The historical legacy and current role of philanthropy is not undisputed. Many frame it as a form of compensation for marginalised groups, while others charge it with continuing the harms of the past into the present.
Lankelly Chase’s high-profile decision to release all of its assets and resources over the next five years and “dismantle” itself has raised lots of questions about the nature and future of philanthropy across the UK.
So, what is the future of philanthropy? Is it possible to disentangle the current role of philanthropy from its exploitative legacy? How does foundation divestment from harmful industries impact the portfolio returns and resources for social justice movements? Should existing philanthropic endowments come under more democratic stewardship? And will a potential void of progressive foundations create space for more corporate – market-oriented – funds?
For this group feature, we invited a range of contributors to offer their perspective on the future of charitable trusts and foundations, and potential opportunities for more democratic alternatives to the philanthropic model.
The future of charitable trusts and foundations has been under increasing scrutiny in recent years for several reasons. The murder of George Floyd and the Black Lives Matter movement resulted in closer attention being paid to the origins of foundation wealth. For example, the Rowntree foundations, with wealth stemming from the manufacture of confectionery in York, commissioned research in 2020 into the supply chains of the Rowntree Company in the nineteenth and twentieth centuries. This uncovered evidence linking the historic business practices to the purchase of raw materials produced by enslaved people, indentured servitude, and allegations of racial discrimination and anti-union tactics at the firm’s South African subsidiary during apartheid.
During the Covid-19 pandemic, while marginalised communities were being disproportionately harmed, many foundations saw strong financial returns and material growth in the value of their endowments. Foundations tend to have substantial investments in public equities and seek to use the returns from these investments to fund their charitable giving. However, this is problematic as the very systems that foundations are relying on for their continued existence are those same systems that foundations are seeking to change and address – a profit-driven extractive economy, characterised by extreme wealth inequality and unsustainable practices, that has led to the transgression of multiple planetary boundaries.
One argument is that foundations need to commit to making measurable shifts in assets out of the dominant financial system and into community-controlled projects that build economic power, transferring both wealth and governance power over how wealth is held and invested, with communities also retaining returns generated from these investments and deciding how they ought to be redistributed. The Kataly Foundation in the US is by design an experiment in radical wealth redistribution of this nature. And in the UK, Lankelly Chase has decided to redistribute all its assets due to the inherent contradictions in the traditional foundation model.
At the same time, there is a recognition that foundation capital is but a drop in the ocean in the context of the broader economic system, but that it still has a crucial role to play in the transition to a more equitable and sustainable future. Foundations play a key role in filling gaps in state provision and challenging state provision through advocacy and campaigning. Also, foundations play a vital role in fostering civic engagement, backing grassroots movements, and representing and amplifying minority voices. And, crucially, foundations can drive innovation, take risks the state can’t, and adopt a long-term view. Our work in the Emerging Futures team at the Joseph Rowntree Foundation is particularly centred on this last point, with a focus on building and imagining the alternative systems we need for a better future.
There is no clear answer, and it is imperative that the trustees of foundations engage with these complexities when making strategic decisions. And it is also imperative that those working in the sector with the power to make and influence decisions listen carefully to the voices of those who are calling for things to be done differently.
The future of philanthropy is a world where grassroots groups, social movements, community leaders, and activists are able to easily access funding, equipping them with the resources they need to drive social change. It’s a world with democratic decision making at its heart, where Participatory Grantmaking Processes (PGM) are the norm, and communities are empowered to collectively determine where and how money is spent. Or at least, that’s the dream. So, how do we get there?
Clearly, philanthropy needs to change if we’re going to see the kind of social change we need to address the multitude of social, economic, and environmental issues we face. But for us, the question isn’t if philanthropy can disentangle itself from its exploitative legacy. We’re not sure it can, or should. In fact, its legacy can be the very thing that drives it to evolve into something better. Just as postcolonialism wouldn’t exist without colonialism, and feminism wouldn’t exist without patriarchy, any new system that we build will be because of, and in response to, the old one. We need to continue to acknowledge philanthropy’s damaging history, and learn from it.
So how can we create a new model of philanthropy that is not exploitative? In our opinion, it’s by shifting the power to communities. We need to increase the range and breadth of voices making decisions about endowments and get more funding into the hands of grassroots groups, who, given the right resources, are best placed to drive effective change.This can be done through PGM processes that involve communities in decision making about what and who to fund, and fiscal hosting (thesocialchangenest.org) allows funders to directly fund unincorporated groups and individuals.
We don’t have all the answers. That’s why, along with PG Collective and Collaborate, we set up Losing Control, a network of funders who want to take action to shift power in funding. We know that finding alternatives to traditional philanthropy isn’t easy. It requires those working in the field to get comfortable with uncertainty, accept failure as part of the learning process, trust communities to take the lead, and, sometimes, to get out of the way. But if we really believe in social change, then we’ve got to try.
From one perspective, the decision by Lankelly Chase – effectively, to dismantle itself and relinquish control of its assets – can be seen as a bold and necessary attempt to do things differently. As we, and others, have argued elsewhere, the world of charitable foundations is too often characterised by adversity to risk and a commitment to business-as-usual. Equally admirable was the transparency with which Lankelly presented their reasoning, via an open publication on their website: “we view the traditional philanthropy model as so entangled with Colonial Capitalism that it inevitably continues the harms of the past into the present.”
In truth, however, the challenges facing philanthropy have less to do with the past than the present. One such challenge, which is gaining increasing prominence, concerns what might be framed as the ‘5/95’ imbalance. Typically, a charitable foundation might allocate around 5% of its endowment to grants – thereby supporting third sector organisations in their goals to tackle social or environmental harms – whilst investing the remaining 95% in portfolios that uphold and perpetuate those very same harms. Of equal importance is the decision-making power that surrounds these investments: whereas ‘participatory grantmaking’ has caught the attention of foundations, the concept of ‘participatory investment’ has yet to leave the drawing board. Ironically, perhaps, one of the clearest articulations of this issue was made by Lankelly Chase, in an article from June 2023 (‘Fixing responsible investment’s democratic deficit’).
In promising to “wholly redistribute its assets over the next five years”, Lankelly was primarily referring to its endowment. But with the best foundations, an often overlooked asset is the body of knowledge and learning that has been amassed over time. The Joseph Rowntree Foundation, for example, has rightly earned a place as a thought-leader on issues such as poverty and social injustice. Should other foundations consider following in Lankelly’s footsteps, they might be wise to ask themselves whether the gains – whatever they may be – will outweigh the losses.
While Lankelly have announced a five-year timeframe to map out a “transition pathway” to closure, one immediate decision has been reached: to transfer £8M of their capital – currently 6% of its endowment – to the Baobab Foundation, which describes itself as “a Funding Organisation, a growing movement and a support system for Black African/Caribbean and Global Majority (People of Colour) communities in the UK”. Although it is unclear precisely how grant funding decisions are made within Baobab, its structure as a Community Benefit Society necessitates a degree of member control – thereby presenting an alternative to the closed and narrow trustee-led model that predominates within charitable foundations.
Solid Fund is another example of what we might call the democratic stewardship of capital: a common fund, built on member subscriptions, that is “directed [and allocated] democratically by the members, on a ‘one member, one vote’ basis.”
If these examples currently exist on the margins, they also point the way to possible alternatives. Now seems an opportune moment to ask: what would it take for such models to become mainstream? And what other structures might be innovated, in order that the wealth and power of foundations – existing and new – might be brought under democratic stewardship?
