Risk capital

In 2005, John Stone co-founded the Stone Family Foundation, following a successful career in financial services.

Since then, John has donated over £100 million to the Foundation, of which more than £72 million has been given to charitable causes across Africa, Asia and the UK.

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Quick facts

The causes

• Water and sanitation
• Mental health
• Young people

The funding

• The Stone Family Foundation

The takeaways

• When you’re starting out, ask for advice – from professional philanthropy services and your peers.
• Choose causes where you can have the greatest impact.

The journey

Q: What led you to set up a foundation?

A: My business background has always been in the financial services sector. I became the main owner of a UK wealth management firm in 1984, after leading its acquisition through an MBO.

After four years, I sold the firm and in 1991 and started a new pan-European business. This was acquired in 2005, as a result of which I had more money than I had ever dreamed of.

My then wife and I sat down to discuss our future. We weren’t interested in a lavish lifestyle and we didn’t think we’d do any favours to our children if we left a fortune either.

At that point, you ask yourself what the other options are. It becomes apparent that the only thing left is to use the money to improve the lives of other people.

So, we set up Stone Family Foundation to do exactly this.

Q: How did you decide which causes to support?

A: When we started our Foundation, we didn’t have specific causes in mind.

So, we did what I would suggest anybody in this situation should do – we took advice. We spoke to an advisor from New Philanthropy Capital who asked us a lot of questions:

• UK or international?
• Emergency support or long-term?
• Fewer causes or more?

She took our answers away and drew up a wonderful pilot portfolio of 10 charitable causes for us to invest in.

The plan was for us to meet each organisation and get to know their work. Then, if we were happy, make a donation to each and track their progress.

Once the projects were up and running, we went to visit them all. The good news is that none disappointed; they had all been incredibly well researched.

We ultimately decided to focus predominately on water and sanitation, where we felt we could have the greatest impact.

At the initiative of one of our children, we also set up a portfolio in the UK which addresses both mental health issues and disadvantaged young people.

Approach to funding

We occupy a unique position in being able to provide risk capital to catalyse pilots schemes. Our role is to help initiatives go from ‘pilot’ to ‘scale-up.’

Once an enterprise successfully scales-up, the risk for larger funders has been mitigated. At this stage, we attract risk-averse funders with deeper pockets to replace us.

In terms of approaches, we provide whatever funding is appropriate for the situation. This varies from grant-funding, to debt, to equity.

One of our biggest successes was to develop the first ever Development Impact Bond alongside U.S Aid. For this, we provided the capital upfront to begin a development programme. As the programme’s targets were achieved, our capital was paid back by U.S Aid.

The idea was to enable a large funder to pay for a development programme without taking on risk. It was a ‘no win, no fee’ approach for a risk-averse funder, because Stone Family Foundation would have underwritten the cost, should the programme have failed.

We also fund other projects through Royalty Revenue, where the percentage of repayment is based on the revenue of the project, rather than on fixed interest rates.

Advice for philanthropists

In some cases, people have a particular cause they are keen to support, and that’s great. They can pursue the cause, speak to charities and carry out due diligence on their own or with a partner organisation.

But for those who don’t know what they want to fund, the simple answer is to take advice. Take advice from professional philanthropy services and take advice from peers who have gone through the same journey. Learn about their successes, their failures.

There are many people in my position who are quite happy to spend an hour or two with others to help guide them on their journey. It’s all about taking the first step to get the ball rolling.

Ewan Kirk is an investor, technology entrepreneur, and co-founder of the Turner Kirk Trust, a family foundation that supports causes in the UK and developing world. It has disbursed over £7 million to charitable causes since 2007.

Ewan’s focus is on innovation, and he believes that donors should give charities ‘permission to fail’.

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Quick facts

The causes

• STEM
• Conservation and biodiversity
• Early childhood development

The funding

• Family foundation
• Working with charitable partners to find breakthrough solutions

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Funding for innovation

Q: What cause areas do you work in?

A: When we set up the Trust, we wanted to find solutions to problems that were stifling growth and innovation in STEM, conservation, and early childhood development. Our main priority is to attract funding and add value in crucial areas that often struggle to raise money, such as fundamental mathematics research or biodiversity.

A major issue in the philanthropic sector is that many charities are reluctant to experiment and find new ways to solve issues, and this is something we wanted to change. At the core, our work is evidence-based and driven by robust impact evaluation. This allows us to encourage our charitable partners to engage in smart risk-taking to find breakthrough solutions.

