Philanthropists aren’t tax dodgers

Dame Stephanie Shirley sold her successful computer business and then poured tens of millions of pounds into tackling the problem of autism. She invested in research into its causes, she founded schools for children with autism, and her funding pioneered services for adults.

Hardly the profile of a tax dodger. Yet it’s people like Dame Stephanie that are most likely to be affected by the government’s proposed cap on tax relief. Let’s be clear though—donors weren’t even personally benefitting from the tax relief in the first place. In order to use the tax relief, the donor to give the money away—which meant the donor no longer held the money for his or her use. Or does the government believe that cash behaves like sub-atomic particles and can be in two places at once?

If the government thinks that the rich are funding bogus charities abroad which then channel the money back to the ‘donor’, then it should investigate such abuses and use the law to bring perpetrators to justice. Charities here in the UK are regulated by the Charity Commission, and charities with income over £25,000 submit audited accounts. Defrauding a UK charity is quite difficult and may result in criminal prosecution so I doubt tax lawyers were recommending clients exploit charities as a tax loophole.

It could be argued that a donor giving the same amount of money is better off, net, with the full tax relief than the cap on the tax relief. In principle, that is true. But I doubt there are many donors giving away large sums do so without considering the tax effect of their donations on their overall wealth. So without the full tax relief many will just give less.

I’m no tax expert, but I calculated that an imaginary donor with a nice £1m bonus to dispose of could give away only two-thirds of what he would have given before the tax relief. He had to retain a third for the tax man, unless he wanted to fund the tax bill from elsewhere. NPC has just been told by a charity that one of their major donors told them that the cap on tax relief will affect his donation to the tune of 30 to 40%.

In 2009/2010 £780m of donations to charities came from donations of over £1m. So very conservatively, even a 20% reduction on the £780m figure means £150m less for charities. And this doesn’t include the effect on a myriad of decent-sized donations below £1m.

These people are generous, and fund charities to help others. We need more wealthy people to join this generous club. Meanwhile charities doing good are struggling on all fronts. Government funding is down, trusts and foundations have less income to give away, donations from the general public are under pressure. And demand for charity services are up—for the first time in 35 years a charity in East London told us recently they were distributing food parcels to people in extreme poverty. And now this. What has happened to David Cameron’s vision of Big Society?

So this is why NPC has signed up to the ‘Give it back George’ campaign with our colleagues from CAF, NCVO, ACEVO, CAF and many other charities.

‘There is no normal we will ever go back to’: creatively responding to public sector cuts

For the first time in 35 years, CommunityLinks is having to provide food parcels to families, hit by benefits suspension. It has had to reduce its staff by 25%, including all its volunteer coordinators, and shut many of its services and buildings. And this at a time when demand for services is going through the roof and each case presents ever more complex problems.

At the same time Barnardo’s has lost £14.4m of government income, two-thirds of which was funding designated for early intervention and family services.

NCVO’s latest survey also paints a pretty gloomy picture—almost all charities expect a worsening economic environment.

Meanwhile, Big Society seems to have dropped off the government’s radar, with no mention in the recent budget or speeches. Even funding for the evidence-based early intervention work that the government loves to talk about is being cut where local authorities are seriously strapped for cash.

So how are charities coping?

This morning NPCheld a breakfast seminar at the Guardian’s offices to discuss how charities can and are responding to these changes. Steve Bullock, the elected Mayor of Lewisham, was brave enough to join the panel and provided the realistic viewpoint of what its like to be a local authority with 25% fewer resources, some alarming demographics, and no prospect of a recovery in government funding—in fact rather the reverse.

Geraldine Blake, Community Links’ chief executive, and Jane Stacey, Director of Children’s Services at Barnardo’s, provided valuable insights from a local community organisation and big national charity. After several hours of lively discussion (the event ran over time), I took away some key points.

Firstly, that charities can be resilient. A big charity like Barnardo’s can weather the storm, albeit adjusting its core family services. It is in a good position to bid for government contracts as a prime contractor, and can enjoy the benefits of this role. The ability to form partnerships across different sectors key here.

A local community organisation like CommunityLinks is much more vulnerable. But if its leadership is able to make tough decisions, plan where possible (easier said than done given the caprice of some funding decisions), and engage with the community, the damage can be contained. For instance, when the staff at its adventure playground had to go, CommunityLinks were worried they would have to shut it, and deny 100 very deprived children the chance to play outdoors. Instead, 60 families have taken over the running of the playground so the children still have access.

Barnardo’s is increasingly using volunteers to provide some of its ‘universal’ services, and finding this investment in volunteers worthwhile. And both Barnardo’s and CommunityLinks are asking their paid workforce to be very flexible on activities and roles. With a blunt and honest ‘ask’, some of CommunityLinks’ private funders have reached deeply into their wallets and developed an engaged group funding relationship.

