Why risk?
Historically, risk has often been associated with the checks put in place to manage and allocate funding. But as we heard through our 2023 Festival of Learning and other conversations with members, risk goes far beyond this, with many of us questioning the way we’ve traditionally approached it:
Where traditional attitudes to risk might be impeding rather than enhancing the impact we aim to achieve, it might be time to reconsider how we approach risk.
Part of our focus this autumn has been to create space and share learning with other funders and changemakers to interrogate more deeply what we mean by risk and how we might reconsider the way we view and manage it.
What we learnt
In October we attended WINGS’ global conference on transforming philanthropy, where we heard from Dr Una Osili at Lilly Family School of Philanthropy who argued that “although philanthropy should be taking the most risks, it is one of the most risk-averse sectors in our society”. According to Andrew Chunilall, CEO of Community Foundations of Canada, one of the reasons for this is that there's “no innate reason or external competition that requires philanthropy to change”. The corporate sector is constantly innovating and taking risk - if they don’t, “they go out of business”. In philanthropy, there is no natural competitor – indeed, it's communities and civil society organisations who are competing for funding, which can further disincentivise change.
There is a need for closely examining whether the assumptions we hold about risks are real or perceived and whether the processes put in place are proportionate to that risk.
But this reluctance to take risks is not just about a lack of competition – the organisations and systems we work in all influence how we view and manage risk. And of course, that looks very different depending on the type of funder you are – how a local authority manages risk will vary greatly from an independent foundation.
Risk is not just contextual. Something that has stuck with us is also how subjective risk is. In addition to how the systems we work influence how we view risk, individuals also have different relationships to and appetite for risk (a telling anecdote is the variety of answers we got when asking funders the first word that came to mind when they heard the word ‘risk’ – responses ranged from ‘opportunity’ to ‘failure’).
But whatever the appetite for risk, and the structures put in place for managing it, there is a need to closely examine whether the assumptions we hold about risks are real or perceived and whether the processes put in place are proportionate to that risk. As Eda Tajuddin from the Social Change Nest shared with us, we have a tendency to get stuck with the same processes, ‘because that’s how it’s always been done’ and as a result, “we’ve managed to weaponise risk and create frameworks that are exclusive and extractive”. Instead, she argues that we need to reframe our view of risk and create a new culture that is able to embrace it.
We’ve also heard in conversations with members - from local forums in Newham and Camden to workshops with local authorities who want to adopt more open and trusting grantmaking practices – that there is an appetite for doing things differently and drive real change for London’s communities. Risk inevitably shows up in this – whether it is funding new changemakers who might not have a track record but present with great ideas, or using different decision-making structures which challenge the status quo. Collaboration has been one of the ways we at London Funders can enable funders to take risks together, whether through long-term funder collaborations like Propel or jointly coming together with members to look at how we can develop a shared approach to due diligence.
The last couple of months of sharing, gathering and capturing lessons have helped us and funders in our network to unpick ideas and structures around risk that might hold us back in acting in greater solidarity with London’s civil society and communities – from being stuck in rigid systems that are hard to change without full organisational support to funding decisions feeling even more high risk when demand for funding is at an all-time high. At the same time, we’ve also explored the risk of ‘not acting’ on some of the huge challenges facing the city, which require us to shift to new territory and embrace new ways of doing things. We’re incredibly grateful to everyone for openly sharing their own perceptions of risk as individuals and the context of their organisations. All of these have sparked debate and challenged our thinking about risk.
We’ve gathered more learning points and resources under the ‘Reconsidering Risk’ programme in this slide deck and below is a link to articles from us, members and friends in the sector on this topic:
An update on our learning programme: risk, power and solidarity
What working in collaboration has taught us about pushing boundaries
Due diligence: next steps towards piloting a shared approach
Let’s Stop Being Afraid of Risk: Insights from The Social Change Nest
Reconsidering risk: why we need to invest in the trying and the testing
How can open and trusting grant-making work for public sector funding?
