Foundation Practice Rating - An Introduction

Private trusts and foundations hold assets of over £62 billion in the UK. This is used to support charities, social enterprises, people in need and good causes through grants (and sometimes other financial instruments) amounting to over £6.5billion in 2018[i].

The bodies value their independence from government and corporate influence on their spending. This allows them to act quickly in a crisis, and make their own choices about what they support. But there is no standard way for them to demonstrate their governance values, other than their compliance with UK charity laws.

[i] Pharoah and Walker (2019) ‘Foundation Giving Trends’, Association of Charitable Foundations. 

What is the Foundation Practice Rating?

Foundation Practice Rating (FPR) is a new method of assessing the governance and reporting practices of private trusts and foundations in the UK, creating a public record of their achievements
The project is led by Friends Provident Foundation, implemented by Giving Evidence, and co-funded by a number of foundations (see ‘Partners’). 

It utilizes a technique often used to bring greater accountability to corporate behaviours – a published rating using publicly available information.
Using clearly defined, carefully selected criteria, FPR will assess and report annually on the performance  of a selection of private trusts and foundations. The rating system can also be used by foundations themselves to check and improve their performance in key areas. 

Why is a rating system needed?

The case for providing accessible and transparent information over and above the requirements of charitable reporting in the UK is relatively new. Some foundations have public or corporate accountability, but many do not. 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 uniformly across the sector.

Creating consistent standards is partly an issue of redressing a power imbalance – independent funders tend to be relatively powerful in the relationships in which they operate: those requiring funds have rarely been in the position to question the source of funds or the legitimacy of the funder. In the era of big data and shifting power balances, these traditional relationships are changing. Foundations recognize – 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. FPR is intended to support foundations in this process.

What will the Foundation Practice Rating do?

FPR will assess foundations’ performance in three areas:
Transparency
Accountability 
Diversity

Over 100 foundations, including all those who are funding this project, will be assessed against a standard list of criteria relating to these three areas. Each will be rated annually for at least three years, with the ratings published along with the underlying data.
FPR will only draw on publicly available materials (foundations’ websites, annual reports, etc.), reflecting the experience of prospective grantees searching for information.

FPR is a rating system – it is not a ranking (which compares one organisation with another and shows who is top), nor an index (which shows how the whole pack moves over time). It provides an absolute measure, and it is theoretically possible for all those who are rated to achieve top or bottom ratings.

Consultation

The project was launched by Friends Provident Foundation in May 2021. Suggestions for assessment criteria were gathered from members of the public, stakeholders and a range of experts.

The criteria were refined in consultation with the public, and Giving Evidence drew on multiple data sources to determine the final list of starting criteria.

You can find out more about the criteria here.

Other, similar initiatives were drawn on in devising FPR, including: 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.

Partners

Please note that this is a rating: it is not a ranking (which compares one organisation with another and shows who is top), nor an index (which shows how the whole pack moves over time). Unlike a ranking or index, a rating is an absolute measure: it is quite possible for all entities to achieve the top level, and it is also possible for them all to be in the bottom drawer. 

Accessibility