Private Foundations - International Development Committee Contents


Written evidence submitted by the Centre for Charitable Giving and Philanthropy (CGAP)

EXECUTIVE SUMMARY

This paper presents headline quantitative findings from new research on the amount and nature of funding for international development and activities contributed by private charitable UK trusts and foundations, which has been commissioned jointly by The Nuffield Foundation, The Baring Foundation and Paul Hamlyn Foundation.

The work is being led by Cathy Pharoah, Professor of Charity Funding, Co-Director, Centre for Charitable Giving and Philanthropy (CGAP), Cass Business School.

This report has been compiled specifically for the interests of the Select Committee, drawing on data being prepared for a larger report which will also discuss factors which motivate trust and foundation interest in funding international development and related issues, and key trends and approaches.

The results show that international development and related causes is an increasingly important funding theme amongst UK charitable grantmaking trusts and foundations, both large and small. The group of trusts identified as funding above £50k in this area represents almost three-quarters of the income value of grantmaking trusts in the UK.

Main quantitative findings include:

—  The annual value of current spending by charitable grantmaking trusts and foundations on international development and related causes is estimated at around £290 million.

—  This is equal to around half of DFID total spending through NGOs.

—  Ninety trusts have been identified as making grants above a total value of £50k per annum for international development and related causes in 2009-10 (listed in report).

—  Spending on international development causes represents 13% of the total charitable spending amongst the trusts which fund this area, and 9% amongst all UK grantmaking trusts.

—  The region attracting the highest number of trust funders is Africa (37%), in particular East Africa. This is followed by Asia (23%).

—  Trust interests are extremely diverse, and fund a wide range of subject areas; direct health care and formal education attract the highest number of trust funders (12% each), and sustainable economic/agricultural development and investment attracts 10%, followed by utilities and infrastructure at (%).

1.  INTRODUCTION

1.1  Outline of content and context of this submission

This paper presents the headline findings from new research on the amount and nature of funding for international development and activities contributed by UK trusts and foundations, which has been commissioned jointly by The Nuffield Foundation, The Baring Foundation and Paul Hamlyn Foundation. The work is being led by Cathy Pharoah, Professor of Charity Funding, Co-Director, Centre for Charitable Giving and Philanthropy (CGAP), Cass Business School. Professor Pharoah is a leading expert on charity data on the UK, who publishes annual tables and analysis of giving by the major charitable trusts and foundations, and has carried out several studies of grantmaking by charitable trusts and foundations. A full report will be published later this Autumn. The project is announced on www.cgap.org.uk/news/101/76/New-study-of-UK-trust-and-foundation-funding-for-international-development.html.

Addressing needs within an international context is an important aspect of the funding programmes of many UK trusts and foundations. Some are devoted wholly to international working, while others include an international element within a generic funding programme. The majority fall into the latter category.

The new data is being made available to the Select Committee ahead of formal publication, because it was felt that it would be relevant and useful to its inquiry into Private Foundations. The study updates previous research commissioned by the Nuffield, Baring and Paul Hamlyn Foundations, and published in June 2007 under the title 'Going Global'. Since this earlier study, it is notable that a number of new trusts and foundations which fund internationally have emerged, including the Children's Investment Fund Foundation, The Waterloo Foundation and The Ashmore Foundation.

1.2  Methodology

Data for the research has been drawn from figures published in the audited annual reports and accounts which foundations submit to the Charity Commission. International funders were identified using relevant directories. (See References section at end of paper) Published information is being supplemented with interviews with a balanced selection of funders of different sizes and with different programmes.

Foundations publish their annual accounts at different times of the year. Most of the data used in this study relates to funding spent in the fiscal year 2009-10, or the calendar years 2009 or 2010.

All reasonable efforts have been taken to compile reliable figures for the amount of funding which foundations devote to international grantmaking, but as foundations vary in the amount of detail they publish on spending by programme area, in some cases best estimates have to be used. As the full report is still being completed, it is possible that there may be some minor variations between this report and the final figures.

1.3  Note on definitions

International development is used in the report to refer generically to activities in developing countries and emerging economies encompassing growth, governance, health, education, gender, disaster relief, humanitarian aid, infrastructure, rights, economic and environmental sustainability, and associated research.

Trusts and foundations refers to privately-funded independent grant-making charities. The phrase is shortened at times in this paper to 'trusts' for convenience. Figures in this study include the Big Lottery Fund.

