A common refrain at Joseph Rowntree Foundation’s Next Frontiers conference in London last month is that ‘philanthropy needs a new operating system’. If that’s the case, then what are the implications for the infrastructure which underpins it? How can legal contracts – expressions of power relationships in concrete form – and other invisible forms of control be ‘re-wired’ to make our systems more human centred? And is the grantkmaking community ready for such a re-writing of the rules? After leading a lively session on the topic, Dhami sat down with Alliance’s Charles Keidan to explain more about why philanthropy needs to invest in a ‘boring revolution’.

Annette Dhami, Dark Matter Labs

CK: What is your endeavour at the Dark Matter Labs?

AD: The central question I ask is: how do we deeply democratise the civic level and build the places and economies around us to be fit for the future? How do we design the foundational institutional infrastructures that are supportive of that?

I worked initially in social enterprise and joined Dark Matter Labs in 2020. My interest in philanthropy comes from the idea that how we move resources through systems is a critical part of how we’re going to be able to build the places around us to deal with poly-crisis. We haven’t got the societal capabilities of governing systemically. It’s not part of our normal economic models, so we need to be able to come together and make agreements about how we want to govern, to turn those different ways of being and building into contracts, in ways that enable us to collectively learn and make sense of this complexity we’re in.

Is your view that philanthropy systems aren’t set up as well as they might be?

Generally, when money is moved through philanthropic foundations, the foundation makes the decision about how much and where it will go. There’s normally no room for agreement about what the appropriate mechanism to govern this work together is nor what could be alternative accountabilities, such as to the community’s grant partners serve, and to future generations, for example. It’s normally a top-down process with a set of terms that have been written by lawyers instructed by the foundation, who have a duty to protect the funder risk under their professional standards. So, the accountability is primarily to the money. The information and learning are primarily channelled to the funder.

I think we need to move money through systems beyond what’s prescribed by traditional philanthropic institutions. Yet the micro-details are still locking us into not being able to do a lot of the things that philanthropy actually has expressed desire to do — as in shifting power more meaningfully. In some cases, outdated questions of risk, autonomy, accountability and responsibility underlie substantially how we move money, and to the detriment of what are prescribed and desired outcomes.

What role is Dark Matter Labs playing in helping to change this?

The piece that I’m particularly involved in is called Beyond the Rules. It’s a collaboration with others to create open-source tools. We have a funding agreement portal, and we’ve worked with a legal designer and specialist lawyers to create a playbook which goes through what you’d normally have in a set of terms and conditions and how we could rewrite them in a way that is set up for systemic governance. Each term has an example of how we could approach it, a series of notes and considerations, and then an example of legal text that could be used. We’ve worked on that with leading law firm, Bates Wells, so that all those pieces of legal texts have been checked and verified.

It’s the invisible parts of the systems that we don’t even notice that are deeply influencing how we are, so exposing it is a key part, but it’s also about changing it

Are any foundations using this yet?

We published this at the beginning of the year and I’ve spoken to a number of foundations who are already starting to build this in. We actually designed the playbook for fundees, so they can push back against usual terms and say: ‘I see that you’ve put this term in. How about we use this one instead?’ One of the things that came up in our inquiry is that there isn’t an impetus in the foundation context to make the changes; if no one’s saying that the terms are a problem, they’re not perceived as being a problem. So first of all, it’s a question of how we highlight that this is problematic and then it can also be used by the funders to change their contracts. Some are starting to explore and implement that.

You mentioned an inquiry. Is that the research that you did to try to understand what the needs were?

We did a piece of work prior to this and published four propositions in the philanthropy and grantmaking field, particularly on how the Beyond the Rules approaches could be appropriate and useful in increasingly complex contexts. But it’s also about how we govern more systemically, equitably and move resources differently. We spent quite a bit of time speaking to different funders that had been approaching how they were moving money in different ways. Alongside this, we’ve been looking at employment contracts and pay. All of this is quite entangled.

So it’s not just about contracts between grantmakers and grantees? You’re talking about employment contracts?

These are all really important governance spaces. I suppose one of the reasons that we’ve focused on contracts is because it’s one of the areas where it’s harder for an individual organisation to make shifts on its own. Where do risk, accountability and autonomy lie in both the funding agreement and an employment contract? They are codified into the contracts, but each of those two is different, and they’re both hugely impactful on the relationship between the contracting parties, on how the space is governed, where power lies, where risk lies, where accountability etc lies. And again, pay is about how you move resources through a system.

What principles do you think should shape governance questions around pay in our field?

I don’t think that there’s one answer. It’s different in different contexts. There’s so many things entangled with pay, for instance – the organisational position, the individual position, the group governance. Quite often, what we find is that groups will end up with an approach that feels good enough in their context, but once you open up and you really look together and say, ‘actually that’s quite problematic, and if we structure this what does that mean?’ From there, you can land at places that you agree are good enough to move forward.

There’s a lot of power in some of the resistance being rechannelled when that desire for integrity is redirected through new frames of thinking about the problem. As an small example, instead of requesting reports from grantees in order to reassure resource-holders, grantmakers instead focus on evaluating the source of their power and where legitimacy of the resource lies and hold themselves accountable to others on their own journey of change.

What we ended up with in Dm was a pay structure that involves a shared base formula that seeks to represent a proxy for living costs, and a pot of funds on top that is self-set to adjust for gaps in the formula, alongside a comprehensive benefits infrastructure.