But while charities may be good at adapting to tough circumstances, the commissioning and funding environment is capricious and complicated, and doesn’t make it easy for them. Geographical variations in how badly charities are hit are huge. Not all local authorities are as sympathetic to the voluntary sector as Lewisham. Some local authorities are prioritising the protection of their own workforce over the benefits of externally contracting services in more effective ways.

Where local authorities have taken a knife to their own administration, this has a knock-on effect on commissioning. In reality big, simple contracts are easier to manage if you only have two people, even if lots of small, local, specialist contracts are no more expensive and deliver better outcomes. But improvements to basic procurement processes, eg, decent periods of time to bid for tenders, could give smaller charities a better chance to form bidding consortia. The question is, are local authorities imaginative enough to think like this?

There was so much more discussed during the morning, but it’s difficult to capture it all in one blog. One theme that seemed to run throughout, though, was summed up by Steve Bullock: ‘There is no normal we will ever go back to’. The landscape has changed for the voluntary sector whether we like it or not—and charities, funders and local authorities will all have to continue to make tough decisions and try to think of creative solutions for the foreseeable future.

View the story “Event roundup: Coping with the cuts” on Storify

Have your say on government commissioning

Commissioning. It’s a word that has been bandied about the charity sector a lot over the last year, along with other jargony phrases like prime contractor, subcontracting, Payment by Results and personal budgets. Since the government published its open public services white paper last summer, the commissioning landscape has seen many changes, and charities’ role in public service delivery has come up for a lot of discussion.

Initially hailed as the sugar to sweeten the bitter pill of funding cuts, charities were promised the chance to bid alongside private companies for public service contracts to make up some of the funding shortfall. More recently, there have been mumblings in the sector about how changes to the way local and national government commission charities are heaping insult on top of the injury of government funding cuts.

But what is really going on? What are charities’ actual experiences of these changes? Its very difficult to know how they are actually manifesting themselves in the day-to-day running of the UK’s charities. Are they thriving or flailing?

We want to find out, which is why today at NPC we’re launching a survey of the top 750 charities that also receive earned income. We hope it will help us get at some solid data behind the public hand-wringing.

But we also want to probe for some detail as to the real cause of problems charities are facing: is it contracts that are the trouble, or the behaviour of commissioners? Do charities have the right skills needed to manage and bid for these large contracts? And indeed is there any optimism amongst the public gloom?

We’ll be writing up the results (strictly anonymously of course) in a report which will be published later this year, which we hope will provide a good evidence base for future discussions with funders, commissioners and charities. We want to make sure charities’ answers help shape the debate on commissioning, and inform thinking about what needs to happen next.

So look out for it in your inboxes today. It will only take 15 minutes to complete, but your response will influence the outcome of the survey, and what NPC will be saying to funders and policy-makers. We’ve tried to send it to the most relevant people in charities, but if you get it and you aren’t the right person, please pass it to whoever can help—and make sure your charity gets its voice heard on commissioning.

Charity Commission guidelines on social investment clear up confusion

The recent clarification from the Charity Commission that charities can invest for a social return is good news for the social investment market. The previous guidance was confusing for trustees, unsure of whether they could use charitable funds to make social  investments.

But there will still be many trusts, foundations and grant-makers reluctant to dip their toes into this market. The mantra coming from many foundation boards is that they have a duty of care to maximise financial returns so that they have more to give in grants. So they’d prefer to stick with commercial investments.

This would be a compelling argument if there were decent and reliable returns to be gained from commercial markets. Frankly though its hard to find any commercial asset class offering a respectable reward in return for the risks. In olden times equities could be relied upon for a slow but inexorable rise in values over the long term, with periodic price corrections. No longer. The Footsie 100  has been trading (with extreme volatility) in the same range for the last decade and a half. Although it is technically possible to earn modest cash dividends from shares, if you need the capital back, deciding when to cash in the shares can be a roller coaster ride. Meanwhile, returns on cash investments rarely keep pace with inflation, let alone offer a return. A nice government bond, index-linked, was withdrawn after being swamped by investor demand. The price of corporate bonds yo-yo up and down so again, exiting before maturity is hazardous. And there is something distasteful about institutions aiming to achieve social good by making a fast buck out of commodities or property.

Making good money off foundation portfolios for the benefit of charity recipients is therefore extremely difficult in such conditions. And if anyone has cracked it, please can they manage my pension pot.

So how can a foundation make its portfolio work hard for social benefit? A few foundations, like Esmee Fairbairn Foundation, have set aside funds to experiment with social investment. They are accepting lower financial returns in exchange for social impact – although such lower financial returns hardly compare with the 50% ‘hair cut’ demanded of Greece’s creditors, which include banks. Figures released by social investors such as Social Investment Business talk of quite modest capital write-offs—5% cumulatively over several years. Ie SIB expects to get 95% of the money back and can then recycle it. Not bad, if you achieve good social impact in return for your small loss.

