The big issues and trends in philanthropy this year

I’ll start with a few words about the issues that we’re paying attention to as a funder right now, before moving on to set out the implications for our grant making at Trust for London. These issues are having a significant impact on our funded partners, and forcing us to reflect on how we make grants.

The cost-of-living crisis is creating increased demand for services from the organisations we fund, while at the same time undermining their ability to respond effectively, stretching an already under-funded advice sector. With uncertain funding for staff, we’re likely to see more burnout in front-line roles and staff choosing security in the private sector over the risk of redundancy in the third sector. If pay and conditions do not improve, I suspect we will see more staff in charities unionise.

However, the current crisis has also drawn funders attention to poverty. Like covid, the cost-of-living crisis has deepened existing inequalities. This has increased recognition among funders that poverty is structural, impacting disproportionately on communities that are structurally excluded and minoritised.

We’re also experiencing a tightening of civil liberties, including attacks on human rights legislation, on the right to protest, and changes to electoral law. The cumulative effect is to make our work more challenging and to make it much harder to bring about structural change.

Finally, the rise in populism and the increased volatility we see in our politics means both funders and civil society organisations are pushed into a cycle of constant fire-fighting, reeling from one crisis to next. This creates a state of constant uncertainty, with individuals and charitable organisations feeling they are under attack - sometimes literally.

Overall, we’re noting three trends. First, poverty is deepening, and structural inequality widening. Secondly, our operating context is becoming more complex, making it harder to bring about long-term change. And finally, sustained volatility is increasing the stress and risk of burnout at an individual level for those trying to bring about change.

So what are the things we need to do as funders to support the organisations we work with during this time?

Many organisations are under-funded and held back by weak infrastructure. Funders need to work collaboratively to put in place strong, shared foundations that allow organisations to increase their effectiveness. This might include shared infrastructure in relation to individual care and wellbeing, or an increase in support for civil society leadership, ensuring leaders have access to high quality coaching and peer networks.

Everyone in civil society currently faces a risk that fire-fighting becomes the normal mode of operating. This can mean as funders we are too focused on short-term crisis, rather than on the long-term change. This is not surprising. It’s easier to focus on the short-term, where we have better analysis and it’s easier to try and measure our impact. Too often we articulate change as the problem we want to address, but are not so good at thinking through or articulating the positive longer-term vision of change which we hope to bring about.

We need to acknowledge the politicised context we’re working in, and the fact we’re often at odds with the direction of travel of government in some areas of policy, for example on migration and asylum. This is prompting funders to think about when and how to speak out and use our voice and position effectively.

Many funders will not have experience of doing this and are much more used to providing a platform for the organisations they fund. In this context it is important to learn from strategic communications experts and avoid tactics that may not help or potentially do more harm, like myth-busting.

Against this backdrop, we’re going to see more organisations choosing not to register as charities. Non-charitable structures (doing charitable work) are going to play an increasing role in helping funders achieve their mission, so it will be important to ensure our processes do not prevent them from engaging with us.

If the external context is volatile and unpredictable, funders need to provide certainty and security. Flexibility in terms and conditions that allow organisations to be agile and adapt to sudden and unexpected shifts is also vital. Core, flexible and unrestricted grants must be a major component of funders approach, but this alone does not give organisations the level of resource to be effective in this operating environment.

Funders need to be realistic about what the level of funding we provide achieves. We know that low-level core and unrestricted funding is immediately allocated within an organisation (e.g. to staff costs). This means it doesn’t always give as much flexibility as we funders like to think.

In providing security, the length of grant is also important. I hope 3-5 year terms at a minimum become the norm in philanthropy, and not the most commonly awarded 2-3 years . This may mean funders have to make fewer grants.

Funders have an important role in modelling the kind of practices we want to see adopted in wider civil society. Working in philanthropy probably means you have better wellbeing care and support, and a higher pension contribution than if you work in many charities. It’s important the level of funding we provide allows organisations to adopt these same practices.

Funders also need to step into their role as convenors. We need to connect individuals and organisations, and broker partnerships where appropriate to align tactics and ensure differing approaches are mutually reinforcing. And if we bring broad and diverse movements together, we need to take responsibility for managing the inevitable conflict that emerges when there are differences in approaches and world-views. If we’re interested in seeing increased collaborations, funders need to invest in the very early stages of relationship and trust building across civil society, before collaborative ideas are even formed. This means situating ourselves as active participants within a movement, and moving away from simply providing financial resources and being at arms-length.

Finally, if we understand poverty to be not only a lack of resources but also a lack of power, then tackling poverty means we must address the lack of resources and shift power. Funders need to make sure our processes do not reflect wider inequitable power dynamics in society that reinforce existing power hierarchies.

To do this, we must analyse where power sits in our organisations. Too often we only pay attention to visible power structures (i.e. our board of trustees) and give less attention to how hidden power operates in our everyday operations. For example, the decision making power of staff in shortlisting and benchmarking stages. How do we bring funded partners into our deliberations on an ongoing basis so they are informing our priorities and identifying where we have gaps in our portfolio?

We need to move away from processes that primarily suit us and our needs. This means being comfortable with uncertainty and trying new approaches and making (and learning from) mistakes. Be prepared, this will likely be bruising!

The proactive and relational style of grant making I am advocating for requires a higher investment of time and resource. To be able to do this well, our teams need to be able to build meaningful relationships and shift attention from the front end of grant making (assessing and distributing grants), which can take up most of our time.

At the same time, funders must remember we have autonomy over our own processes and there is nothing that ties us to the way we currently practice grant making. Making these changes simply requires curiosity and an appetite to step into the unknown.