Rather than trying to solve a problem in its entirety, we support initiatives that have the potential to help reach faster, more scalable solutions. The Trust provides a platform to bring a wide range of people from different disciplines together to share their expertise and have the potential to create long-term, sustainable change in policy and practice.

Q: Why is it so important to catalyse innovation?

A: Charities don’t experiment because they are afraid of failure. Any experimentation they do around their ways of working is often minimal, which can make them less efficient and deter them from continuing.

This approach slows down innovation and leads to missed opportunities in fundraising and philanthropic work. To tackle this, we give our charitable partners what I call ‘permission to fail’.

What this means in practice is allowing our charitable partners to run projects that trial new ideas, even if they might not work. They may fail initially, but with each failed experiment, you are one step closer to discovering something that works.

Most charities operate in problem areas that are so vast they are impossible to solve with philanthropy alone. We aim to fund projects that drive change through trialling new methods that improve the way charities work, rather than funding initiatives themselves.

You can’t do the same thing repeatedly and expect different results. Charities need to run a lot of cheap experiments in the short term so that they have the chance to discover a solution that drastically improves their long-term efficiency.

There are countless charities all over the world doing amazing work, but they are forfeiting the chance to amplify that impact if they don’t experiment. That’s why this method of support is so important, and we believe it’s something we need to see more of in the sector.

Approach to funding

Q: Should donors be hands-on or hands-off with the charities they support?

A: Hands-off is always better. The charities are the experts, and they live and breathe these problems every day. Some donors have historically had the bad habit of coming to a charity and making well-meaning suggestions that aren’t backed by research or evidence. Charities then feel obliged to take these suggestions into account because they come tied to funding.

That said, it is important for donors to know enough about the project and to understand the issues, so they are able to ask difficult questions – and ensure that they know what is going on.

The good news is that evidence-based philanthropy has become a tremendous force for good in the charitable sector. Donors are learning – rightly – to back up their giving with research and hard data, rather than making decisions based purely on gut instinct and emotion.

Q: What is the project you are most proud of supporting?

A: It’s difficult to choose just one, because all the organisations that we support are run by passionate, inspirational people that do amazing work. But looking back, one project that jumps out was establishing the Cantab Capital Institute for the Mathematics of Information. Hosted at the University of Cambridge, the Institute is tasked with addressing some of the world’s biggest problems in data and fundamental mathematics.

Every one of us churns out endless streams of data every year, which is a huge challenge no matter the industry. The questions that big data poses rely heavily on fundamental mathematics research, yet it is one of the most underfunded research spaces in the UK.

That’s why we were proud to help establish the Institute. Fundamental mathematics research might not be the most glamorous or heart-wrenching cause, but that doesn’t make it any less important, and new discoveries in the field could have far-reaching consequences on all our lives.

The Institute has already done some very important work, including research to make climate models more efficient and specialist modelling on the coronavirus pandemic. Most recently, Professors at the Institute won an ESPRC Programme Grant Award on the mathematics of deep learning, and it’s great to see how far the Institute has come since its foundation.

Advice for philanthropists

Q: What advice do you have for those looking to get into giving?

A: Treat philanthropy like a job. To have a real impact with your giving, you need time, effort, and passion. If you are missing even one of these, you are passing up an opportunity. Philanthropy isn’t something you can just dip your toe into. You need to fully immerse yourself in a cause you are interested in, because it’s the only way to see any meaningful results.

Similarly, don’t make impulse decisions. Philanthropic giving is very tied to emotions, but it’s important to back up your choices with evidence. Always encourage your charitable partners to experiment and think about problems in new ways. This is the difference between having an impact today, and creating long-lasting, sustainable change for the future.

Strategic climate philanthropy

Sophie and Nick Marple’s foundation, Gower Street, has evolved to focus on funding small organisations working for transformational change in the climate crisis.

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Quick facts

Meet Sophie Marple

Set up the Gower Street foundation in 2007 with her husband Nick.
Works with Impatience Earth offering pro-bono guidance to donors interested in climate philanthropy.

The causes

• Girls’ education in Ghana
• Climate change

The funding

• Through Gower Street, a family foundation
• Focus on small organisations and systems change

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The journey

Q: How did you get involved in giving?