But we’ve still not got to the bottom measuring the social impact of social investment. The sector is getting on the case to think about how to assess the social impact of such investments, and I’m optimistic that when we do start assessing the impact, we’ll find its mainly positive.

Another market challenge is the availability of ‘investment ready’ opportunities for social investors. With Big Society Capital starting to disburse funds to intermediaries, there is a risk of too much funding chasing too few deals. Or wanting to find deals on terms which don’t quite match demand. This is one of the reasons why NPC will be publishing a guide to social investment for charities in November, which we hope will help charities to think about whether taking on loans or other types of social investment is something which could benefit their cause. For instance, could social investment accelerate the provision of urgently needed new facilities or services? Or help to make money for charities?

And in the meantime, I think more foundations should consider dipping their toes in this interesting area. Many have close relationships with grantees already, which puts them in a good position to invest appropriately in these grantees. They know the management –  helpful in developing a pipeline and a key step in assessing risk. But not all foundations are confident in this area, but could borrow the expertise of others as they experiment? Food for thought perhaps.

Barclays Wealth/NPC research: an economic approach to allocating charitable funding

All charitable funders want to improve the lives of disadvantaged people. But what if you also wanted your funding to create savings for society and the economy at the same time? Is there a way of applying economic analysis to some of society’s greatest problems?

Charitable funding is often allocated according to personal beliefs and emotional connections. Society’s biggest problems do not attract the most money. Nor is funding spent on the most effective solutions. But if resources are scarce, should we think more about their allocation?

Earlier this year, Barclays Wealth asked NPC to investigate whether taking an economic approach to charitable giving could help to maximise its impact. The report is published today.  This is what we learnt:

1. Economic analysis can make the case for supporting unpopular causes

Taking an economic approach can highlight unpopular and neglected issues, which are also very costly. The analysis not only makes the case for tackling them—because if you don’t, they will cost society billions—but also identified the economic benefits of the solutions.

For instance, crime committed by adults who had some sort of conduct problem in childhood costs £51bn a year. So what happens if you tackle conduct disorders in childhood, before they become entrenched? A schools-based counselling programme has evidence that over 70% of the children using their services show improvement in behaviour and well-being: this programme, working with over 2,300 children, estimates it achieves £6m of cost savings by preventing problems in adolescence and adulthood.  The Family Nurse Partnership programme, working even earlier in life to support vulnerable young mothers with pregnancy and infanthood, has robust evidence from the US that it saved five dollars for every dollar spent. We’ll see if it achieves the same here in the UK, but a lower ratio would still be impressive.

2. Private funders have a unique opportunity to experiment with different approaches

Private funders have a special role—taking risks, supporting early intervention, prevention, investing in evidence collection. Governments prefer proven programmes delivered by ready-made professional organisations, and demand returns quick enough to impress the electorate. Private funders can experiment, take a longer view, fund evaluations, and nurture the organisations developing and delivering solutions towards greater effectiveness.

3. This kind of analysis is difficult (and imperfect) but worth it

This whole process was experimental, so finding that that it is possible to take a rational approach to asset allocation was valuable in itself. An economic approach is just one you could take. Other lenses, such as well-being, could also be applied to assess the benefits of tackling social challenges. But don’t expect perfect, comparable data – it doesn’t exist - do take the time to think about cause and effect, and risk/return. Expect the process to be sometimes subjective, and certainly iterative. But the journey is worth it—you learn so much, and come to understand the case for solutions to really tough problems.

Read about this research in this weekend’s financial times (login required)

Need versus effectiveness: sometimes the former takes precedence in giving

Usually I urge people to donate based on effectiveness. But not today. Today I want people to donate based on need—if it’s a hospice. 

Paul Ramsbottom at Wolfson Foundation, a funder of hospices, recently told me he was alarmed by the finances of some of the far flung hospices in deprived areas. The published audited accounts are lagging reality somewhat—but as a funder Paul is party to budgets and business plans, and his warning light is on. Feeling the pinch on community fundraising and poor legacy performance, some hospice’s deficits are increasing, with management contemplating the unpleasant option of reduced services. Which is bad news if you or a loved one are dying somewhere poor or remote.

