaluable. Finding people that share our mission and approach has helped us to become more efficient and effective. We can compare thoughts on NGOs, discuss wider issues in the sector, and share approaches to monitoring and evaluation. In a number of cases, the Stone Foundation funds alongside other established funders ‒ such as the Gates Foundation, the World Bank and the Michael and Susan Dell Foundation.
The foundation’s scale-up is still in its early stages. By no means have we got everything right but we’re developing an approach that works for us, and we believe it makes the foundation more effective. It’s not a template for everyone, but by setting out our journey and some of the questions and challenges we’ve addressed, we hope it will help more people think strategically about their giving and the impact they can have.
Adrian Fradd is a senior consultant at New Philanthropy Capital. The development of the Stone Family Foundation’s giving is the subject of a new report published by NPC today. For more information about the Stone Prize for innovation and entrepreneurship in water see http://www.thesff.com.