From Audit Society to Trust: Grant Givers’ Management of Charitable Giving

This working paper presents a novel set of findings about charitable giving by grant making bodies. It uses insights from the audit society and trust in accounting to understand the perspectives of various grant givers in grant award, management and monitoring. It is argued here that the drive for grant management and reporting evolves along a continuum between audit and trust. At one end of this continuum, grant givers invoke formal systems of award and monitoring, resulting in low discretion for the staff. At the other end of the continuum, grant givers are more reliant on relationships of trust and discretion to manage charitable giving. For those with more formal systems of grant management, insights from the audit society (Power, 1997) inform the analysis. For formal grant management, the use of outcomes serve a multipurpose role of admittance, compliance and verification. Much of this drive for formal systems of verification can be attributed to funders’ own upward accountability requirements. Moving along the continuum, other grant giving bodies opted as to whether to utilise these formal systems or set them aside. They find outcomes a useful shorthand as they seek to minimise their own administration costs but may give to charities based on trust as well. This can help the retention of mission in beneficiary charities. Finally, there are also some ‘elite’ private grant givers who eschew formal systems of reporting and operate instead on a trust basis with beneficiary charities. These grant givers nonetheless use other mechanisms to verify reliability of beneficiaries. The research contributes to the literature by analysing the impact of trust and audit in a charitable setting