The local nature of hospice fundraising is often a factor in this conundrum. Hospices based in nice middle class areas generally have less difficulty fundraising. Sure, even these may be feeling slightly worse off at the moment, but compared to hospices in poorer areas they are in clover. We noticed this eight years ago—indeed my first piece of charity analysis—when examining the hospice inHartlepool. Its catchment area includes some of the worst off wards in theUK (so its constituents were sicker), it had no leafy suburbs and no decent-sized corporate to provide regular sponsorship. We compared it to Trinity Hospice in Clapham (also serving Kensington and Chelsea). On a different planet, Trinity’s access to resources was not only reflected in the cost base but also the services and facilities.Hartlepool deserved much credit for doing its level best on very limited resources. Trinity meanwhile was Rolls-Royce with every sort of therapy and attention to ease people’s spiritual, physical and psychological pain.

Some hospices are better run than others, so I’ve generally told potential donors to head for St Christopher’s in Sydenham, a major pioneer of good practice led by the awesome Dame Barbara Monroe. But Dame Barbara’s influence won’t be felt in, say, Cornwall, if vital services are cut. So for equity’s sake, right now I’d say find a really hard up hospice in a hard up area. Not every hospice has the human and financial resources of St Christopher’s. Most are just trying their best to meet pressing local needs. And if you are a major donor, and worried about whether your chosen hard up hospice is as effective as it might be, then you can think about how best to support your hospice to help it to become more so. Does it need help recruiting trustees? Does it need investment in its local shop chain to help generate future income? Does it need guaranteed income for a few years so it can commit to an essential post?

We’ve been working with Help the Hospices looking at hospice service data collection, and starting to plot a future where service provision can be mapped against social need. One day, I hope, a donor could click on a map and see the areas needing more investment.

In the meantime, we can help to locate hospices for you. Or take a look at the map here  and then look up a nearby hospice in Help the Hospice’s directory.

‘Any Qualified Provider’ for services to the NHS could be interesting for charities

In July, the Department of Health  announced that Primary Care Trusts (PCTs) will have to choose three or more services out of eight selected service priorities, and open up these services to ‘Any Qualified Provider’—including charities.

These service priorities range from services for back and neck pain, to adult talking therapies for mental health problems, and in extremis PCTs can choose service priorities not on the list of eight. The timetable for implementation is tight, with pressure for PCTs to have implemented service provision by September 2012. And then in during 2013/2014 government aims to extend this list to include services such as long term chronic condition management and children’s talking therapies. So this is an interesting challenge for charities. If they provide the services chosen by their local PCT cluster, they can become a Qualified Provider.

As a patient, if I needed support for mental health issues, I personally would welcome an option to talk to someone from a local charity rather than flogging to some soulless outpatient unit next to a dismal psychiatric ward. And as the process is allegedly going to be based on quality rather than price (prices will be fixed), hopefully this will mean charities adding special value to services will win contracts. But we have to wait until autumn for the qualification requirements and I’m uncertain as to how basic or sophisticated they will be. I do believe however that providers able to prove their added value—good outcomes measurement will be essential to demonstrate this—are more likely to succeed than others. And of course once they become a Qualified Provider, they will need to attract patients and referrals. Again, proving quality/outcomes will be important here. So charities should prepare to be match fit.

In the short term some charities are on the offensive: first you have to ensure that your service is one of the ones selected by your PCT cluster. Whizz-kidz is clearly on the ball on this. And then you have to ensure you are a Qualified Provider—no doubt plenty to do here.

However I have to confess to being slightly puzzled by this process as in practice I’ve seen charities delivering health services in a number of sectors—eg, palliative care and mental health services, often with local PCT contracts. But maybe this makes the policy more definite. I’m also not 100% clear on where we stand with PCTs generally given the status of the wider NHS reforms, now adjusted to take into account NHS Future Forum’s concerns. These should be winding their way through Parliament in the autumn, and will almost certainly flush out further issues for charities.

So all very interesting. But definitely time for charities to get on the front foot. Let us know if you need help thinking anything through.

Charity analysis/organisational reviews – why bother?

At NPC we love nothing better than to analyse a charity. We get to escape the office, visit riveting projects, chinwag with dynamic charity leaders, and, best of all, meet charity clients. We hear moving personal stories, learn all about the challenges of the sector, and almost always miss the train home. It reminds us of what theUK’s prodigious charitable effort is all about.

But does it do the charities any good having us turn up asking loads of questions, and then writing a lengthy organisational review? We thought we’d better check, and thankfully, in our new report launched today, it seems the benefits are real.

We interviewed 16 charities whose analysis we’d published over the last few years. Apparently our analysis reassures charities that they are ‘on the right path’, whilst at the same time giving management teams ‘something to go for’ in terms of improvements. Not only did charities welcome our independent perspective as a ‘critical friend’, a third even found the analysis process itself to be useful—despite its demands.  

Well over half of the charities interviewed took action to strengthen areas identified as weaknesses by the analysis. In one case the charity reduced its over-reliance on the chief executive. Another now uses evidence and results in a more co-ordinated way when determining strategic priorities. One charity has even pinned a copy of the charity effectiveness grading grid (at the back of NPC’s little blue book) on the office wall as a constant reminder of what to strive for.

