Business Case

The case for making the information provided by foundations accessible and transparent over and above the requirements of charitable reporting in the UK is relatively new. Some foundations have public or corporate accountability. Yet for most foundations there are hugely varying levels of commitment to communication, transparency of information, and being accountable to a foundation’s various stakeholders or beneficiaries. This has been addressed at various times, most recently by The Association of Charitable Foundations (ACF) as part of the Stronger Foundations initiative, but not in a uniform manner across the sector. In essence, the lack of consistent standards are issues of power – independent funders tend to be relatively powerful in the relationships in which they operate: those asking or requiring funds are rarely in the position to question the source of funds or the legitimacy of the funder. However, in the era of big data and shifting power balances, these traditional relationships are changing. Foundations are beginning to recognise – as evidenced in the ACF report – that charity effectiveness and responsibility are based on transparency and accountability to those they support, and to society more widely.

We will create a system for rating foundations’ performance in these three areas of transparency, accountability and diversity. We will have various criteria in each of those three areas. Clearly, there are too many foundations for us to rate them all, so we will take a sample, and also include the foundations who are funding this project: this is not about anybody judging anybody else. We will rate the included foundations each year for at least three years. We will publish the ratings each time, along with the underlying data. We will use only publicly available information.  This initiative is led by Friends Provident Foundation, in partnership with Barrow Cadbury Trust, The Blagrave Trust, Esmee Fairbairn Foundation, John Ellerman Foundation, Joseph Rowntree Reform Trust, Lankelly Chase Foundation and Paul Hamlyn Foundation.

The rating system will address deep-seated, long-standing structural issues of power, equity, control of capital and transparency. This project will use similar standards of corporate governance and public accountability that have long been applied to the corporate sector.  We are borrowing some ideas from similar initiatives such as Transparency International’s Corporate Political Engagement Index, the “Who Funds You?” initiative for think tank funding transparency, the Equileap Global Gender Equality Index, ACF Transparency & Engagement, Stonewall Workplace Equality Index and ShareAction’s annual ranking of fund managers.