Ask NPC: Where can I get good information about which charity to support?

So, you’ve decided you want to give to charity, you know what issues you want to address, and you’re ready to choose some charities to give to.

It feels like it should be easy; we’re all acutely aware of growing social needs at home and abroad, and there is no shortage of organisations working to address those needs. But it’s not always obvious which charities will have the greatest impact on the causes you care about, or where your money will make the biggest difference.

Yesterday I attended NPC’s Selecting Great Charities training with representatives from twelve grant making organisations, where we discussed exactly these questions. It was interesting to hear about the different approaches they took and common challenges they faced in finding and choosing between charities. At NPC we have a lot of experience helping people get started with their giving and, although it can seem tricky to begin with, finding good information needn’t be a chore if you know where to look.

There are plenty of websites where you can search for charities to support, or find information about charities you already have in mind. The Charity Commission is the best place for detailed information on English and Welsh charities; using the advanced search you can narrow down a list of potential charities according to activity, beneficiary group, geography, and size. The equivalent information for Scotland is available online from the Office of the Scottish Charity Regulator. Other suggestions for researching and donating online include Charities Aid Foundation, GuideStar UK and CharitiesDirect for UK registered charities; Local Giving which provides information on vetted local projects; and See The Difference and The Big Give for worldwide projects and charities.

Alongside all this online research, don’t forget to talk to people! It may not seem very scientific, but asking which charities other people are passionate about is a brilliant way to find charities you might otherwise miss. Try asking what causes your family, friends and colleagues support, or use requests for sponsorship (through websites like Just Giving and Virgin Money Giving) as an excuse to find out more.

Attending events to meet other people who are thinking about their giving can be a fun way to exchange ideas and learn from other donors. Donor communities such as The Funding Network or London Funders exist to share knowledge and introduce donors to projects, and you can find funder communities in your geographical or interest area through Philanthropy UK’s directory.

If you are interested in a particular cause or issue area, it can be useful to look at membership bodies with a specialism in those issues; for example, for charities tackling homelessness, you might look at Homeless Link. NPC’s sector reports can help you identify the appropriate membership bodies or specialist funders who often publish lists of the charities they support. To find projects in a particular area, the local council for voluntary service (CVS) may be able to put you in touch with local projects, or funders who know which charities are having a big impact in the area. Similarly Community Foundations are geographically focused charities which can assess and shortlist potential local projects based on your interests. By linking with experts you can find not only effective charities to donate to, but also a wealth of information about the needs of the people they exist to support.

Once you’ve found all these great charities, the difficult part is choosing between them. We recommend narrowing down your list to a couple of charities on which you want to do further research—perhaps based on your interests or priorities, or their location or beneficiary group.

And when you’ve identified your final choices, it’s worth taking a little time to look at how effective they are—NPC’s little blue book is a good tool if you want to look at a charity in detail. But If your time is more limited, you can analyse a charity in two hours using the same principles. In this way, you can be sure your giving is informed, high impact, and making the biggest difference possible to the causes you care about.

Over the next few months we’ll be publishing a series of blogs dealing with common questions NPC consultants get asked in their day-to-day work. This is the second in a series of Q and As for donors written by NPC’s Funder Effectiveness team, based on their experiences of working with funders of all kinds. You can read more about their work on our website.   

What will the Giving Summit give to the sector?

The champagne was put on ice and the grand Giving Summit very much toned down. The 19 (yes 19!) action groups set up to feed into the summit were testament to the original idea for a rather splendid affair topped off with a reception for the great and good of the sector. In the end it morphed into a bit of a squib—a meeting of the chairs of those action groups only—and most of us in the sector could take the night off.

So do we laugh or cry at this turn of events? We all know why it happened. The philanthropy tax stands in the dock. Right or wrong, the charity and giving community was pretty appalled at what took place in the Budget and it was too embarrassing to have them assemble at a fancy do at a major venue as originally envisaged. No consultations, no hint of what was to come. And when the sector reacted with shock and disbelief, the government dug itself in deeper by an attempt to suggest that it was all to avoid philanthropists evading tax through donating to weird off-shore ‘front’ charities—a suggestion that collapsed before a distinct lack of evidence. Whatever the government does now as a result of the consultation on the tax relief cap, the idea that the coalition thinks that philanthropy is a code word for tax dodging is one that will stick.

The conversations were good and open. And a number of precise ideas came out of them.

