STRATEGY FOR IMPACT

Two funders share the strategic decisions they’ve made to maximise their foundation’s impact and offer advice on developing a strong strategy.

GRANT-MAKING IN 2021/22: £900,000

DIRECT IMPACT INVESTMENTS TO DATE: £6.2M

Treebeard Trust was set up by Barnaby and Cassandra Wiener in 2011. From the start, they were interested in how the trust might bring about impact not just through grant-giving, but also through social impact investments.

When I joined as director in 2016, one of the first things I looked at was our strategy. We decided to focus primarily on funding projects with the potential to create structural or systemic change. Initially, we thought that meant stepping away from frontline work. But we're happy to have proven ourselves wrong there. Five years later, we’ve come full circle, having realised just how important frontline work is in system change.

In Treebeard’s first 10 years, we’ve funded across all sorts of issues and sectors. Last year, we decided to prioritise three areas in our grant-giving and deep dive into those. These are: violence against women and girls; refugees and vulnerable migrants; and climate change. But we don't like to pull the barriers up too high – we’re also open to supporting initiatives that aim to create the context for change, as well as those addressing specific issues.

Another strategic decision we made in 2016 was to increase our ambitions around impact investment. Our target is to deploy half of our entire endowment – just under £20m in total – in impact investments which have a dual aim: a social or environmental impact as well as varying levels of financial return.

Some of our investments are especially compelling on the social or environmental impact side, and less so on financial return. Some are the other way around. It's about balancing that portfolio to ensure we can still give away 5% in grants while generating the most impact possible.

We invest in organisations with every type of structure – including charities, profit for purpose businesses, and social enterprises. Our underlying belief is that every type of organisation has the potential to make positive impact, including those that generate profit. Our social impact investments include a prison-based coffee company, Redemption Roasters, which uses the income from coffee sales and its coffee shops to support training and employment routes for ex-offenders. We’ve recently made our first property investment, buying and renovating a building to create a new model of children’s residential home with Lighthouse charity.

The underlying factors we look for in our social investments are the same as with our grant partners. Inspiring people and leadership are key. We also want to see clarity of purpose, vision for the organisation, a very clear route to scale, and a collaborative outlook. On the investment side, of course, we're also looking more closely at the financial business model.

The proportion of our assets we aim to invest in impact investments (50%) is high compared to most foundations. It's ambitious. But for us, grants and social investments are absolutely equal parts of our funding model. For a small funder wanting to increase its impact, how you invest is a really interesting and important area. We want to inspire and support other small foundations to look at their endowment in different ways.

One thing we’ve learned over the last 10 years is that small grants don't necessarily mean smaller impact. Fundamentally, a small and flexible grant given at the right time to an organisation with a clear purpose, led by amazing people, can have an impact so much greater than the sum of its parts. As a small funder with flexible processes, we’ve also been able to respond nimbly when a grantee needs support getting through a difficult patch – by providing patient, zero interest loans, for example.

We believe small unrestricted grants provided at the earliest stage can be catalytic. If we’re compelled by how an organisation is outlining the issue and their solution, and if we’re inspired by the people involved, we don't see really early investment as a huge risk. Our early stage funding includes The Difference education charity, which tackles school exclusion, and Peers for the Planet, which brings together members of the House of Lords who want to put an urgent response to climate change and biodiversity loss at the top of the political agenda.

I do understand that organisations may be hesitant when there’s no proof of concept yet, sometimes not even a set of accounts. But, a set of accounts can look great and a project can still fail. In our experience, when we’ve trusted our grantees – and our gut –the outcome has been really positive.

While I recognise that social change can be hugely constrained by the systemic inequality that is all around us, it is often a ‘computer says no’ approach that is the downfall of an early-stage initiative. As a small, independent organisation, we’re lucky that we can be more flexible and open minded about how we operate.

When the Santander Foundation was created in 1990 it took a similar approach to many other corporate foundations at the time – giving lots of small grants to a wide range of organisations. It was very much focused on corporate social responsibility (CSR) and getting money out of the door. The foundation was making a difference by having a small impact in a lot of different places, but that’s a resource heavy approach – and can feel quite ‘transactional’. When you’re awarding hundreds of grants, and you’re only a small team, it’s hard to build strong relationships with your grantees.

By 2019, our approach no longer felt fit for purpose. The board decided to refocus their work towards a new Financial & Digital Empowerment Fund. The aim is to support UK charities to give people the digital confidence, knowledge, and skills to enable them to make better, more informed decisions about money and have access to financial services. There was initially a lot of discussion about whether we should focus on financial inclusion or digital inclusion. But we decided to be flexible, and to include both. This was pre-pandemic, when we couldn’t have imagined that digital would move from being a ‘nice to have’ to an essential life skill.

The programme was almost ready to launch when the pandemic hit. So, we paused. We took the opportunity to step back and make sure that the new focus was pandemic informed and fit for going forward. We wanted our programme to be sensitive and attuned to what would be useful to the sector.

We spoke to stakeholders with expertise and insight. One of the areas we looked at relates to ACF’s Stronger Foundations research. We took on board the point around making sure you don't ask too much of your grantees. We reviewed how we could make a grantee’s journey as efficient as possible and avoid too much process.

We also decided that the funding didn't have to support new work, it could support existing work that organisations wanted to continue, develop or strengthen. We wanted to acknowledge that there's amazing work happening within the sector. Sometimes that's new ideas and ways of doing things but it can also be seasoned work that continues to be needed.

Having initially planned to award 12 grants, the delayed start meant we were able to make 21 grants at the end of 2021. Each one was between £125,000 and £150,000.

We had 455 applications. It shows that a lot of people recognise the need for digital and financial inclusion support, and there are many organisations out there already doing it. We had some difficult decisions to make!

When I joined the board, I remember a trustee saying that the foundation is one of Santander’s best kept secrets. We don't want that to be the case. We want it to be a real source of pride. That’s why one of our priorities this year is to gather tangible evidence data and some rich stories to share about our impact. We’re still at the early stage of our relationships with our grantees but we're actively looking at ways to help them use these grants to leverage their own profile and credibility within the sector.

We’re in a privileged position because we can see, in real time, people doing really interesting and impactful work. We want to support out grantees to learn from each other. We want to think about how we can find ways to cross fertilise. It's a small enough cohort that putting together some spaces and events where they can get to know, connect and share with each other can be incredibly effective.

When we chose our grantees, we made a conscious decision to invest in diversity. The groups we’ve awarded grants to are incredibly diverse and work in all sorts of geographical areas and with many different communities. They range from providing employability and financial literacy one-to-one sessions and workshops to LGBTQI refugees to a mixture of sport and skills training to lowincome young people. This means their learning can be even richer. While they’ll inevitably be coming across different challenges, they might be able to learn from each other in terms of solutions.

When you’re developing a new strategy, I believe it’s really important to be curious and creative. It can be easy to get stuck in your own organisation’s thinking. My advice is to go out and talk to people. Get a range of expertise and insights, but make sure you talk to people you know will challenge you. And be prepared to make shifts in your thinking.