2.  SCALE OF UK CHARITABLE TRUST FUNDING

2.1  Total trust funding for international development

Ninety (90) trusts and foundations were identified as making international grants worth around £50,000 per annum or more. These are listed in Appendix 1.

International development and related funding by these trusts and foundations was estimated to be worth around £242 million in 2009-10.

It can be estimated that at least another 20% of this amount, around £48 million, is given by the smaller trusts not included in the study, and those on which there is little published information.[1] This means that total charitable trust and foundation funding for international development is estimated at around £290 million per annum.

2.2  Place of international development in UK trust funding as a whole

Trusts and foundations which fund internationally contain both the UK's very largest and smallest charitable funders.

International foundation funders as a group, however, are weighted towards the larger trusts and foundations, and represent around three-quarters of all UK trust and foundation grantmaking by value (74%), as can be seen from the table below. (This is based on published figures on the top 500 grantmakers, which represent the majority of UK funding:see Pharoah, 2011).

Funding for international development and related causes represents an average 13% of the total annual charitable expenditure of £2.3 billion by trusts and foundations involved in international funding. It is equal to 9% of all trust and foundation funding.

SUMMARY DATA ON CHARITABLE TRUST AND FOUNDATION GRANTMAKING 2009-10
Trusts which fund internationally All trusts and foundations*%
Total grantmaking£2.3 billion £3.1 billion74%
International development grantmaking£290 million £290 million
International dev't grants as % of total grantmaking 13%9%
Range of international grants as % of grantmaking 1%-100%

* Figures for top 500. (Pharoah, C, 2011 ibid)

There is, however, a wide range in the proportion of funding dedicated to international development. For several, it represented all (100%) of their charitable spending, while for others it was just 1%. The graph below illustrates the range. There is large cluster of funders at the top end of the range for whom international funding represents all, or almost all, of their funding. While 13% of international funders' funding overall went to international development, the average proportion of funding dedicated to it was 45%. This shows that international development tends to have a fairly high priority amongst those who support it.

DISTRIBUTION OF PROPORTION (%) OF FUNDING DEDICATED TO INTERNATIONAL DEVELOPMENT ACROSS 90 TRUSTS



2.3  Trend for smaller trusts to specialise

The result also shows that smaller trusts tend to devote a higher proportion of their funding to their international development work. This is illustrated in the graph below, which ranks trust by income size. The trend-line shows clearly that the proportion (though not the amount) of funding declines as trust income increases.

RELATIONSHIP BETWEEN SIZE OF TRUST (BY INCOME), AND PROPORTION OF FUNDING DEVOTED TO INTERNATIONAL DEVELOPMENT CAUSES



2.4  Distribution of total funding for international development by trust size

Although smaller organisations tend to dedicate a higher proportion of their funding to international development, there is a strong direct relationship between amounts given and size of trust and foundation by income. The proportion of the total amount given to international development by trusts in particular income-bands is shown in the table below.
Trust Income Band % of total international funding
> £1 million 11
£1-5 million15
£5-10 million3
£10-50 million22
>£50 million 49
Total100

2.5  Trust funding for international development in context of ODA

Trust and foundation funding for international aid forms just one part of the bigger picture of the total flow of international development support, which includes government aid, foreign direct investment, remittances from migrant labour and international non-government organisations, as set out in the earlier report (Las Casas and Fiennes, 2007).

The table below places the contribution of trusts and foundations within the bigger picture, setting out some top-level figures for UK and international government support. (It excludes the private sector).

GOVERNMENT AND VOLUNTARY FUNDING FOR INTERNATIONAL AID 2009/2010
Total DAC country ODA$129 billion
Total UK ODA£7.4 billion
of which
— Total DFID Expenditure£6.4 million
— Voluntary grants£256 million*
General public, corporate and legacy donations £1 billion approx (Estimated**)
UK Trusts and foundations£290million

Sources: DfID SID 2010: OECD, IDS, 2011.
* 2008 figure
** Based on grossing up figures for donations to the major international fundraising charities, Pharoah, 2011, ibid.

2.6  Funding relationships between DfID, trusts and international aid charities

Both trusts and foundations, and DFID, provide funding to UK international aid charities and other civil society organisations who play an intermediary role in helping developing countries, and directly to non-government organisations in developing countries. Recent figures for DFID support to civil society or non-government organisations, which represents around 9% of its spending, are set out below.