But it is a major shame that the Giving Summit did not take place as originally planned. I was lucky enough to be on two of the action groups and they were two of the most well-organised and focused discussions I have attended in my (admittedly brief) time as head of NPC. One looked at how to get core costs funded—a massive issue for the sector for both charities and funders—and the other talked about how to improve the advice given to high net worth individuals to get them more interested in philanthropy and promote good, high impact giving. The casts were high powered but mixed. The conversations were good and open. And a number of precise ideas came out of them.

I hope these ideas get followed up and implemented. Nick Hurd will, I am sure, do his best. And perhaps the Treasury, with their heads hung low, will try and help these new ideas happen to make up for their blunder on tax relief.

As the state withdraws and plays a new role in this age of austerity we need to think hard about how people give, why they give and to whom. Government taking a lead here is useful—although in the end the sector must work these things out for itself with initiatives like the Give more campaign or the Philanthropy Advice Forum.

In the meantime, let’s hope they keep that champagne on ice, in case we do get a sensible change in the proposals for the cap on tax relief on charitable donations.

Minding the gaps

As the dust settled on last summer’s riots, attention shifted from the young people who had been rioting to the ‘troubled families’ they grew up in. David Cameron pledged that his government should be judged on its success at transforming the lives of 120,000 such families by 2015. But in an area where government has claimed it will fix the problem, what is the role for independent funders and charities? Where are the gaps?Troubled families, according to the UK government, are those where parents are out of work, children are not in school, and family members are involved in anti-social behaviour and crime. These problems are often long-standing and inter-generational—children whose parents have multiple problems are eight times more likely to be suspended or excluded from school than other children, and ten times more likely to be in trouble with the police. The 120,000 most troubled families in the UK cost society an estimated £9bn every year.

Troubled families are a UK government priority—last month it committed an extra £448m to target the most difficult families, and has pledged to expand early years services to try to prevent problems emerging. These efforts are encouraging, but they will not reach all families in trouble, and financial pressures threaten the success of work in this area.

Independent funders do have a role to play in supporting these troubled families, but it is not a straightforward one. However, there are gaps where more support is needed and where charitable funding could have  real impact.

• Support for vulnerable families in the earliest years can prevent problems later in life. The government have talked a lot about early intervention, but there are still a lot of gaps to fill—for example the commitment to doubling the Family Nurse Partnerships programme by 2015 will still only cover 40% of estimated need.
• Ensuring the quality of support for the most challenging families. With recent cuts in public funding, projects supporting troubled families face larger case loads, and are having to shorten their interventions and are provide fewer outreach services—which undermines their effectiveness.
• Providing support for mental health problems. There is a need for staff who are trained to recognise mental health problems, make timely referrals and provide families with practical support.

This is a challenging and complex area, but that is not a reason for funders to shy away from it. Charities can make a crucial difference in this area—charities like Family Action, whose Building Bridges project helps families with multiple and complex problems. Helping these families to tackle problems early can prevent a generation of children growing up to face the same problems their parents have. The potential for a positive impact is huge.

A version of this blog first appeared on Latest from Alliance.

A rising tide of giving

This guest blog comes from Trevor Pears, Chair of the Give More campaign and the Executive Chair of the Pears Foundation. Here he talks about why he’s launching the Give More campaign today, and what he hopes the campaign can achieve.

Need in our communities is going up, and resources are going down. When we are asked who is going to give the money, time or energy to charitable causes the answer has to be: all of us.

The Give More campaign launches today with a wide-ranging survey of the UK public, who tell us just that: they see the need in their communities and they recognise that it is up to us all to help. Encouragingly, they also show they have the appetite to respond to that need themselves.

• 51% said that they thought need in their local community has increased in the past 12 months and 57% said that need is likely to increase over the next 12 months

• 79% think the UK is generous when it comes to giving money, time and energy to charities, community groups or directly to the community

• 26% (or 12.5million people) said they could give more to good causes than they currently do

People have been pledging to join the Give More campaign throughout the day with photos on the site.

That last statistic is the crucial one, and the reason why I am optimistic that we can rise to this challenge. Our campaign has been touring the whole of the UK, with teams in shopping centres in London, Glasgow, Cardiff and Belfast today talking to people about giving, and getting an overwhelmingly positive response.

The campaign now hopes to push on to new heights, and our objectives are to:

• Inspire people to make a public commitment to give more money, time or energy to the causes they care about in 2012.

