Allen Lane Foundation       

How do we best use limited resources in grant-making?

I am honoured to be invited to give this lecture. My pleasure at seeing so many friends is only slightly overshadowed by my memory of hearing at the end of a previous Allen Lane Lecture one respected Foundation director – previously the headmaster of a distinguished school – drily mutter "Beta minus query minus?"

Grant-givers and trustees have one of the most interesting roles in society, enviable (a cynic might say we purchase gratitude and appreciation with other people’s money) and worthwhile but a job that is far from easy to do well. Andrew Carnegie may have told Gladstone "He who dies rich dies disgraced" but a character in ‘An Ideal Husband’ shortly after complained "Philanthropy seems to have become simply the refuge of people who wish to annoy their fellow creatures". The independence which is one of Trusts’ great strengths equally places a responsibility on us continuously to re-examine and improve our ideas and delivery. J.D.Rockefeller’s view was that giving money away effectively needs as much effort and thinking as making it. How many of us evaluate our work as thoroughly as we do that of our grantees? The imminence of the next committee meeting and its paperwork rarely seems to give any time for long-term thinking. In a world today where society is changing with exponential speed we continually need to re-self-educate and especially I suggest sensitize ourselves to the needs of the less articulate people.

We philanthropoids start from a position with some tremendous advantages. Like all charities we are independent of government, but grant-giving Trusts also enjoy the priceless benefits of neither having to solicit money from the public or the government nor of having to look over their shoulders at voters or council-tax payers, nor at shareholders as commercial donors and sponsors do. Free from any worries about voters or elections, and almost ignored by the media, Trusts can take risks which democratic governments are unwilling to do, and support unfashionable, long-term and undeservedly unpopular projects. But how many of us in fact do so?

I believe taking some carefully considered risks (good risks are not the same as bad ones) is part of our job: if no grant ever fails, are we making enough use of our freedom of opportunity?

The pluralistic, innovative and anti-censorship qualities of Trusts are the strongest - perhaps the only - argument for their existence. They possess in microcosm the potential to criticize and support re-shapings of our society; less often they possess the will to use their resources in any such way. Rare is the government or established institution that welcomes fundamental self-criticism, let alone iconoclasm: therefore is it not democratically admirable we have a system whereby the State not merely tolerates but helps through tax-benefits to subsidize work and views which may run counter to its current beliefs?

Ironically it was Henry Ford I who asked "Why should there by any necessity for alms-giving in a civilised society?" Carnegie had the right answer when he said he hated charity, but wanted to help others to help themselves.

Additionality – the extra value charities contribute to public expenditure – can also bring a humanizing quality to social work. Many charities are only sticking plasters, though it’s true sticking plasters have a use in life. I’m a tremendous admirer of the volunteer impulse and citizens’ involvement, though these cannot do everything. Co-opting volunteers and empowering clients are hugely attractive and can be of real two-way benefit. Our lifeboats in the UK, for example, are an admirable example of a charitable organisation, but, even so is it right that the provision of such a nationally essential service should be left entirely to the vagaries of collecting tins?

A few Trust deeds on the other hand have been criticized for perpetuating the wishes of dead people and allowing them to evade contemporary standards of responsibility, even though they continue to be partly paid for by current tax-concessions. I think that since the fiscal benefits of Trusts and charities are provided by taxpayers irrespective of gender, religion, race or geographical area, while their benefits ought to go to those in their priorities who are most needy, it is logical that all restrictions or exclusions on grounds of race, creed, gender or area (e.g. a Trust providing a rowing club for white, Anglo Saxon, Protestant public-school males in Sussex) should be brought within the anti-discrimination laws. Such absolute exclusions are different from preferential priorities – for example, some of us prefer to help poorer areas than south-east England. Parts of London have manifest problems, but so many other funding sources (including 89% of the major Trusts and the headquarters of most companies who give donations) are easy of access for people who live in London and the south-east.

It’s true that Trusts are started for an extraordinary variety of motives. A few donors may be on an ego – as opposed to an altruistic – trip but I don’t think the motive matters as long as good work results. In that, Shaw’s Undershaft was right. However, several large inert Foundations are administered from the bottom drawer of a busy lawyer who rarely has time to visit any project. We should beware of our English nostalgia for amateurs, and remember the US mayor who defended his choice of police chief by explaining "he was a damn good tailor". Written applications – however well-honed, honeyed and polished – are no substitute for on the spot visits to a project to see what actually is happening and how its beneficiaries are treated. Often anonymous and unscheduled visits are best because I vividly remember from my National Service days how a barrack-room was unrecognisable when an inspection was known to be imminent!

Many Trusts today are only too aware that, due to market forces, "their tiny funds are frozen". Some Foundations including Ford now believe they should be spending capital because of the size of present needs, and the Field Foundation amongst others has championed the idea it should have a finite life (J.S.Mill proposed 50 years) before spending itself out of existence. But can’t we all agree that since every Trust’s money is limited, it should be put to the maximum public benefit? Trusts are in an almost unique position:

· to evaluate independently and criticize public policies;

· to scrutinize other established and powerful institutions such as the professions, unions,

charities, universities and the media;

· to support undeservedly unpopular and disadvantaged people (including individuals such

as the Galileos, John Clares and William Blakes of today);

· to redress the imbalances in society caused by market and political forces;

· and to safeguard the freedom of ideas by helping cultural plurality.

