Towards Greater Transparency in Philanthropy

Foundations increasingly see the sharing of information about their grants as a way to improve the effectiveness of their giving.  The Gates Foundation has recently announced its decision to join the International Aid Transparency Initiative (IATI), making it one of the first private foundations to do so.  As a result of this move, it will publish all of its aid contributions online with a link to the IATI’s central registry.  In a similar vein, the Big Lottery Fund now provides information on each of the thousands of grants that it has made since opening in 2004, while the Wellcome Trust has for some time made details of its funding available to all. 

To keep track of this trend, the UK advocacy group Publish What You Fund, founded in 2008, ranks aid donors around the world according to the transparency with which they make grants.  Fran Perrin, the chair of Publish What You Fund and a trustee of the Institute for Philanthropy, says that “Many philanthropists I speak to feel like they’re giving in the dark, without basic information on who is giving what to whom, and where. Businesses wouldn’t make decisions without knowing this basic data, and neither should we. I hope that if donors feel confident to share more about their giving it will benefit all of us”.  Meanwhile, Marcelle Speller, the founder of Localgiving.com and Spear’s Wealth Management’s Philanthropist of the Year for 2013, highlights the need for transparency in non-traditional forms of grant-making.  “Social investing is a new area and the measurement is more complex, so donors need as much information as they can get, she says.  “To not share information makes it even more difficult to know whether you are making a difference”.  

The Institute for Philanthropy has decided to examine this area from a private donor’s perspective.  Earlier this year, it participated in a working group, comprising data experts and civil society representatives, whose aim was to encourage individual philanthropists and foundations to publish what they fund in an open format.  The working group’s belief was that opening up grant data in this fashion would enable more effective collaboration amongst funders and between civil society and funders.  It would allow for more effective strategic planning, ensuring that money reached the areas of greatest need, and it would enable grant-makers to assess their impact and demonstrate this to the public.

Following the meeting of this working group, the Institute for Philanthropy conducted a survey among a group of donors in its global networks, to find more about the perceived value and challenges of sharing information from the viewpoint of the philanthropist.

About the donors

• The 33 donors come from the UK, the US, Canada, Lebanon and Mexico.
• Their foundations have an average endowment of $13, 817,717.
• 12 of them declared an annual grant-making of between $250,000 and $1,000,000, the most common size of annual total grant-making.  Three of them declared an annual total grant-making of over $10,000,000.  
• Their areas of philanthropic giving, in order of frequency, are: children and young people; environment and conservation; education (primary/secondary); health (services and care); economic development, housing and employment; education (higher); women and girls; arts and culture; social justice and human rights; health (prevention); social welfare; philanthropy, voluntary sector management and development; education (informal); general charitable purposes; advocacy; health (research); training and skill development; peace and conflict resolution; disability; science and technology; social sciences, policy and research; sport and recreation; religion and promotion of faith; and older people.

Key Findings

• The factor that most donors felt would help to make their philanthropy more effective was “sharing evaluations with other foundations” (19 out of 33 donors).
• Donors thought that the greatest benefit of sharing more information about their giving was that it “facilitates collaboration (21 out of 33 donors)”.
• 24 out of 33 donors would be interested in further discussing the possibility of a standard for sharing information about philanthropic activities with other foundations.
• Several donors were clear that, despite seeing the value in sharing more information about their giving, the main reason that they did not do so was to safeguard their family’s privacy.

Summary of Results

• When the donors were asked which factors would help to make their philanthropy more effective, the most popular answer (19 out of 33) was “sharing evaluations with other foundations”.  The next most popular answer was “accessing other funders’/investors’ research and evidence on successful and unsuccessful outcomes” (17 out of 33), followed by “Sharing research/evidence used in due diligence for selecting grantees/investees” (16 out of 33) and “formalised feedback from grantees” (6 out of 33).  Only 4 out of 33 chose the category “sharing financial information with other foundations”.
• When the donors were asked what they considered the benefits of publishing and sharing information about their philanthropy, the most popular answer (21 out of 33) was “facilitates collaboration”, followed by “contributes to best practice among funders” (20 out of 33), “inspires public confidence” and “reduces duplication of effort in the field” (both 18 out of 33) and “improves communication with grantees” (16 out of 33).  “Understanding other grantmakers’ experience/success and target metrics would be very valuable”, commented one donor. 
• When asked if they would be interested in further discussing the possibility of a standard for sharing information about philanthropic activities with other foundations, 24 out of 33 donors replied in the affirmative.
• 15 out of 33 donors were making social investments (that is to say, investments which provide a social as well as financial return); 3 out of 33 are planning to do so in future. 

Analysis

The results seem to present a contradiction.  Most donors saw the value in sharing information about their giving (for example, 21 out of 33 thought that it would help to facilitate collaboration), and most donors (19 out of 33) thought that sharing evaluations with other foundations was the most important factor in making their philanthropy more effective.  However, only 4 out of 33 donors thought that it would be helpful to share financial information with other foundations.  

This seems strange at first sight: donors are keen to share their evaluations with each other, but not their underlying financial information.  However, the results quickly made more sense when viewed in the light of various donors’ comments about privacy, which emerged in several cases to be their overriding concern. 

The overriding concern: safeguarding privacy

Several donors were clear that, despite seeing the value in sharing more information about their giving, the main reason that they did not do so was to safeguard their family’s privacy.  One donor considered that “I personally believe it is important to be named as a donor to set an example and be seen to give.  We do not publish anywhere other than with the Charities Commission what we give because we are just a small family foundation, however we are always happy to be listed as donors by the various recipients.”

However, this was a minority view.  The following two passages quotes give a sense of the concerns of the majority.

One donor, from North America, stated that:

“The trust is our Family Trust and our concerns are about attracting unwanted publicity to ourselves (which we work very hard to avoid – we are very low key)…Publishing or releasing any personal or financial information is really something that I shy away from as much as possible. We would rather let our light shine under a bushel.”

Another donor, who runs his own charity from the UK, commented that:

“[One reason for confidentiality] is a cultural one…In the UK, though this is increasingly changing, it’s not the done thing to show that you’re wealthy.  There is also one case I do know where there are people who don’t want people to know what cause they’re supporting.  Some people have giving they really don’t want you to know about: for example to a political party, or for lobbying activity.  Grant-making charities are not obliged to say who they make grants to.  There’s a sense of “that’s my business”.

We asked this donor if he would be willing to share information about failed initiatives.

“For one project we’re working on,” he answered, “we prepared a report for our two donors.  In that report, we set out what we hadn’t got right: and both donors came back to us, independently of each other, and said that it was very unusual for a charity to say what’s gone wrong as well as what’s gone right.  It didn’t occur to us to do any different: for us, it was just the same as reporting the good things. And frankly, why the hell not?”