Sharing information about the impact of donations can enable others to replicate successes and avoid failures.

The world we live in increasingly calls for accountability and transparency in all areas of our lives. We demand to know details about MPs’ expenses, where our clothes have been made and the environmental impact of the businesses we use. The philanthropy sector is no different.

Donors giving money to charities today expect to know how their donation will be used, and what impact the charity’s activities are having on the people they seek to help – rightly so. For their part, charities are getting better at demonstrating this: 75 per cent of charities in the UK now measure the effects of some or all of their work. However, public trust remains low – more than 1 in 3 of the general public have doubts about charities as a whole. To address this lack of confidence, charities need to measure continuously the impact they are achieving, not only to inform donors about the use of their funds, but also to get a clearer picture of what works, and what doesn’t, thereby improving their services.

So, if donors are demanding more transparency from charities, should they not also conduct their own philanthropy in the same way? After all, if these foundations are set up for public benefit, with associated tax advantages, then surely the public have a right to know how significant that benefit really is? Even corporate foundations that usually give away a proportion of shareholders’ profits are only just waking up to the need to demonstrate the impact they are achieving. Some do it better than others, and the trend is in the right direction, but there’s still room for more evaluations of corporate programmes.

After all, the benefits of transparency are plentiful. Publishing clear guidelines about what a foundation funds ensures more targeted applications from charities, and avoids time wasting on both sides. Through the publication of grants data, other funders – including individuals – can piggyback on the expertise and due diligence of a larger foundation.

Melinda and Bill Gates

In fact, a new giving instrument in the US, Mirror Funds, is being set up with exactly this in mind. Allowing individual donors a chance to ‘give like Gates’, it mirrors the donation choices made by the Bill and Melinda Gates Foundation – or another foundation of the user’s choice. In the UK, Fran Perrin, founder of the Indigo Trust, has also created an initiative to facilitate this process, called 360 Giving. In her early days of funding, Perrin quickly realised that there was no single source of information about what other funders were doing in the areas in which she was interested. And so she created 360 Giving, a simple, easy-to-use platform where foundations upload their grants data. Their aim is to open up data on 80 per cent of the UK’s grants within five years.

Fran Perrin

Sharing information about the impact of donations can also enable others to replicate the successes and avoid the failures of others. As an example, the Shell Foundation in the UK wanted to assess how it was doing compared to similar foundations and published a report, Enterprise Solutions to Scale, which offered a unique look into the foundation and its grant-making. It found that during its inception phase, from 2000 to 2002, 80 per cent of the projects it supported failed to achieve either scale or sustainability. It subsequently changed its strategy, and, thanks to its new approach, found that by 2010, 80 per cent of its grants were successful in meeting the foundation’s objectives.

Shell Foundation provides solar energy to families

There’s no doubt that greater transparency has an important role to play in encouraging more and better giving – and it’s not just for foundations. I had a personal interest in supporting a small grass-roots organisation working in primary schools in Lambeth, which used music to help disadvantaged young children. I contacted one of Lambeth’s oldest and most experienced foundations and they not only put me directly in touch with one of their grantees, In Harmony Lambeth (pictured top), but also shared their grantee evaluation report on this organisation. Some years on, I still donate to In Harmony Lambeth and have been putting other donors their way. I would never have found them had it not been for the Lambeth foundation.

Plenty of foundations see it as their right to remain private, fearing that increased transparency might garner unwanted interest and applications. But hopefully, via a greater understanding of the benefits, we can incentivise philanthropists to be more open and publish their grant-giving data. It’s preferable to resorting to regulation and sanctions in order to ensure that foundations adhere to the same standards of transparency that they expect from the charities they support.