Should grant-making trusts and foundations give more money to charities?

The UK benefits from more than 4,000 charitable foundations, many of which were set up centuries ago. Indeed, the concept of charitable foundations has its roots in ancient Greece, although they became more significant during the nineteenth and twentieth centuries.

Some UK foundations have reserves running into billions of pounds. As we emerge from the coronavirus crisis, it could be argued that more of this funding should be disbursed to front-line charities, many of which are struggling to deliver vital services to their beneficiaries, having suffered major drops in income since March 2020.

Jonathan Goodman, writing in The Globe and Mail, argues that charitable foundations in Canada, which are similarly structured to those in the UK, should spend all their funds within 18 years of receipt. He points out that Canadian foundations have doubled their assets in the last 6 years, well above the rate of inflation and the growth in Canada’s GDP.

He goes further to criticise foundations which have not increased their grants to charities in line with the added funds they have accumulated. More controversially, he proposes that foundations set up by individuals and families should not grow like business empires, but should disburse their assets over an 18 year period and then fade gracefully away unless they are given further funding by a new generation of Canadians.

Jonathan Goodman admits that his views have not endeared him to Canadian foundations, and it seems unlikely that they would be more popular amongst grant-making trusts in the UK. However, charities here – especially those with an annual income of £1.5 million or less – which are feeling the effects of the coronavirus restrictions might well support the line he is taking. In any event, his views are worthy of detailed consideration and further discussion.