• Focus public attention on safeguarding the vital contribution of the voluntary sector. Encourage organisations to sign up to the Give More partner commitment.

• Publicly celebrate the giving of money, time or energy to the causes people care about.

We hope this campaign will be a rising tide that lifts all the ships in this sector, but we can only do it with the help of our brilliant partners and supporters, all pulling in the same direction.

To find out more about the Give More campaign, visit www.givemore.org.uk

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.

A funder’s journey

Imagine being in a position where you have the potential to change thousands of lives through philanthropy. Perhaps you’ve sold a successful business, or been left a large sum of money, which you want to use to do the most good possible. But if you don’t have a strong preference about what issue you tackle or where you give—as long as your giving is high-impact—where do you start?

For many people, identifying a charity to run the marathon for can be hard enough; but when you’re looking to set up a new foundation spending £5m per year it is even more difficult, and even more important that you make the right decisions. The Stone Family Foundation came to NPC in 2005 with exactly this challenge. Set up by a British entrepreneur, John Stone, the foundation wanted to tackle disadvantage, but needed help to identify where its resources, skills and interests could be used most effectively.

Sometimes you have to learn by doing in order to identify what you’re passionate about and work out the best way to fund. Our first step with the Stones was to identify a broad portfolio of NGOs across the world, spanning microfinance in Malawi, education in Laos, water provision in Bangladesh and mental health in the UK. The trustees then spent the next three years building up their knowledge, visiting the charities, and meeting with experts and other donors, becoming aware of the challenges of being an effective funder.

Giving is most successful where there is a clear focus, so the next step was to narrow down the areas the foundation had explored to concentrate on the issues they were most passionate about and set out a strategy for the future. Focusing on a limited number of topics allows a funder to build expertise, establish strong networks, and target areas where the foundation could have a high impact.

In the end, the Stone Foundation trustees decided to put the majority of their funding into water, sanitation and hygiene (WSH). Again and again, issues around water and sanitation kept coming up in the projects the foundation funded. One in eight people worldwide cannot access safe water, while almost two fifths (2.6 billion) do not have adequate sanitation. Problems with water and sanitation have far-reaching consequences; millions of young people miss out on an education because they cannot attend school due to illnesses caused by dirty water or poor sanitation. As a direct consequence of problems with water and sanitation, 1.4 million children die every year from diarrhoea.

As well as defining a focus, it is also important to fund the most effective ways of tackling a problem. The Stone Foundation are supporting innovative and entrepreneurial work that harnesses the power of the private sector. A lot of exciting developments are emerging in water, sanitation and hygiene, where social enterprises and NGOs are helping provide low-cost, sustainable services to poor households. The potential for impact is high. Yet these projects struggle to find funders who are willing to take on the risk and help them grow and scale. The Stone Foundation’s trustees, with their business background, did not shy away from investing in riskier projects which they thought had the potential for high impact. Like many successful funders, they found a way to draw on their own skills and experience to maximise the impact of their funding.

The projects the foundation supports are varied, but all are put through a due diligence process by NPC to test the potential impact and ensure that they are well-run—particularly important when giving grants of roughly £1m each. In Cambodia the foundation supports a project that has developed a low-cost latrine that people actually want and trains local entrepreneurs to market and sell it. In urban slums in Lusaka it is funding work setting up an integrated system to empty people’s over-flowing toilets, transport and process the waste, and then sell it as fertilizer.

We’ve learnt a lot from working with the foundation, about water, sanitation and hygiene, but also about high-impact philanthropy more generally. The foundation is now taking its funding even further, and looking at ways to give smaller grants to promising early stage ideas. .One way it is doing this is through the launch of a new prize scheme: the Stone Prize for innovation and entrepreneurship in water, which NPC helped to develop. This will award up to five prizes worth £100,000 each to initiatives which have developed a sustainable and scalable way to provide clean water to those who need it.

In the past couple of years, the foundation has come far, from a relatively blank sheet of paper to an established organisation with clear funding streams and a strong portfolio of NGOs to support. We’re excited to see how it will develop, to follow the success of the foundation’s current portfolio and see the ideas that emerge through the prize.

The development of the Stone Family Foundation’s giving is the subject of a new report published by NPC today, A funder journey. For more information about the Stone Prize for innovation and entrepreneurship in water see www.thesff.com.

Why do you give to charity?