We were also heartened by the degree to which charities could use the analysis to attract funding, improve communication with stakeholders, and develop partnerships.

Our latest charity analysis assignment was for Sue Ryder, a progressive and ambitious charity offering care for those with complex neurological conditions, and palliative care for people at the end of life. The chief executive emphasised the report’s value when fundraising, and also as part of the due diligence process when negotiating with strategic partners.

Our analysis can contain some difficult messages. A confident, flexible management team generally embraces constructive criticism, and strives to improve. Over time the charity’s grading moves to good and excellent. In some instances we have to agree to disagree—especially on matters of subjective judgement. In a few disappointing cases we’ve run across a trustee or manager who simply won’t brook criticism. Then our warning light comes on. Its not about who is right and wrong on a particular point, its about whether people want to learn and improve.

If you think you would benefit from a review of your organisation, then do get in touch and we can arrange for some appropriate charity analysis. The cost varies: we tailor what we do to a charity’s size, complexity and means. If a budget is tight, we can focus on issues that matter most. Tomorrow I’m off to do half a day’s charity analysis training with a charity, as they are thinking of doing the analysis themselves.

We usually publish the analysis on our website, but if you prefer to keep it private then we will. More importantly we hope you would learn as much from the process as us, and even enjoy it!

Penny wise pound foolish

And so it came to pass. NPC predicted that last autumn’s comprehensive spending review would result in reductions in valuable prevention services generally paid for by local authorities. Our cuts paper tried to quantify the risk and guide funders on how to help. But what the local authority budget pressures mean in practice was brought home to me forcefully as I chatted to a charity last week. I’m not going to name the charity as it has valuable relationships with its local authority funders and I don’t want to spoil these relationships by my interpretation of what is going on.

Refuse collection contracts with local authorities are worth billions of pounds. The contracts generally run over many years—Brighton has published its contract (full marks for transparency) and its worth a billion quid for 25 years. You can be sure such contracts are negotiated very carefully by the private company’s legal team – heaven help the local authority which tries to break one of these contracts.

I’m not knocking refuse collection, recycling etc. It’s a necessary local service. But if a local council wanted to reduce specifications in order to trim 5% off a billion-pound contract costing £40m a year, thereby saving £2m a year, it wouldn’t have a legal case to do so. With time it might be able to embark on some protracted negotiations with the contractor, but the pace of the cuts don’t allow for this. So the local authority is forced to terminate a few contracts with charities offering, say, youth services, instead. These would have been provided by charities on annual contracts, without input from sophisticated legal teams, so can be terminated without legal difficulty.

So the charity I chatted to explained it was shutting some youth services. What will the young people do now, I asked? Where will they go to for counselling for family problems, homework clubs, after schools sports and music clubs, job-seeking support, drugs and alcohol advice, and so forth? Will they feel abandoned? Very probably. Will the drug dealers be pleased? Almost certainly.

‘Penny wise and pound foolish’ is how the charity described the shut-down to me. The charity predicted a rise in the usual criminal justice, mental health, and worklessness problems which plagued the area before it developed services to address these issues. This future expense will of course be shouldered by tax-payers. Some activities will be transferred to a service in a neighbouring ward—but my contact noted wrily that several members would have difficulty attending as this involved a sprint through rival gang territory.

The charity also talked movingly of the vulnerability of now-redundant employees. The youth workers employed by the service aren’t middle-class graduates with plenty of self-confidence and employment options. These are vulnerable young people born into great disadvantage, nurtured through the services’ programmes, and then given an opportunity to shine in their communities. They are employed role models helping others. And now they are let down. One young man is so ashamed he doesn’t leave his house. His employment options are limited to casual labour on local building sites—an option, but hardly playing to his considerable people skills. Its as if his light has been snuffed out—even though his redundancy is no reflection on his abilities.  The whole community is feeling the loss—the overall sense that the community doesn’t matter to anyone is palpable. So much for Big Society.

I honestly don’t think this is what the Coalition Government had in mind when it began its mission to reduce the budget deficit whilst promoting a mixed economy. It probably imagined that refuse collection could be sensibly trimmed back a bit, and that cost-effective services offered by charities and other small organisations would be retained because of the social problems solved. But in reality its got something different. The negotiating muscle of big private companies eclipses the social benefit of charities’ activities when it comes to disinvestment decisions. So the mixed economy envisaged by the Coalition Government will end up skewed towards the private sector…… while Big Society shrinks.

Big Society Bank touches down

Is it a bird? Is it a plane? Is it a Bank? Er, no, actually, the Big Society Bank won’t be a bank as it won’t get a licence.

