Having Too Few Personnel Compromises Foundations’ Performance on Key Issues

A clear finding from the Foundation Practice Rating Year One research – which assessed 100 UK-based charitable grant-making foundations – is that foundations with few trustees, or few staff, tend to perform poorly on diversity, accountability and transparency. This matters because UK charities told us that those three areas are important. Foundations with no staff perform particularly poorly on these issues.

The Foundation Practice Rating is an independent assessment of UK grant-making charitable foundations. It assesses foundations’ practices on diversity, accountability and transparency, and does so using only their public materials. It is funded by 10 UK foundations, and is repeated annually. The sample of 100 foundations comprises: the 10 foundations who fund it, the UK’s five largest foundations, and the rest are selected randomly. Foundations have no choice of whether they are included. The criteria are based on precedent elsewhere, and a public consultation. They do not assess what a foundation funds, nor its effectiveness as such. Each foundation is rated A (top), B, C, or D on each of the three areas, and is also given an overall rating. 2022 was the rating’s first year: the results were released in March 2022.

Nearly two-thirds of foundations with no staff scored the lowest grade of D. By contrast, of foundations with staff, only 10% scored a D. No foundation with more staff than 50 staff scored D.
There is a similar pattern in the number of trustees. No foundation with more than 10 trustees scored D, and Ds were much more common among foundations with few trustees. The graphs below show the distribution of scores by a foundation’s number of staff (left), and its number of trustees (right).

Our hypothesis is that foundations with too few people don’t have enough person-power to do the work required to have and disclose good practice in these areas. (The rating only uses publicly-available materials, so policies need to be disclosed in order to be included.) It takes people to create and publish policies, or to clearly disclose investment policies, gather and publish grantee feedback and the actions arising from it, to publish clear grant criteria, create ways for people with disabilities to contact the foundation and apply, to maintain whistle-blower systems and complaints processes, etc.

We appreciate some foundations’ concern about minimizing their internal costs (e.g., on staff) in order to maximize the amount available for grants. But the other factors captured in the rating also matter: charities told us this in the consultation, and the rating’s criteria reflects what they value in foundations and what they want from them. Charities (and other social-purpose organisations) are surely foundations’ main stakeholder (one might call them ‘clients’ or ‘users’), so it is important that foundations listen to them. The data above suggest that having too few staff in a foundation may be a false economy: it may save money, so increase the amount available for grants, but at the expense of being able to operate well and transparently.

In some foundations, the work is done by the staff and the trustees (who collectively comprise the board), provide oversight and direction. In other foundations – notably those with few staff or no staff – the trustees may do much of ‘the work’ themselves.

Having too few staff and trustees may also inhibit effectiveness: it seems quite possible that having more staff and trustees provides a larger network from which to source ideas (about anything) as well as potential grantees; and that having too few trustees makes for inadequately diverse experience involved in the board’s decision-making, resulting in sub-optimal decisions.

That said, it is clearly possible to score (pretty) well with few staff. One of the only three foundations which scored ‘A’ overall has only five staff; and five of the foundations which scored ‘B’ overall have no staff or only one staff member. Perhaps a foundation’s culture and intention to be open / external orientation influence its practice and hence its score. Any foundation can decide to disclose the items that the rating seeks.

Giving budget per staff member

Looking at this through another lens, we examined the giving budget per staff member across the 100 foundations. This figure varied widely: from over £7m/ staff member (Leverhulme Trust) to ~£30,000/ staff member (Franciscan Missionaries of the Divine Motherhood Charitable Trust). Clearly, for the 33 foundations which have no staff, we cannot calculate this number. Of course, we realise that giving models vary considerably and therefore that comparing foundations on this ratio is not a perfect like-for-like comparison.

The graph below shows the range of giving budget per staff member, and each foundation’s overall rating.

Working upwards from the bottom of the graph below, the foundations with no staff generally rated pretty poorly: of the 33 foundations with no staff, 21 scored D, nine scored C, and only three scored B.

Then let’s continuing upwards to foundations which do have staff. Amongst those foundations with small giving budget per staff member, performance is pretty good: none of the 43 foundations with the smallest giving budget per staff member scored a D. The first D that we encounter working upwards – i.e., the foundation with the smallest giving budget per staff member which scored a D is Yesamach Levav, which gives £930,000/staff member.

As giving per staff member increases from there, performance tends to weaken: of the ten foundations with largest giving budget per staff member (i.e., the top ten in the graph below), five scored D, four scored C, there is only one B and no As.

This again shows that having staff who are stretched across large budgets correlates with poor practice.

Overall rating of the FPR Year One sample of 100 foundations, by giving budget per staff member:

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