I was talking to someone on Friday night about what I do at NPC. This led, as it generally does, to a discussion of her own charitable giving. She told me she gave to Cancer Research because her aunt had died of cancer, and the RSPCA because as a child she had adopted several rescue cats from them, and now kept seeing abandoned pets in her local area.

I’ve had many conversations like this off the back of the ‘what do you do?’ question. And most people will readily volunteer the reasons for their charity choices. I was particularly intrigued to hear my new friend tell me about her attitudes to giving in light of the research into donor motivations NPC is planning to carry out over the next few months.

We’ll be conducting a major study into why UK donors give, the first research of this scale in the UK. It will consist of a survey of over 2,000 medium- and high-income households, alongside in-depth interviews. The Money for Good UK research will be carried out later this year and we hope to publish the results in November 2012. We’re delighted to be supported by the Pears Foundation, Oak Foundation, Bill & Melinda Gates Foundation and NESTA.

Finding out about wealthy donors’ motivations is more important than ever in light of the recent budget proposal to cap tax relief for major donors, which could have a serious impact on high-net-worth giving, and threaten the many charities that rely on these large donations to survive (for more on this see giveitbackgeorge.org, the campaign to get the government to reconsider, headed up by NCVO and CAF). Uncovering more about what makes these donors give, and what could make them give more, has become even more relevant.

The person I spoke to on Friday gave to charity based on personal experience. But in the same conversation with others, I’ve heard a host of different reasons—from a desire to help eradicate a problem they see daily, to a sense of duty stemming from religion or family background, to the request from a friend for sponsorship for an event. Working at NPC, I am always particularly interested to hear whether people think about how effective a charity is before donating to it, and how they go about finding out.

This is why it will be so fascinating to see the results of our survey, and to find out the complex thought processes and gut instincts that govern where money goes in the UK charity sector.

But we’re not just doing it because it’s interesting. By digging down into donor motivations and experiences, we hope this research will help charities in the UK better understand the donors they’re trying to attract, and improve how they engage with them—in particular high-net-worth donors. A US version of this study by Hope Consulting two years ago found that better engagement could potentially leverage huge amounts of extra funding for charities: donors would potentially give an additional $20bn if charities better met their giving needs.UK donors are giving in a country with its own problems and its own distinct history, and the context of their donations differs from that of their US counterparts—which is why a separate study is needed. Unlocking an equivalent potential in UK charitable giving could make a huge difference to the UK charity sector, and the lives of those it seeks to help.

My conversation on Friday reminded me how important it is to think about the different motivations which drive people to carry out the same action. And for charities, how important it is to understand this in order to maximise fundraising opportunities. We hope that our Money for Good UK research can help go some way to achieving this.

Read more about NPC’s Money for Good UK work in the press release.

Ask NPC: How do I get started with my giving?

Many people come to NPC having decided they that want to start giving to charity, or because they want to scale up their giving. They face the same challenge: where to start?

They know they want to give something back to society, and have often given money to charity in the past. But often they aren’t sure how to start giving in a way that is satisfying and rewarding.

It’s not surprising that getting started with your giving can be daunting—with over 160,000 charities in the UK alone, making decisions about which ones to give your money to is not easy!

The first step to more rewarding and impactful giving is to find specific issues that you care about and are interested in funding. You don’t have to pick just one area, but focusing down on two or three issues can make giving much easier and more satisfying. Having a focus enables you to get to know which charities operate in that area, and to understand what approaches really make a difference to the lives of the people the charity seeks to support. This then makes it much easier to choose effective charities to donate to, and to understand the difference your funding is making.

In order to narrow your focus areas, we recommend that you think about what really matters to you and choose charitable sectors accordingly. This might be related to a personal passion or interest, like the environment, sport or the arts. It might be driven by a personal experience, for example if you have a family member suffering from a particular illness. It could also be inspired by a specific event that has moved you, like a major earthquake or local floods. Or maybe you are really frustrated by a particular social issue that you want to help tackle, like knife crime in your local area, a lack of clean water in ruralAfrica, or rising youth unemployment. If you are worried about limiting your focus, you can always keep a pot of your charitable money to one side to answer urgent requests or donate in light of unforeseen events.

Rather than being reactive in your funding, and responding to requests from friends and colleagues to support random charities, choosing a few themes to your giving can help you achieve more with the money you have available. If you have a clear focus, you’re more likely to engage with the issues you’re funding and choose better charities as a result. Having specific focus areas will also enable you to more easily reject funding requests that come your way—its often hard to say no!

