Smaller foundations can have a structural advantage in pursuing 'ambitious practice', report finds

Smaller foundations are able to be more ambitious with their grant-making practices than their larger counterparts because they can be more agile in their processes and better connected with local communities, a new report has found. 

The report, called 10 Pillars of Stronger Practice for Smaller Foundations, is the latest publication from the Association of Charitable Foundations’ Stronger Foundations initiative, which was set up in 2017 to help foundations identify and pursue excellent practice. 

The report, published today, says that although the largest 300 UK charitable foundations account for half of all charitable grant-making, many smaller grant-makers choose to award their funding as small grants, with the result that they are collectively responsible for "very many interactions between foundations and grant-seekers, grantees and communities".

This means the role of smaller foundations and their grants is of “enormous importance to civil society and their individual and collective impact on people, places and causes is highly significant”. 

Smaller foundations are considered to be those that give out grants of up to £500,000 a year, which accounts for about 90 per cent of UK charitable grant-makers. 

The report says that although excellent and ambitious practice is found across foundations of all sizes, many smaller foundations are “highly successful at non-grant-making activities, such as advocacy, research and in-person grantee interaction”. 

It says: “Indeed, it is clear that smaller foundations can have a structural advantage in pursuing ambitious and effective practice and achieving impact in pursuit of their mission.”

This is because smaller organisations can be more agile in their decision-making, better connected to local communities, leaner in their bureaucracy and able to “stick or twist” with their objectives more flexibly, the report says. 

It says that with fewer assets and less income than their larger counterparts, most smaller foundations aim to offer the largest possible grants budget by having few or no paid staff and are less likely to undertake non-grant-making activities. 

If they do have a paid staff member, they are likely to work part-time. 

“Limited staff time can make it difficult to take on additional organisational development alongside day-to-day activities, and aside from the trustee board there are less likely to be others to discuss ideas and thoughts on foundation practice with,” the report says.

The ACF’s Stronger Foundation’s initiative involved involving representatives from 100 foundations across six working groups that each produced a report on foundation practice in areas including diversity, transparency, strategy and funding practices. 

The reports set out a total of 40 “pillars of practice” that aimed to identify how foundations could be ambitious and effective with their resources, the ACF said.

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