In a world eagerly adopting venture philanthropy, strategic philanthropy and more recently catalytic philanthropy, is there still room for the ‘humble’ grant and if so what role can it play? This was the question before the Alliance Breakfast Club, held in London on 19 March and co-hosted with the Paul Hamlyn Foundation.

For Barry Knight, secretary of CENTRIS and guest editor for the March 2014 issue of Alliance, the dominance of these new, largely donor-led approaches has made many people dismissive of grantmaking. ‘Throw away your grant proposals,’ Mark Kramer of FSG advised delegates at last year’s EFC conference.

The choice of language to some extent frames the debate, said Knight. No one is going to say they don’t want impact or they don’t want to be strategic, he argued, but contrasting these approaches with grantmaking seems to imply that the latter is not concerned with impact and is not strategic. Far from it, he said. Of course grantmaking is concerned with impact. The difference is that it places the emphasis on the grantee-led approach to delivering success.

Grants allow for a bottom-up approach, putting ownership over social change in the hands of civil society organizations capable of defining and measuring impact on their own terms. The new approaches are much more top-down, he said, largely driven by external business practices and consultants, with foundations specifying measures of success that don’t necessarily tally with the aims and experiences of organizations and individuals on the ground.

This is not to suggest that grantmaking should be the only model. ‘There should be no “ism” that rules the world,’ Knight insisted. The different approaches are all needed, complementing each other like the different instruments of a jazz ensemble.

Agreeing that grants are an important tool in supporting civil society, Judith McNeill, grants director at Comic Relief, identified several key uses for grants. They can support new talent and potential. In these cases you often don’t know what the impact will be. She gave an example of supporting a small Ugandan organization offering savings and loans. They quickly discovered that when women had more money, gender-based violence became more prevalent. The organization therefore decided to tackle this issue, with considerable success, at local, district and regional levels. How effective grants can be in kickstarting small, local organizations is shown by the number of organizations she notices investing in projects that were themselves originally Comic Relief grant recipients. Grants can also serve to help build new fields of activity. She talked of how Comic Relief has sometimes noticed a new issue emerging and has supported a range of organizations to begin to develop new approaches.

Michael Green, executive director of the Social Progress Imperative and co-author of Philanthrocapitalism, dwelt unexpectedly on the value of grantmaking. He highlighted the danger of being led by strategy, remembering how the Department for International Development (DFID) made grants in Kenya to a new initiative called M-Pesa, the hugely successful mobile-phone based money transfer and microfinance service, and later considered cutting all support because it didn’t fit with DFID’s ‘strategic approach’. The great thing about grants, he said, is that they can empower organizations or individuals that would be seen as too risky to invest in.

Nonetheless, he argued, we need to focus on optimization of scarce resources. We need to have tough conversations about impact, about grants that haven’t worked. If we fail to measure impact we are simply not doing a good enough job. Philanthropy needs more robust numbers: although data is not everything, it is still important.

Martin Brookes, director of the Paul Hamlyn Foundation, agreed on the need for measurement, arguing that a ‘relentless search for impact’ is forcing foundations to ask difficult questions, to think about what they want to achieve and to be more effective in doing so. Grants are a tool but the tool is incidental and shouldn’t become the focus. ‘Do you care about the impact or do you simply rejoice in the process of grantmaking?’ he asked.

In response Knight pointed out that there are many ways of measuring change. He declared himself to be ‘passionate about impact’ but insisted that the focus on how you measure success is a red herring. Peace building, for example, cannot easily be measured. Civil society itself should be able to judge what success looks like rather than adopting a system of measurement devised by the foundation. Several audience members asked what we might be missing if we focus solely on grants with provable impact.

Brookes questioned this. The difficulties of trying to measure success are not a reason not to try, he said. You may not do it perfectly, but understanding that you are on a journey towards a goal is more important than the mechanism you use to get there, grants or otherwise.

Lloyds Bank Foundation’s Paul Streets questioned philanthropy’s obsession with scaling up successful projects and the equation of scale and impact. ‘Small can be beautiful,’ he said. It may depend on what sort of impact you are looking for. Phrases such as social change and impact lack meaning, said Balihar Sanghera from the University of Kent. What sort of social change? It is hard to achieve change in an area such as social mobility, but that doesn’t mean the funding is not justified. An over-emphasis on a measurable impact may push funders to cherry-pick specific, easily attainable aims to the detriment of less achievable but more important structural changes.

Both McNeill and Brookes saw grants as at one end of a spectrum based on the knowledge that a foundation has on a given issue. In areas where little knowledge exists, McNeill said, you have to back a cause based on a hunch, an intuitive feeling that it is a good thing and in the direction you want to go. Brookes acknowledged that grantmaking is partly about humility, admitting that you do not know that much about an issue and so offering more control to the grantee. As you gain in knowledge, you can move along the spectrum and begin to understand the impact you want to achieve and how it can be measured, then you can introduce different approaches. ‘We can only exercise power when we know what we are talking about.’

Green noted that if you take risks with grants it becomes more incumbent to talk about failure. Brookes then revealed his plans for Paul Hamlyn Foundation to publish a report detailing their failures, stressing the need to be ‘brutally transparent’.

For McNeill failure was not the main concern; the far greater risk is ‘chronic mediocrity’, she said. As a funder that raises its money annually from the public, Comic Relief is in the public eye and cannot afford to stagnate. Other panellists agreed about the dangers of mediocrity. Knight commented that foundations that exist in perpetuity can end up ‘going to sleep’. Green felt that foundations should be put under heavy public scrutiny so as to force them to raise their game. He suggested that the Treasury might do well to publish how much each foundation receives in tax subsidies so that the public can decide if their work is worth the loss of tax income.

Are grants a bottom-up approach compared to so-called impact-driven approaches that put too much power in the hands of the funder? Is it a contradiction in philanthropy that it wants both to take risks and to be more effective in achieving and measuring its goals? Or are these false dichotomies? These questions proved too big to answer in just one sitting of the Alliance Breakfast Club, though all panellists seemed to end up agreeing that impact is crucial and grantmaking is one valuable tool among many.

What are your thoughts on the discussion? Do you agree with the panel? Let us know what you think in the comments section below…

Purchase the March issue, Grantmaking for social change, for £15 or less here>

Caroline Hartnell, editor and Tom Rennell, marketing officer at Alliance magazine.