In contrast, trusts and foundations provide a very high proportion of their funding to civil society organisations, although figures for this are not available. Other important recipients include organisations such as universities and hospitals. The figures show that UK trust and foundation funding is equal to just under half of all DFID funding for civil society.

DFID SPENDING THROUGH NGO 2009-10
DFID funding to UK NGOs.£362 million
DFID funding to all NGO funding £599 million
UK trust and foundation funding to civil society £290 million

3.  PATTERNS OF UK TRUST FUNDING—REGIONS, NEEDS AND ACTIVITIES FUNDED

3.1  Challenges of classification

It was not possible within the resources of this project to analyse in detail all of the grants given within the year of the study. There are thousands of small grants, and generally only details of the larger ones are given. To get an indication of trusts and foundations' international funding priorities the main areas of preference mentioned in annual reports was classified. The amount of detail available varied, so the results should be regarded as indicative. The picture of funding derived is consistent with findings in other studies of grantmaking, as is noted below.

The classification system used was based on that developed for a previous study of grants made by trusts and foundations, adapted for the purposes of this project.
(Vincent and Pharoah, 2000)

3.2  Trust and foundation funding by region

Trust and foundation funding priorities by region is similar to that of UK expenditure on international support. As the figures below show, the broad distribution of the number of trusts who fund particular regions is similar to the spread of gross public expenditure. Africa appears to receive most support, followed by Asia, and then the Americas.

Total UK Bilateral Gross Public Expenditure %
UK Trusts
Number* %
Africa5658 37
Asia4036 23
Americas320 13
Pacific02 1
Europe 113 8
Developing countries (general) 2818
100157 100

* Number of trusts mentioning that they will fund this region
** Total funding divided by % of trusts mentioning that they will fund this region
Source: SID 2010

3.3  Indicative distribution of trust funding by region

As noted, there is not enough information in trust and foundations' annual report to allocate expenditure by region. However, if the distribution of trusts saying they fund in particular regions is applied to the value of funding, then an indicative allocation of funds can be derived. This is shown below.

UK Trusts
Number *% £ Equivalent**
Africa5837 107
Asia3623 67
Americas2013 38
Pacific21 3
Europe138 23
Developing countries (general)28 1852
157100 290

* Number of trusts mentioning that they will fund this region.
** Total funding divided by % of trusts mentioning that they will fund this region.
Source: SID 2010

3.4  Trust and foundation funding by detailed region

Priorities within regions are set out in the Figure below, which gives the proportion of trusts and foundations willing to fund particular sub-regions. East Africa emerges as the area of greatest funding interest (22%), followed by South Asia (17%). The extent to which funding interest in Eastern Europe has grown is also illustrated by the 8% of trusts mentioning that they fund in this area.

DISTRIBUTION OF TRUST FUNDING BY REGION AND SUB-REGION



3.5  Trust and foundation funding by subject area

A very wide range of topic areas is funded by trusts and foundations, as can be seen from the chart below, ranging across direct health, care and welfare service provision, economic and infrastructure development, poverty relief, civil society capacity-building, disaster relief, humanitarian aid and peace and security. Areas attracting highest numbers of funders were direct health, education and welfare services. Sustainable economic and agricultural development attracted 10% of funders, with utilities and infrastructure close to this at 9% of funders.

PROPORTION (%) OF UK TRUSTS (BY NUMBER) FUNDING EACH SUBJECT AREA



3.6  Trust and foundation international funding by beneficiary group

Sometimes trusts and foundations indicate the groups they fund, either in particular regions or as a main funding focus. The distribution of numbers of funds stating they fund particular beneficiary groups is set out below. The single largest category of beneficiary is children and youth, with children representing almost three-quarters of cases. The priority given to children reflects the findings of a previous study which analysed a large sample of all grants made by UK charitable foundations. (Vincent &Pharoah, ibid). Within the women and families group, 70% were instances mentioning women.

A striking difference between the findings of the previous study of all grants, and the study of international funders, is that the proportion of grantmakers mentioning disadvantaged people in the international study was twice the proportion found in the study of all grants. (18% compared with 9%) This is likely to reflect funders' concern about the scale of disadvantage in developing countries.