Once you’ve identified a focus, you’re ready to move onto the next stage in your funding journey. Ultimately, finding something you care about to focus your giving on can make the whole giving process easier. But more importantly, you will get more out of your giving if you’re passionate and excited about what you’re doing, which is a great inspiration to others to start giving too.

Over the next few months we’ll be publishing a series of blogs dealing with common questions NPC consultants get asked in their day-to-day work. This is the first in a series of Q and As for donors written by NPC’s Funder Effectiveness team, based on their experiences of working with funders of all kinds. You can read more about their work on our website.   

Funding in a cold climate

It’s not easy being a grant-making trust or foundation at the moment. I know because I’m a trustee of one, and regularly talk to others in the course of my work for NPC.  Many have less money to play with, at the same time as charities are in need of more. They are faced with grantees in serious financial difficulty, whilst public policy changes are leading to a rise in absolute poverty and disadvantage.

It’s tougher still being an operating charity in this environment, but there’s no doubt that funders are faced with some very real dilemmas; should they step in to meet urgent needs where the state has withdrawn, or should they stick strictly to the additionality principle? How interventionist should they be when grantees are struggling? And above all, how should they seek to achieve impact with fewer resources? These are tough questions that go to the very heart of a grant-makers identity and principles, and there are no easy answers.

NPC is planning a short research project to look at some of these issues. We want to provide some clarity on the range of strategies available to trusts and foundations to help grantees weather the storm, or even turn the situation to their advantage. In the meantime, however, there are a few things that I personally think are worth bearing in mind for successful funding in a cold climate:

• Seek ways to leverage your funding. Join up with other funders, pay for advocacy, look to scale up good work grantees are doing. These are all ways to leverage resources for greater impact. For example, in Islington local funders are thinking about how to co-ordinate their individual giving programmes with the council’s successor to the Social Fund, to try and preserve a decent safety net for residents. Not all funders will want to get that close to government, but if you’re pragmatic there are times where it can work.

• Use evidence.  Basing grant-making on the best available evidence increases the chances of success. For me that’s about equipping yourself with information on what the needs are, who is doing good work, who else is funding in the area. The Nationwide Foundation is a good example of a funder who undertakes research to establish these things before launching a new programme, so its grant-making is focused and effective.

• Help the sector to adapt. If the voluntary sector is going to do any more than cling on it needs to change, and independent funders can help it do that. That could mean encouraging collaboration (as, for example, The Baring Foundation have been doing in their work with Law Centres), paying for organisational development, or providing core funding for charities in difficulties to give some breathing space.

• Show some grit. At the same time we have to accept that not all organisations will make it. There will be many genuine losses, but also perhaps some which did not deserve to continue. Grant-makers have a role in making sure that the best charities survive, and that the resources available flow towards them. That may, at times, require a hint of ruthlessness.

If all this sounds like a description of the much discussed ‘funder plus’ model then that’s no co-incidence, it’s never been more relevant. If funders react to hard times by withdrawing to a traditional model of reactive grant-making, I think they’d be missing a huge opportunity. Now, like never before, is the time for bold and brave funding.

Budget 2012: Raising the giving question

The budget doesn’t often have direct consequences for my role at NPC—working to promote more and better philanthropy amongst individuals, families and their advisors. But yesterday’s announcement included two very relevant developments. We were disappointed to see the cap on higher-rate tax reliefs for charitable giving, although hope that the Treasury will find ways to minimise the impact on major gifts.

But it is yesterday’s confirmation of the reduction in inheritance tax from 40% to 36% if at least 10% of an estate is left to charity that I find most interesting. Not because there’s likely to be a dramatic increase in the amount given to charities in people’s wills—there isn’t. It is estimated that of 552,000 deaths in 2010/11, only 3% of estates will actually pay any inheritance tax. And on an estate of £1m with a 10% gift to charity, it only reduces the tax bill by £24,300.

However there are two reasons to get excited about this inheritance tax change, which comes into effect for any death from 6 April 2012. First, it shows government commitment to improving the UK’s philanthropy culture through a practical measure, alongside their White Paper and proposed Giving Summit. We hope that philanthropy remains high on their agenda.

And second, and of real significance, legal and tax advisors talking to their clients about their wills will now have to raise the issue of leaving money to charity. We are always surprised at the reluctance of advisors to raise the subject—even in the US where philanthropy is generally more talked about, a 2010 Bank of America survey of high net worth individuals found only 10% of advisors raise the subject with clients. The vast majority wait for clients to start the conversation.