Recently there have been renewed calls to reform the charity laws and to give equivalent tax-breaks to any not-for-profit organisation which is non-party political but benefits the general public. How can it be that Eton is a charity while Amnesty still is not? But without waiting for any change in the laws, I believe we should consider:

1. doing more to replicate the benefits and lessons of successful pilot-projects (though we’ve yet to find the best way to do this);

2. funding campaigning (alias public education) on social issues provided it’s non-party political - which can unlock much more government money than we have at our disposal;

3. backing not just organisations, but good people - from whom we can learn as much as vice versa: the "sparkplugs" of social change: who are the younger successors today to Michael Young?

4. multiplying the pool of grant-givers. This would be a cost-effective effort. How many new grant-giving Trusts have started recently, compared to the huge rise in the number of new millionaires? Few seem to share Einstein’s suggestion that we ought to put back into the world at least the equivalent of what we take out. (Bill Gates, whose recent $21 billion endowment is a conspicuous exception, has offered to talk in confidence to other rich people if it would encourage them.)

5. many needs of, for example, women and rural people, are less obviously visible; and many of the most vulnerable groups such as young carers, refugees and asylum seekers, travellers and gypsies, or people in prison have no votes and few allies in Parliament with which to attract public help;

6. by evaluating, disseminating and replicating we can help the multiplier effect of beneficial work including:

7. across national boundaries. Too many Trusts hesitate to work overseas where the needs dwarf those in the UK – half the world’s population are trying to exist on less than $2 a day and 1.5 billion people never see a clean glass of water. The international exchange of good ideas and practice could help benefit all people, not cabin’d and confined by national blinkers.

Up until now, most Trusts have been content to see themselves as midwives, but they could in fact be match-makers and even parents. We’re right to be cautious of playing God, or being paternalistic, but don’t we waste our whole raison d’etre unless we try to make a difference for the better? Loyalty is an admirable virtue, but some Trusts are so barnacled with steady pensioners dependent on them, they’ve lost almost all freedom of manoeuvre. Others are still focussed on yesterday’s problems, just as some generals only refight the last war they remember.

An employee of one of the largest Foundations in the world told me when I was writing my book on these issues, "Half the battle is educating the trustees. Sometimes I think we’d make better use of our money by a crash programme to turn them on". I don’t know how many of you know that in an attempt to keep in touch with the grass-roots, the regional grant-giving committees of the Community Fund (formerly called the National Lottery Charities Board) choose two of their members of lot. This you’ll remember is Aristotle’s prescription for democratic government. The two people are drawn from the electoral register, the job is explained and they’re asked if they’d like to join. (If they drop out and resign there’s a suggestion that ‘Lot’s wife’ might be invited.)

We’ve all, staff and trustees, learnt from experience that there’s no correlation between an alpha application and an alpha project; sometimes indeed the reverse: people doing the most worthwhile projects are too busy and sometimes too exhausted to pore over directories or guidelines or to write alleging they were at school with you or your father….. Shouldn’t we be using out finite resources trying to target the alpha needs and projects rather than the expert fundraisers?

Hence the powerful logic of being ‘proactive’ rather than ‘reactive’ (not of course to be confused with being ‘inactive’!) as we do if we limit ourselves to the haphazard pool of applications that surface in our postbags. After all, many of the most deprived and deserving people don’t have a clue about any Trust or how to apply – that may be a symptom of the reasons they are disadvantaged.

Today an increasing number of grant-givers in Europe and the US are exploring the idea of Social Investment or Venture Philanthropy. This is something of a step-change in funding culture, meaning a partnership with commitment and involvement – a longer-term relationship rather than a one-off grant. It:

· is orientated to trying to remedy some social problems, making a difference by

focussing on solutions rather than merely providing band-aid;

· involves seeking out promising opportunities and not just waiting for fundraisers;

· can, for example, lend expertise, volunteer mentors and other support, not just a cheque;

· requires re-orientating and some re-training of staff and trustees to succeed;

· should include an exit strategy, to avert permanent dependency;

· should include the measurement of outcomes, monitoring of progress and where

appropriate a plan for replication.

Social Investor/Venture Philanthropy occasionally involves loan money (interest-free or otherwise), but most often the only return will be the satisfaction of participating in social progress. It rests on the belief that it is better for grant-givers actively to take alms against a sea of troubles in an attempt to end them, rather than supinely to suffer the slings and arrows of haphazard applications.

To summarise and conclude, I believe that grant-givers shouldn’t do what governments can do (otherwise we risk paying Danegeld); but our seed-money and pilot projects can show where the government should go. I remember one example of how a UK Foundation pioneered anti-bullying work, which became an encouraging model since the government has now taken up the programme nationally.

I suggest we should work with and for disadvantaged, powerless and minority people; looking beyond old fixed ways of doing things, in partnership and evaluating new approaches. We ought especially to reach out to those in need who cannot easily organise themselves into a group that can apply for funding (for example because they’re scattered and live in rural isolation or else lack self-confidence or cohesion). Women and black people are still significantly disadvantaged in trying to get support vis a vis the established white male funding networks often based on clubs, schools and businesses. We need also to tackle the ‘Bolsover culture’, where it is totally against a deprived local community’s culture to apply for help. Despite my being a lawyer I’d advise don’t be worried by the spectre of Creating a Precedent: it defies logic not to help any one-legged dogs just because you can’t help all of them. And we should evaluate, evaluate, evaluate: although psychologically uncomfortable and even threatening we all – grant-givers and recipients alike – can learn positive lessons from our experience, including our failures.

So I don’t think we should be daunted by Chesterton’s ‘Ballade d’une Grande Dame’:

"Your vicious things shall melt in air.

But, for the virtuous things you do,

The righteous work, the public care,

It shall not be forgiven you…"

Let’s instead allow John Donne to have the final word:

"This only is charity, to do all, all that we can."