Insights
We look at pledges made by more than 100 charity funders to improve trust and transparency in their distribution of grants
Dozens of trusts and foundations have come together to sign a set of commitments to ensure their funding of charities is open and transparent.
The promises have been made through sector body the Institute of Voluntary Research (IVAR), which says more than 100 funders have signed up to its eight commitments for open and trusting grant making, since the initiative launched in 2021. Among those to sign include Olympic legacy funder Spirit of 2012, NHS Charities Together, and Paul Hamlyn Foundation.
In May 2022, IVAR launched a consultation among charities to improve the application process even further by asking questions such as how well they think funders understand the challenges charity leaders face running their organisation. Their views will be built into the pledges.
“By working together, sharing ideas, difficulties and experiences in a spirit of positive challenge, we are all encouraged to act, learn and do better next time,” says IVAR.
Here we look in detail at the eight commitments being made by funders to bolster transparency and trust in grant making.
Among challenges facing charities is the wasting of time applying for funds that they may not be eligible for. Among commitments by funders is to ensure they do not waste charities’ time, by being open and transparent about eligibility requirements and exclusions.
One of the ways this can be achieved is to review rejected applications to see if they had not met any criteria, which had not been made clear in the process. Another is to ensure that all application documents are edited “for clarity and consistency”, says IVAR.
One way the application process can be unnecessarily time consuming for charities is through asking for information that is already publicly available or by asking questions, which are not relevant to the grant on offer. Duplication of information is another challenge charities can encounter when applying.
Funders signing IVAR’s commitments pledge to only focus on relevant information. This could include a two-stage process, with further details asked for at a second stage in the process. Another is for funders to access publicly held information themselves, rather than ask charities to provide such details.
Funders signing up to IVAR’s commitment pledge to “accept our share of risk”. This means being realistic abut how much assurance charities can “reasonably” give on how they manage risk.
One solution could be to share with applicants advice on minimising risk, such as ensuring diversity of funding and managing reserves. Another is to trust charities to “make their own operational decisions”. A risk framework has been published by IVAR to offer further support to charities.
Funders signed up to IVAR’s commitments promise to ensure they make decisions as quickly as possible and stick to timetables given.
This will be welcome by charities looking to access funding swiftly to support beneficiaries and to better plan support, such as hiring further staff and meeting project development costs.
Good practice is to make all decisions about small grants within 30 days of receiving an application and drafting in extra administrative help to ensure deadlines are met, says IVAR’s pledges.
Among challenges facing charities applying for grants is a lack of feedback if they were unsuccessful. This would be vital to improving future applications.
Signatories promise to be transparent about how decisions are reached, giving feedback as well as analysing and publishing success rates and reasons why applications are rejected.
This can include offering more details about why applications didn’t receive grants, rather than simply saying “we had more applications than we could fund”.
Part of the trust process between funder and applicant is accepting that charities are the experts on how to spend money on good causes. This pledge aims to ensure funders give charities flexibility to be innovative and creative in supporting their beneficiaries.
Where possible funders should give unrestricted funding and where specialist funding is handed out, it should be as flexible as possible. Good practice includes a commitment from funders for at least nine out of ten of their grants to be unrestricted.
All communication from funders with charities should be “positive and purposeful”. This helps avoid charities being bombarded with emails and letters from funders and ensuing they are only contacted when necessary.
Ways to achieve this is for funders to promise to discuss with charities how they like to be communicated with.
Small charities often do not have the staffing capacity to fill in lengthy application documents.
Signatures of IVAR’s commitments promise to put in place “light touch reporting” and to talk to charities to find out what financial and impact reporting is realistic for their operation.
Simple tick box forms for dealing with reporting can help small charities in the application process.
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