A bit confusing, but otherwise Sir Ronnie Cohen’s and Nick O’Donohoe’s plans approved by the Cabinet Office this week look exciting. They answer some important issues raised by NPC’s research into the demand and supply of social finance to help inform the development of the Big Society Bank:

•  That transparency is fundamental. We are never going to get anywhere developing this market if we can’t learn from the performance of funds and investments, and why would investors want to invest if they can’t see a track record? NPC would like greater transparency across the social investment sector – our own research was very hampered by poor availability of public financial data.
• Expect attrition of the Big Society Bank’s capital value over the next five years. The types of investment Big Society Bank will make to support the development of the market will be necessarily long term, not very remunerative, and risky. So its good to see the potential impact on its own balance sheet recognised up front.
• Independence. NPC is relieved the Bank won’t be hampered by government idiosyncracies such as the need to spend all your budget by the financial year end regardless of whether it would be prudent or worthwhile to do so.
• Investment in infrastructure. Intermediaries will be pleased to hear they will be in line for some serious investment. And Sir Ronnie Cohen should at least get some of the £250m he wants to develop social impact bonds from the Bank.
• Investment in capacity building. This was mooted, but I got a sense that most of the investment needed to help charities and social enterprises become investment ready will need to come from elsewhere, eg, grantmakers and foundations. It must come from somewhere though, otherwise developing the market will be slow. Profits channelled into the Bank’s own charitable foundation will come too late.

The Bank has a potentially exciting role as hub, sector champion, developer/supporter of best practice etc.  NPC hopes that social impact measurement will be high on its agenda. The plans mention the need for social performance metrics, but somewhat in passing. NPC would have placed greater emphasis on this, as understanding social impact is central to growing the market successfully. If you are going to ask more investors to accept greater risks and in many cases sub-market financial returns by joining this market, they will want to know what social impact they are getting in return. Watch this space, as NPC has its thinking cap on.

£100m transition fund for charities: tight deadline!

I didn’t mean to start 2011 with a moan, but I will.

When the Government’s Transition fund for charities was announced in November, I thought that this could soften the blow for many smaller charities facing statutory funding cuts. I saw it helping them onto a new path. The original Cabinet Office press release talked about the fund being available over the ‘next 13 months’. Ah good, I thought, that gives charities plenty of time to find out where they stand with commissioners, do some strategic planning, run scenarios, and come up with decent funding propositions. I imagined the fund being open well into 2011, to accommodate the vagaries of commissioning decisions, with applications being processed as they came in. I wondered whether the fund would be run on a ‘first come first served basis’ or whether there might be some rationing process over time to allow latecomers a chance. In my Preparing for cuts paper, I talked about how it will be hard for charities to finalise their business plans in the short term: they may need to be quite fluid as the implications of the government cuts packages filter through, and funders will need to accommodate charities’ facing moving goal posts over the coming months.

So I was very disappointed to see that the closing date for the fund is 21st January 2011. Under any scenario, a 7 ½ week application window is tight, let alone the fact that it runs over a busy family holiday period. Few charities will be able to meet this deadline, as they have only the haziest notion of which local statutory funders are going to cut them and how badly. As one charity said to me ‘we expect to be opening post from funders telling us they are cutting back until at least April. We get more news each day, but we won’t have a complete picture for months.’ For many charities their conversations with commissioners remain frustratingly vague: a clear picture by the deadline a mirage. So they can only work up the sketchiest of business plans. And the conditions state: ‘You must have evidence, or have substantial reason to believe, that between April 2011 and March 2012, your organisation will experience a reduction of at least 30% of the taxpayer-funded income you receive for the delivery of front line public services in England.’ Most charities will be in the ‘substantial reason to believe’ category and may struggle to compute the >30% figure.

I’m trying to unpick the reason for this funding scramble. If the fund is available for 13 months since November 2010, what is the timetable until December 2011? Funding decisions will apparently take until March for most, some for May, with all disbursements made by July 2011. Surely decisions could have be phased over a longer period? But all funds have to be spent by grantees by March 2012. It seems the dreaded ‘annuality’ challenge is haunting this fund as it now haunts Communitybuilders. Annuality is where the Treasury says you can’t sit on any cash beyond the fiscal year end. (I could whine about this too – this policy is a great way to waste money). As transition funding is typically needed over a period of months, even years, this could lead to poor spending practice.

£100m is a drop in the ocean as compared to the >£3bn cuts to statutorily funded charities predicted by NPC. So there will no doubt be plenty of early birds to mop up the £100m. But that’s not the point. I don’t see how some of the most deserving charities will get a fair crack of the whip. And I can’t help thinking of all those ruined Christmases endured by chief executives trying to write their papers on time.

Thoughts on the Tory party conference

So last week I lost my party conference virginity at the Tory conference in Birmingham. It was fascinating: very slick speeches from the politicians in the main hall, and a myriad of fringe events everywhere else.