A: About 14 or 15 years ago, my husband and I were both working full time and giving to charity in quite a sporadic way. He had just spent time in Ghana and really wanted to support education in sub-saharan Africa; my giving was closer to home, looking at issues like homelessness in London. We got to a point where we were sorting out wills and were advised that it might be an idea to structure our philanthropy by setting up a foundation. On the back of this advice, we started Gower Street – albeit under a different name initially.

Q:How did your giving change after setting up a foundation?

A: In the early years, we were very much a ‘kitchen-table’ type foundation. The strategy went as far as having our trustees around for dinner and talking about where we might want to give. Once our youngest child reached about four, we began to re-engage with philanthropy more and ask ourselves what we were trying to achieve through Gower Street.

A year after we set up the trust, we went to see New Philanthropy Capital and they helped us to think about what causes and markets were most important to us. This resulted in us funding in education across sub-saharan Africa and closer to home in Islington. We continued this for some time until we realised that, because we were working in a number of different countries, we didn’t know the markets well enough. As a result, we began to keep our African focus purely on Ghana and exclusively on education for girls. We started to think strategically about what we could achieve within Ghanaian education.

This journey of reassessing Gower Street led us to talk to Jake Hayman from Ten Years’ Time. Working with him transformed the way we thought about funding. It moved us from funding big organisations to thinking about transformatory, systems-change work with smaller, on-the-ground players. Things became far more streamlined and we developed a stronger understanding of what we were trying to achieve and how we could get there.

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The journey

1. Set up a foundation to structure your philanthropy
2. Get advice
3. Review your strategy
4. Focus your giving

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The strategy

Q: Is there a strategy behind your funding?

A: We tend to go with whatever the organisation we’re supporting needs, to be honest. Our preference is usually multi-year core funding. I think that’s really helpful for charities. The benefit is that you free up the organisation’s time. All the time they’d spend going out and seeking more funding every year is time you’re giving back to them to do the work they set out to do in the first place.

Ultimately, charities are trying to change the world and we’re trying to fund that change in the best way we can. I believe very strongly that charities are the experts in their own field and that we’re simply very fortunate to have the money to fund what they do.

Q: What is the biggest challenge of being a funder?

A: There are a few, but something I’m acutely aware of is the power imbalance there can sometimes be between a funder and an organisation. Anybody who has given money will appreciate that people sometimes think you have more knowledge about the subject area than you actually do. I have been invited to meetings where I get imposter syndrome – “I shouldn’t be in this meeting; I don’t know enough to be here.”

I think it’s always worth reminding yourself that the reason you’re there is because you can fund the work, not because you know more about the issue than the people in the room. Your role in those meetings is to learn, but reminding yourself of that can be a challenge at times.

Climate philanthropy

Q: What made you interested in climate change?

A: While we were reviewing our strategy with Jake, he happened to be working with another family who wanted to focus on the climate. He ended up passing on some reading material to me. I was shocked to find out how extreme the climate situation had become. It wasn’t that we weren’t aware of the climate crisis before, but I would always say “we’re not climate funders.” I felt I could box it away, like we would with unsolicited grant applications.

This all happened in around 2018, when – coincidentally – lots of climate issues collided at once. You had Extinction Rebellion coming onto the scene, the IPCC report released, and pivotal climate books and op-eds being written. It began to feel very personal for me. I could foresee the impact of the climate crisis on the futures of my two daughters and of the girls we work with in Ghana.

In my mind, I had sectioned ‘climate’ off – I’d put it in its own box. Then the walls started coming down around it.

Q: What climate activities are you engaged in?

A: We fund a number of different organisations across the sector from media, to social movements, land use and trade.  A good example of a recent organisation we’ve funded is called On Road Media who I think are brilliant. They work with broadcasters to reframe the climate debate, so that it’s not done in a way that feels hopeless. 

Among other activities, the On Road Media team works with the Earthshot Prize. Earthshot were initially going to go down a very scientific route with how they framed the prize, but On Road found that the biggest driver to someone funding climate philanthropy is responsibility for the next generation. This revelation led the Earthshot ambassadors to focus more on their own children and the next generation when discussing the climate crisis with the media. With an issue as time-sensitive as the climate, we have to go out with messages we know will connect with people.

Beyond this, I have quite a ‘hands-on’ involvement with Impatience Earth. This is a service offering pro-bono guidance to people looking to get involved in climate philanthropy. My role here is to help in any way they need! I talk to other funders about their giving journeys, I speak at events, I go to workshops. For me, because I work in a small trust and the climate crisis can feel so overwhelming, it can be easy to question whether you’re really making a difference. But working with Impatience Earth amplifies the impact of our other climate work. I get the opportunity to draw on my own experience and knowledge as a donor to help leverage more money into the sector.

