Tuesday, 23 July 2024
UK Charity Week 2024 - Sponsored by Sinclair Method UK
Tuesday, 23 July 2024

UK Community Foundations: Reflections on Endowment

LANKELLY Chase recently announced their intention to dismantle their organisation by redistributing their £130 million in assets to create a healthier resourcing system for social justice work. 

Indeed, Lankelly Chase are trailblazers in the UK and have prompted much debate across the philanthropy sector. The announcement has led charitable foundations holding endowments to consider whether the structure of their funding is a help or a hindrance and whether they are close enough to the communities they serve.   

Philanthropy has had bad press recently. Critics say that philanthropists hold too much power over their fellow citizens and perpetuate social inequality. However, without philanthropists, much of the charity sector would shrivel and die. Being an effective philanthropist requires education and humility, which is why donor education is so important.  

Different approaches are needed for different types of work and social progression, reflecting the challenges and opportunities for each community. Emergency funding is crucial in a crisis, while longer-term pots enable future-proofing and innovation. Those who choose to endow a charity are providing for the long-term future of its work, but if that endowment reduces the flexibility or effectiveness of that work, it won’t allow the charity to evolve.

The truth is that you can’t do it on your own and you can’t do it with an empty purse.  To address systemic issues, you need a variety of actors, skills and influence to make real change. Charities are extremely good at running appeals for immediate needs, but systemic changes require long-term investment, and this can appear less attractive. Yet only charities with deep pockets can commit to multi-year funding and provide the security needed so those closest to the cause can affect real change. This is the principle of the endowment model.  

Every year trustees are expected to declare that they have considered their public benefit and that they are confident they are meeting those objectives as part of their audit process. If your objective is to alleviate poverty, are you applying a sticking plaster or implementing sustainable solutions? For many charities, balancing the desire to make lasting changes in their communities and delivering immediate support for an ever-growing need can simply be too much. The power is often far from their reach to make the right decisions for the future.

 Wholesale innovation or pivotal change normally happens when there is a crisis.  But why wait for a crisis? Initiating lots of smaller-scale community-led approaches is one way of starting to make a difference, and this is where effectively managed endowments come in.

One way to democratise endowments is to build one from multiple sources. Community foundation endowments are different to those of many other foundations where a single benefactor was involved. Community foundation endowments are built over time by many people with interests in a particular geographical place or type of need. One of the conditions of donating to a community foundation is that community panels make the funding decisions, ensuring that the causes most pressing in their area are funded. This way, a multi-channelled relationship built on trust is formed between donors, the community foundation and the local community. This is not yet a perfect model, and there are restrictions that our network must negotiate like many other funders, but having diverse endowments, built over time, is supporting our local communities to work towards a future where sustainable social equity is a reality.

Lankelly Chase’s goals in redistributing their assets are clear: moving away from gatekeeping, distributing money to where it is needed and aligning communities’ visions and values in how money is invested, are vital aspects of effective philanthropy. They are also the goals of community foundations, involving the community in funding decisions, encouraging a wide range of people to invest in their communities, and reducing barriers to funding by sharing power through convening local actors.  

Thank you to Lankelly Chase for inspiring us all to take a long hard look at what we are doing and challenging us to consider what a brighter future would look like. The case for endowments will be a hot topic of discussion at our upcoming virtual conference, Together 23 – Philanthropy Forward: Navigating the Future.


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