 Many of the fringe events centred on the Big Society and what it might mean. Tory speakers speculated that this could be because the idea is catching on. I wasn’t so sure. I think there were lots of events because no-one knows what Big Society means in practice and they were hoping for enlightenment. Enlightenment eluded me.

Instead I sensed a reality gap. The NCVO estimates that 20 million citizens already contribute through a formal volunteering role: does the population have the capacity to do more? Many charities, including Samaritans, say it is getting harder rather than easier to recruit people to work for free. Oh, and it costs money to manage volunteers. Meanwhile many charities report reduced incomes, and the cuts will put further pressure on the sector (see my report, Preparing for cuts, due out on Tuesday.) Shrinking revenue is not conducive to expansion drives to fill gaps as the state recedes. We (the general public) could contribute more to charities than the current 1% of GDP, except that surveys report people feeling somewhat personally stretched at the moment and cautious about upping their giving.

But aside from the Big Society musings there were some really useful sessions. I went to a health charity ‘dragon’s den’ hosted by the Health Hotel. Breakthrough Breast Cancer wanted to upgrade analogue breast mammograms to digital – a move of pure common sense. With digital you can email the results around to relevant medics instead of couriering slides across England at great expense. The Royal College of General Practitioners made an impassioned plea for more training for GPs. And the Princess Royal Trust for Carers made a convincing economic case for investment in support for carers which would lead to fewer demands on acute care. Simon Burns, Minister of State for Health, was on the panel. Since the conference £4.4m has been awarded to support for carers – was this already decided or was it the dragon’s den that convinced the health team of the value of carers? I think we should be told….

The world in 2050

A hot night back in June at Whitechapel Gallery saw an eclectic gathering of folk worried about environmental collapse. Hedge fund managers rubbed shoulders with zoologists; conservation charities chatted to medical doctors. We were treated to superb speakers and tasty food that might still be available 40 years’ hence: chicken, yes; fish, no; strange vegetables.

The event, to consider what the world might hold in 2050, was organised by a new charity Synchronicity Earth.  Founded by a hedge fund manager and his wife, the charity has a vision of ‘a sustainable planet that values the interconnectivity and interdependence of all living things’. To achieve this it currently pursues two main activities:

• Raising funds for initiatives to help conserve the planet and make it more sustainable.

• Publishing research and disseminating solutions to the global challenge. The first activity, embedded within the hedge fund industry, holds similarities to Absolute Return for Kids (ARK) —indeed an ARK trustee sat next to me during the talks. The second activity takes much from NPC, and we are helping Synchronicity Earth by incubating its first research analyst (no jokes about hens and eggs please) in our sector research methodology and approach to charity analysis. No doubt once fledged, Synchronicity Earth will carve its own path, but in the meantime it’s a pleasure to help a funding charity think about research and analysis as a core part of its future funding strategy and knowledge sharing.

But back to the event and why it was so exciting: it drew speakers from all sorts of disciplines, not just its own conservation world. Clearly this will be a charity that thinks outside the box in finding solutions and supportive audiences for its mission.

A Rear-Admiral explained that climate change and resource depletion are national security risks—never mind the dangerous logistical headache of supplying the military with oil for its gas guzzlers in a war zone. Energy efficient technology would save lives (fewer ambushed convoys) and cut costs.

A professor of intensive care medicine warned us of the public health risks posed by future environmental collapse—more bugs and malaria. But more cheering was the reminder that green living is a healthy option: more exercise and less red meat reduces cancer, strokes, and heart trouble. And it would save the NHS a packet.

A financial guru opined that global debt was the pollutant: debt fuels over-consumption, so if you stop fuelling the economy with debt, consumption will drop to more sustainable levels. Fund managers in the audience alternately winced and nodded.

A food professor worried about what we should all eat, and fretted that food was a political minefield. I think he was thinking about rationing, but couldn’t say it.

So it was a refreshing evening. If only this type of cross-pollination took place more often among those in power and charities seeking systemic change.

NHS White paper – all change for health charities

The plans for the NHS in the White Paper from the UK’s new Secretary of State for  Health, Andrew Lansley, are courting some pretty unfavourable remarks from a range of commentators.

The White Paper is scary: scrapping top-down commissioners like Strategic Health Authorities and Primary Care Trusts (PCTs) and replacing them with Consortia of GPs. PCTs have become specialists in commissioning health services and currently hold the vast NHS budgets, while GPs are doctors who traditionally refer people to services but have not held big budgets to buy or commission them. So steep learning curves all round. I can understand the ideology, and the plans are nothing if not imaginative, but I’m instinctively twitchy about undertaking such a huge and risky revolution without first having amassed a decent evidence base around whether it works and how to implement the change. I don’t count the Tories 1990s foray into GP fundholding. I’d prefer some fully evaluated local pilots between now and 2012.