Advice for philanthropists

Q: What advice do you have for those looking to get involved in philanthropy?

A: See your philanthropic money as risk capital. That’s what it’s there for. For me, if you’re not taking risks with philanthropic funding, then I’m wondering why you’re involved in philanthropy. With climate philanthropy especially, taking risks is the only way we’re ever going to make real progress.

I’d also recommend a fantastic book to anyone looking to get involved in giving. The book is It Aint What You Give, It’s The Way You Give It by Caroline Fiennes. I found it transformatory in the way that we fund at Gower Street. It’s all about thinking of how you can be of most use to the people you are funding. Learn from them, be open, be flexible, and see them as the expert. 

And if you’re interested in funding the climate, talk to us at Impatience Earth. We provide completely free advice and guidance, so you have nothing to lose by getting in touch. It’s a free network; it’s free advice; what more could you want?

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The takeaways

• Multi-year core funding helps charities by freeing up time that they might have spent on fundraising.
• You are not the expert: the charities know more about the issue.
• Taking risks is what your philanthropic money is there for. It’s the way to make change happen.

For James Chen, philanthropy is about backing moonshot ideas – funding those special projects or programmes that could change lives, or even change the world as we know it.

Unlike the public sector or corporates, philanthropists are in the unique position of owning their capital outright. Rather than acting as guardians of capital, James believes philanthropists have an opportunity – and a responsibility – to use their capital for the benefit of wider society by taking risks in the fields where others can’t.

With great ambition, comes the need for great patience. Backing a moonshot philanthropy strategy does not bring instant gratification. Rather, it requires resilience. Out-of-the-box ideas often fail or need retooling and even if ultimately successful, they often take time, sometimes years, to succeed.

To drive unproven ideas forward, you have to be agile. You have to identify milestones, evaluate progress continuously, and when you face failure, you must see it as a chance to try something new. This kind of resilience is doubly required when working in developing countries.

The pursuit of perfection is a false economy, James says. His personal motto is: “perfection is the enemy of the good enough”.

James focuses on two main causes – poor vision, and childhood literacy. His commitment to these causes comes from personal experience, having grown up in both low and high-income countries. While living in Nigeria as a child, James noticed that not many people wore glasses, even though there was just as much need for glasses as anywhere else.

If you can’t see, your world narrows. As someone who wears glasses himself, James knows how limited his opportunities would be if he couldn’t correct his vision. 

The World Health Organization estimates that 2.2 billion people are living with vision impairments and 1 billion of those are in need of glasses. 

For James, his experience growing up in Hong Kong, Nigeria, the UK and US has given him the confidence to take risks to tackle this issue globally.

“I’m not afraid of the unknowns and I am comfortable in the developing world. We do our pilots in developing countries and I know how to utilise the opportunities and resources wherever they are,” he says.

This can be seen in his work supporting Vision for a Nation to pilot in Rwanda. It takes four years to complete an optometry degree and costs more than most can afford. Vision for a Nation in Rwanda trained 2,700 nurses in three days to be able to carry out a basic sight test. Those nurses were then sent to all 15,000 villages in Rwanda to test those living in rural areas.

^{An early promotional video for Vision for a Nation.}

The result: Rwanda is the first developing country in history to deliver access to primary eyecare to all its citizens and to do so sustainably. 

As Vision for a Nation’s founder, James worked on the principle that you have to find local experts and trust your team to identify the best approach. He agreed with the recommendation of the NGO’s first country director in Rwanda, Massima Presente, he would only visit if there was a major problem or to celebrate major milestones. For James, this was important because he did not want to drain the organisation’s resources unnecessarily. 

In practice, through the five years of the programme he visited only three times: once when there was a major problem; once to celebrate when all the nurses had been trained and the work was ready to be implemented; and finally, to celebrate the mission’s completion with primary eyecare firmly integrated and embedded in the nation’s healthcare system.

The moonshot philanthropy was paying off, but the work has only just begun. 

Following the success in Rwanda, a similar programme is now being rolled out in Ghana and James expects other countries will follow. 

“Philanthropists make a commitment, measure progress and then continue on the journey,” he says.

It can take many years to reap the rewards of the projects you have funded, but philanthropists should recognise they are in a unique position to take those risks. 

“You have to trust yourself, trust those you fund and trust the process,” he concludes.