Trusts and foundations have a problem. They are letting the charity sector down, and they know it.
Head to a trusts and foundations conference (not necessarily something I would recommend) and I would bet an entire pub’s-worth of pints that, at some point, someone will complain about one of the following things:
- Foundations making charities jump through ridiculous and unnecessary hoops to receive funding;
- Foundations offering funding for extremely short timeframes and pulling it without warning;
- Foundations having extraordinarily privileged trustees who do not understand the experiences of disadvantaged groups; and (most importantly of all)
- Foundations restricting their funding to project costs and leaving nothing for salaries of charity workers.
In 2015, Jake Hayman wrote a widely read piece that put the problem starkly: "I’ve spent 10 years working in the charity sector and my conclusion is that the organisations that finance it are so bad at their jobs that they make the rest of us bad at ours.
"I've been working for too long with people trying to achieve great things for the world and watching them degrade themselves at the feet of foundations whose structures turn brilliant thinkers into fundraisers and who reduce a highly complex world into amateur box-ticking. I’m done."
Foundations know that these issues stem from the fundamental imbalance of power between funder and funded, and many are attempting to alleviate the problem (look at The Fore and The Edge Fund). However, if we know one thing about power, it is that is cannot be given – it can only be taken.
Power is not about being permitted to request funding for salaries when it pleases a funder. Power is about choosing for yourself what should be funded and how. It is, simply put, the difference between being permitted to drink from a well and owning the well itself.
The power imbalance between funder and funded seems intractable – almost innate. However, a solution can be found outside the charity sector.
When debt crises enveloped developing countries in the 1980s, rumours circulated of a potential "debtors’ cartel". The idea was simple: if individual debtor countries threatened default, they could not harm the powerful creditor nations imposing terms on them – they would only cut themselves off from capital markets. However, if enough debtor states threatened default at once, they would suddenly be holding the cards.
It was the same principle behind Opec, the oil cartel formed in the 1970s. If one oil-exporting country were to reduce sales to powerful nations, it would only harm itself. However, if all oil-exporting nations reduced their sales together, they could turn the tables.
History has taught one effective way to overturn an imbalance of power, especially one manifested in a severe imbalance of capital – to unionise. Then those lacking capital can collectively withhold their input to productive processes (be it labour, debt payments or oil).
If we want charities to take power from funders, we need a charity cartel.
And what, exactly, would charities withhold? Applications for funding. This might seem like an act of incredible self-harm, however, just like withholding labour or debt payments, all charities withholding applications from a single foundation at once would, counter-intuitively, harm the funder more than the funded. If refusing to sufficiently fund core costs resulted in swathes of charities boycotting a foundation’s grants, practices would change overnight.
Many will say charities should be grateful for whatever money they receive, rather than overthrowing their funders. However, a functional third sector is vital for a healthy society, and the relationship between charities and their funders is integral to it. Currently, it is a relationship based almost entirely on supplication, and it is producing results that even funders are unhappy with.
We need an institution that can represent the charity sector to foundations and, crucially, one that has leverage with real teeth. Charities have been waiting for decades for funders to change damaging practices; eventually their hands must be forced.
If we seriously want to dissipate the power imbalance between funder and funded, we need to start truly thinking outside the box and become comfortable with structural change. Perhaps the time for a charity cartel has come.
Toby Gill is programme coordinator at The Fore, which provides funding for small charities and social enterprises. He writes in a personal capacity.