But that’s just one example and for me, the pay question is as much about the process that you go through together to think about how you’re going to move money, than it is about having a set of principles to start with.

Are there foundations that you see as offering exemplary practice on either pay, employment contracts or grant contracts?

I think of the work that Thirty Percy have been doing to help move multiple funders to be able to not issue separate terms and conditions to one actor, but to come together over a shared set of conditions. Also Joseph Rowntree Foundation and the Emerging Futures Programme brought the pathfinders cohort together as an ecosystem. Rather than try to fund each of those organisations individually, they’ve brought a group together and then created a learning space in that group so that they can see each other’s strengths and collaborate and build upon each other’s work. There’s a lot of collective learning and sense-making in that group in the way money moves in that system, and there’s some interesting practice that’s happening there.

Some big foundations pay huge amounts to their staff, particularly those that work on investments. There’s an assumption that the purpose of investments is to maximise your endowment so there’s more money for grant making and those people that are good at creating wealth in the foundations should be rewarded. Do you think there’s some issues there with your approach?

That’s part of a wider capitalist economic system that rewards value extraction, and that system is fundamentally problematic. Philanthropy is a microcosm of that. I worry that we spend too much time criticising charities which takes away a focus from looking at what is playing out in the wider economic system.

I was thinking less about fundraising charities and more about charitable foundations like, say, the Wellcome Trust where investment managers who successfully increase the endowment of the Trust by billions are paid many millions of pounds. Is that justifiable in your view?

I think the question is wider than that though: should people be able to hoard wealth full stop? Should we be able to create companies that are designed to extract value so that we can hold it for our own gain? For me, that’s a fundamental economic system problem. We’ve structured our economy so that the default purpose of a company is to hoard value for shareholders so we have fundamentally wired our economic system to purposes that aren’t conducive to people and planet.

The session you led earlier today was called the Boring Revolution, which suggests that the issues are not that interesting but that they still require attention and change. Is the change that you’re suggesting in terms of rewiring going to be sufficient to change the system?

It’s part of a wider whole. One of the areas that we’re focused on is the rules underpinning the financial and legal systems, regulations, policies, contracts institutional design – those things that shape how we build the world around us and who has the power to do what. It’s boring because it’s stuff that seems very dry and operational and the kind of thing we leave to lawyers and accountants, whereas it’s absolutely critical in the design of relationships that shape society.

Is just the fact of interrogating it part of the process of exposing the political nature of these structures so that they don’t just seem technocratic and neutral?

It’s the invisible parts of the systems that we don’t even notice that are deeply influencing how we are, so exposing it is a key part, but it’s also about changing it. So much of what we take for granted in society – and what actually shapes how we live and understand the world and each other – is in the details of our contracts and legal systems, our accounting rules and our employment agreements, for example.

What kinds of resistance are you meeting, if any?

One of the interesting parts of this is that sometimes resistance is driven by well-intended people thinking about integrity from another vantage point. So, for example, people with a legal responsibility might hold assumptions of what it means to mitigate risk, and to be responsible and accountable within the existing system. So, it’s not about saying: take the risk away, take away the power. It’s more about saying ‘let’s think about what integrity really looks like. What actually are the other risks involved?’ In what has become a time of actual existential risk, much of what has been traditionally characterized as risk from a philanthropy or legal perspective is often relatively quite small and likely merits reconsideration.

All the little bits add up to constructing the broader systems and social contract, which in many ways, are in crying need of transition

So, there’s something about understanding these values that sometimes are well meant and that frame good governance in a certain way that is problematic for the context we’re in. So some of the pushback is by people being driven by good governance. The question is, how do we rethink what good means in governance, and recognise the things like risks and forms of autonomy that are needed but are not currently recognised? There’s a lot of power in some of the resistance being rechannelled when that desire for integrity is redirected through new frames of thinking about the problem. As an small example, instead of requesting reports from grantees in order to reassure resource-holders, grantmakers instead focus on evaluating the source of their power and where legitimacy of the resource lies and hold themselves accountable to others on their own journey of change.

Are you encouraged by how many people were in your session today? 

We’ve had a lot of conversations coming out of that. Funders are saying they’ve been thinking about this as a problematic piece of their governance but haven’t known how to address it, and are now starting to see different ways of thinking about it. There’s definitely a lot of that. And there’s a sense that things need to move more broadly in the sector as well. But I guess what it will come down to is whether people are able to take this back into their day-to-day habits and make small-scale redesigns of the things around them because this can’t be a one-off design project, or a sideline activity. This is in the everyday experience and I’m seeing more and more moves that give me hope.

I’d just add that if there are people that are interested in really exploring this and want to look at re-wiring contracts and thinking about their pay structures, for example, there are resources out there, like the Beyond the Rules Portal.

How much of this is relevant for foundations around the world?

It has huge relevance across many contexts, and we’re seeing a lot of interest in this work in other countries. The specifics are different in different legal systems. So there’s things about the playbook that will be relevant in multiple geographies and others that would need to be tailored to different legal contexts. And then there are also different cultural contexts. Not everything is culturally relevant, but I would say at least 50 per cent is. We’re finding that what seems to cut across every place though is the need to rethink and, in many cases, recode the dark matter of how we live together. All the little bits add up to constructing the broader systems and social contract, which in many ways, are in crying need of transition – the Boring Revolution we spoke of earlier.

Charles Keidan is Executive editor of Alliance magazine