NUMBER OF TRUSTS BY BENEFICIARY GROUP FUNDED



3.7  In conclusion

This report has been compiled specifically for the interests of the Select Committee, drawing on data prepared for a larger report which is being prepared and which, alongside these statistics, will discuss the factors which motivate trust and foundation interest in funding international development and related issues, some key trends and approaches taken, and examples of projects. The full report will be published later this year.

REFERENCES

Department for International Development (DFID). (2010) Statistics of International Development 2005/06-2009/2010 (SID). ONS October 2010.

Department for International Development (DFID). (2010) Statistics of International Development 2010 (SID). ONS October 2010.

Directory of Social Change (2011). Directory of Grantmaking Trusts. DSC. London.

Vincent, J and Pharoah, C. (2000) Patterns of Independent Grant-Making in the UK. CAF. West Malling.

DFID Statistics on International Development 2005/06 - 2009/2010. Table 3.

DFID Statistics on International Development 2010. Table 19.

Pharoah, C. (2011) Charity Market Monitor 2011.

OECD. Development Co-operation Directorate (DCD-DAC). International Development Statistics (IDS) stats.oecd.org/Index.aspx?DatasetCode=TABLE1

APPENDIX 1

CHARITABLE TRUSTS WHICH CURRENTLY FUND INTERNATIONAL DEVELOPMENT AND RELATED CAUSES

Absolute Return for Kids
Alchemy Foundation
Allan and Nesta Ferguson Charitable Settlement
Andrews Charitable Trust
Baring Foundation
Beit Trust
Big Lottery Fund
Brian Mercer Charitable Trust
Butterfield's Edward Johnson Trust
C B and H H Taylor 1984 Trust
Childwick Trust
Christian Response to Eastern Europe
Clothworkers' Foundation
Comic Relief
Diana, Princess of Wales Memorial Fund
Dulverton Trust
Elton John Aids Foundation UK
Euro Charity Trust
Gatsby Charitable Foundation
H C D Memorial Fund
Help the Hospices
Hilden Charitable Fund
Jephcott Charitable Trust
John Ellerman Foundation
Joseph Rowntree Charitable Trust
Khodorkovsky Foundation
Maurice and Hilda Laing Charitable Trust
Mercury Phoenix Trust
Nuffield Foundation
Onaway Trust
Open Gate
Parthenon Trust
Paul Hamlyn Foundation
Pears Foundation
R H Southern Trust
Relief Fund for Romania Limited
Saga Charitable Trust
Shell Foundation
Sigrid Rausing Trust
St Francis's Leprosy Guild
The Ajahma Charitable Trust
The Ashmore Foundation
The Audrey and Stanley Burton Charitable Trust
The Big Lottery Fund
The British Council for Prevention of Blindness
The Bromley Trust
The Cadbury Foundation
The Charles Hayward Foundation
The Children's Investment Fund Foundation UK
The Coltstaple Trust
The David and Elaine Potter Charitable Foundation
The Estelle Trust
The Father O'Mahony Memorial Trust
The Freemasons' Grand Charity
The H B Allen Charitable Trust
The Haramead Trust
The Indigo Trust
The Innocent Foundation
The Joffe Charitable Trust
The Kiawah Charitable Trust
The Leverhulme Trust
The Marr-Munning Trust
The Miriam K Dean Refugee Trust Fund
The Monument Trust
The Puri Foundation
The Reed Foundation
The Rowan Charitable Trust
The Rufford Foundation
The Sainsbury Family Charitable Trusts
The Scotshill Trust
The Scott Bader Commonwealth Ltd
The Scurrah Wainright Charity
The Sir Halley Stewart Trust
The Sylvia Adams Charitable Trust
The Trust for Education
The Waterloo Foundation
The Wellcome Trust
The William Leech Charity
The Zochonis Charitable Trust
Tisbury Telegraph Trust
Trusthouse Charitable Foundation
Tudor Trust
Vodafone Group Foundation
Westminster Foundation for Democracy
William Adlington Cadbury Charitable Trust
The Wood Family Trust
Zurich Community Trust

14 December 2011



1   This is based on a previous attempt to compile figures for the total scale of charitable trust grantmaking in the UK, and which is still the only data available. See Pharoah, C, and Siederer, N (1997) "Numbers, income, grants and assets-new estimates" in Dimensions of the Voluntary Sector 1997 (Ed Pharoah, C). CAF West Malling. Back


 
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Prepared 20 January 2012