But, regardless of Lansley’s detractors, charities will have to adapt. Many of our charity friends have fostered close relationships with PCTs. They might have direct contractual relationships with them to deliver services such as Core Arts’ musical and artistic activities for people with mental health problems, or the Brandon Centre’s therapies for young people. Or, charities might have been working with PCTs to improve services. Macmillan Cancer Support’s work to improve care pathways for people with cancer (and reduce costs for the NHS) is a case in point. But with no Primary Care Trusts, charities will need new tactics.

Although interacting with GPs will be new territory for many charities, I think there are opportunities. The Gold Standards Framework (‘GSF’) story holds inspirational lessons. GSF helps GPs to plan and manage the last year (roughly) of a person’s life: by planning ahead symptoms are controlled better and unnecessary hospital admissions avoided. GSF was initiated by a GP, Dr Keri Thomas, and between 1998-2001 was incubated and evaluated by Macmillan. It was rapidly returned to the NHS—so not strictly-speaking a charity—but Dr Thomas is a classic social entrepreneur that a charity chief executive could emulate. Once evaluated, GSF was rolled out through a cascading GP training programme, and has become mainstream practice within the NHS. And through the GSF After Death Analysis Tool—NB funded by a private donor via NPC—it is collecting some super data about whether GSF works and how it can be improved.

So it is possible to win over the GP audience to your cause: but offering solutions, getting evidence-based endorsement for them, and coming up with a mechanism for roll out, eg, training, will all be needed. More practically, though, my hunch is that a lot of the PCT personnel will resurface as practice managers in the new GP consortia, so don’t abandon your personal relationships…..

Charity analysis – why don’t more people analyse charities?

I don’t have the answer to this, but it baffles me. In my previous lives, first as a banker (sorry), then as a development financier (better), we spent hours analysing companies, projects, markets—in fact anything that moved. And even now, when I look anxiously at my paltry savings (yes, I’m that old), I want to know about the companies I’ve invested in. I also know that companies read stockbrokers reports on themselves—and the competition—assiduously and mull over the contents.

So to me, analysis should be part of everyday life in the charitable sector. But I’m not sure everyone recognises the benefits of charity analysis. The people who attended our valuing impact conference last year are interested in impact measurement, but how many charity trustees or fundraising departments prioritise a general analysis of their charities? In my opinion, charity analysis has three main benefits:

• Management and trustees can use the analysis to refocus activities, decide priorities, and change things that aren’t working.

Let me give you an example. Late 2008, NPC analysed the UK charity Macmillan Cancer Support. We highlighted a need for the charity to invest more in its evaluation and measurement. Since then, the charity has decided to set up an Intelligence and Research Unit, headed up by a dynamic job-sharing duo, Catherine Boyle and Jenny Ritchie-Campbell, to oversee user research, impact measurement, and to bring findings together and learn from them. And although benefits of the unit’s work will take a few years’ to show, NPC visited Macmillan recently and was excited by progress. The unit has set priorities for what the charity needs to know about the needs of people with cancer and whether its services meet the needs effectively. Catherine has also used NPC’s analysis to build a case for getting the resources she needs to do the job well.

• Analysis is a great tool for charities to learn from each other, and helps to stimulate debate around effectiveness.

Every time we analyse a charity we learn something new. We can then apply this to another charity, whether we are doing charity analysis or providing a consulting service.

From analysing the eating disorders charity Beat, I’ve learnt that it is possible to overhaul a board that is very well-intended but needs skilling up. The well-known UK helpline, Samaritans, has taught me a lot about volunteering and what a quasi-professional volunteer force looks like. And the UK charity CAADA shows how a charity can improve results in a sector—in this case domestic violence—by improving the evidence base and training other charities and professionals.

We publish examples of analysis so that charities don’t need to hire our consulting services in order to learn from others. These examples hold some fascinating insights into what other charities are doing, so we’d encourage charities to be nosey, and read what their peers have been up to. We also want people to debate our methodology and comment on the analysis they read. NPC is as keen to evolve as the charities we analyse.

• Charities can use the analysis to talk to funders.

We’d like to see more charities adopting the analytical route when talking to funders. We know from talking to funders that they like a neutral report. We also know that an independent piece of analysis can persuade funders to provide funding that the charity needs, rather than funding for yet another project. One charity we spoke to, Research Autism, shared NPC’s analysis with a funder who then gave them a £80k rolling core grant. The time cost to do the analysis was about 10% of the value of just one year’s grant. A clear benefit in my book.

So what will it take for charity analysis to get into the mainstream? More competition for one, NPC is always moaning about being one of the only players in this space. Greater willingness of funders and charities to pay for analysis would also help. Or charity trustees/management could spend the time doing the analysis themselves.