News in focus: Unfair shares for all in the spending round on trusts

Recently published figures reveal a strong bias in the allocation of grants handed out by independent trusts and foundations. Mathew Little looks at the funding patterns and priorities of Britain's grant givers.

Britain's 11,000 trusts and foundations furnish around one-tenth of the sector's annual income of £20bn. But, according to research by the Charities Aid Foundation, this philanthropic largesse is far from equally shared out.

Social care, health, education and arts organisations receive more than half of all funding (54 per cent of the total), while other causes such as the environment (4 per cent), international development (4 per cent), animal welfare (1 per cent), and civil society (1 per cent) barely register.

Contrary to the contentions of the Daily Mail, Peruvian guinea-pig farmers may as well throw their application forms in the bin.

But do the giving patterns of Britain's foundations, many of which emerged to meet the social needs of the 19th century, show them locked in a Victorian time warp? Or are they merely following the modern contours of a sector that has evolved to take on a significant public service role?

On one level, the CAF figures don't actually say anything about the conservatism or daring of grant makers. The popular categories may be mainstream, but the funded projects could actually be far more marginal.

Education charities get 10 per cent of all grants, but are the recipients public schools or inner-city teenagers? The figures don't tell us.

However, some critics argue that the priorities of foundations - social services, health and education - demonstrate an unimaginative conformity with the priorities of the state. This is said to be contrary what they should be doing.

Krishna Sarda, chief executive of the Council of Ethnic Minority Voluntary Organisations, contends that since local authorities have pulled back from direct service provision in recent years, trusts have filled the funding gap.

"In a strange kind of way, independent trusts and foundations are stepping into the shoes of public service providers," he says. "More and more, they are aligning themselves with an agenda from government."

He argues that this co-option means less money for civil rights organisations trying to advocate on behalf of minority communities. "It's a real uphill struggle to get trusts and foundations to fund more BME organisations.

I can think of a dozen neighbourhood-based groups that live off donations that communities can ill afford to give," he says. "Less than 2 per cent of trust funding goes to ethnic minority groups. But who makes up these institutions? Trusts are a part of the establishment and have never experienced inequality or the exercise of power in an inequitable way."

Former LSE academic and consultant Diana Leat suggests that, contrary to their self-perception, trusts have a herd mentality and mimic what the state does. "Much of what they support can be done by fundraising charities or by government," she says.

Leat, who co-authored a 2002 book, From Charity to Creativity, which accused trusts of a lack of adventure, says they are not taking advantage of their independence to fund projects that no-one else is prepared to.

"Unlike politicians who have constituents and the tabloids to please, and corporates that have customers to consider, endowed trusts and foundations are free in an important sense to do what they like," she says.

"The fact that they are not championing causes like civil rights means they are not using the freedom they enjoy. They really have almost complete freedom to take risks and they are not exploiting their distinctiveness to the full."

Blanket judgements

From Charity to Creativity brought a distinctly huffy reaction from trusts that felt they had been unfairly branded as uninspired dullards. Nigel Siederer, the former chief executive of the Association of Charitable Foundations, warns against blanket judgments. "Trusts and foundations are difficult to generalise about," he says. "They are a genuinely mixed bag."

He asserts that many have an enviable record of supporting unpopular and unfashionable causes - refugees, prison reform, treatment for drug abuse and the peace process in Northern Ireland.

Nor are they as immune from external pressures as critics imagine. "Children in Need's regional funding helps groups in a way that no other organisation does, but it has a particular public profile and if it really reached out to the radical end, it would have the gutter press to deal with," he says.

But the critics assert that trusts in this country need only gaze across the Atlantic to see a more daring model of grant making. Sarda lauds the US's "radical culture of business giving" compared to the "small 'c' conservative bread and butter issues" funded in the UK. Leat says US foundations are prepared to take on emotive and controversial issues such as the Homeland Security Act's impact on freedom of information.

Certainly, funding patterns are different. Religious causes, for example, make up one-third of all charitable giving in the US. But American charities are also far less entwined in service delivery than their British counterparts, which means a larger proportion of trust patronage goes to support advocacy and activism.

A tiny 1 per cent of trust funding in the UK is destined for 'civil society, law and civil rights' according to the CAF figures. But in the US, 'public affairs and societal benefit' - a category that includes civil rights, community improvement and development, and public affairs - receives 11 per cent of all grant dollars.

But American foundations are also far more interventionist, seeking to foist innovation on charities, rather than sitting back and waiting for applications to arrive.

Ken Hoffman, a US fundraising consultant, says this is not always a blessing for grant recipients. "Coupled with the increasingly bold and insistent direction of charities' programmes by many foundation boards, the charities are caught in a vicious circle," he says. "They often feel impelled to 'chase the dollar' to stay solvent, yet are then disappointed at the withdrawal of support when foundation funders feel that innovation has been accomplished."

Siederer cautions against radical visions for the UK's trust sector, whose prime virtue is that it is able to make up its own mind about what it funds. "Trusts aren't all that wealthy - they only give out £2.2bn a year, which isn't that much money. However, it is anarchic, but it has to be. Otherwise it would be directed by someone, and the point is that it is not."

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