But is asking the question about leaving money to charity in a will enough? At NPC, we are constantly seeking to improve not only the amount of charitable giving but the quality of that giving. Advisors are perfectly positioned to help clients think through the best use of the money they want to leave to charity, rather than flicking through a charity yearbook and choose a charity they’ve heard of at random.

As any advisor will tell you, once they’ve had a detailed conversation with their clients about philanthropy, they gain a better understanding of the client’s values and passions, which develops the relationship considerably. As an example, NPC worked with a lawyer and his client in a series of workshops where we created specific guidelines for the foundation that would come into existence on the client’s death. At the end of the project, the lawyer said to us “this process has really allowed me to get to know the client so much better, I’ve learnt more about him during those two mornings than I have in five years”.

We don’t hold particularly high hopes for a considerable increase in the amount people leave to charity in their will as a result of the changes to inheritance tax. Having said that, it is encouraging to see the various campaigns launched recently to promote more giving, including Trevor Pears’ Give More Campaign, Spear’s Magazine’s 1 Per Cent Campaign, and the Legacy10 campaign, launched by Roland Rudd, where a number of public figures have pledged to leave 10% of their estate to charity.

But we have higher hopes that legal and tax advisors will now become more proactive about raising the giving question. And we hope that the conversation extends from pure tax and legal advice to broader questions around the objectives of giving, choosing really effective charities and how people can make the biggest difference with their money.

Small charities face big changes

The Hampton Fuel Allotment Charity (HFAC) was founded in 1811 by Act of Parliament as a way of compensating the poor for the loss of grazing and wood-gathering rights when the local common land was enclosed. David Parish has been Chair of HFAC for two years following retirement and prior to that worked in various management roles for a large transport company. Here he writes about how recent changes to commissioning have affected the small charities HFAC funds.

HFAC has an interesting history. The charity was given land as part of the Enclosure Act and the poor allowed initially to gather fallen wood. Later the land was leased for farming and the income used to buy coal. The land allocated to the charity was sold in 1988 and the amount received converted into an endowed fund with half the income to be used for the relief of individuals in poverty and half to make grants to local organisations which contribute to community life. The annual income from the endowment last year was £1.8m.

The local authority, the London Borough of Richmond upon Thames, following a trend among  LAs has decided to end its practice of making annual grants to charities and move to commissioning for the services it needs.

As a local funder we are close to the organisations we support and they have been telling us of the strain this change is placing upon them. They are having to allocate significant staff time for the commissioning training courses run by the excellent local CVS. Costs are also being incurred in obtaining legal advice on the contract documentation and in drawing up partnership agreements so that smaller charities can bid together.

Some local groups are affiliated to national organisations and they have been able to draw on the advice of national level staff. However, for local community support groups it is not possible to obtain this type of advice unless they pay for it and some of them fear that they may not be able to put in as good a bid as the commercial service providers or the national organisations. Thankfully, with changes to legislation these contracts will not be subject to ECOJ European Union bidding rules, but nonetheless the borough procurement department is using its standard documentation for service contracts. Completing this document is a formidable process for trustees who may not have much business experience. The Invitation to Tender document runs to sixty pages. And the contracts, when awarded, will contain penalty clauses if the outcomes are not achieved; heavyweight stuff for small local organisations which are already facing pressures of increased work as more responsibility for care transfers from the state to the community. It is hard to see how the hoped-for improvements to services will be achieved if valued local organisations, with detailed local knowledge, lose out to large national charities or commercial service providers.

For grant-making charities like ours there is the dilemma of how we budget our grant-making for the next two years. Some organisations may be awarded contracts worth over £100,000 and need less support from us. Those who lose out, but still do worthwhile local work, will need more funding. In my view the whole process seems unduly complicated and may result in some very good and well-run charities having to close or reduce their work. As trustees we are considering holding back some of our budget until later in the year to be able to help organisations that could suddenly lose 20% of their income.

NPC recently carried out a survey of how changes to government commissioning are affecting charities, supported by Zurich. We’ll be publishing the results of the survey later this year. This is the second in a series of blogs looking at commissioning from the perspective of those working on the front line.  

A problem shared

Funder collaboration should be a success in theory, but is often hard to implement in practice. In theory, by working together funders can combine money and effort to create a wider impact than they would achieve in isolation.  But managing multiple stakeholders can be time consuming and frustrating, so is collaboration worth the effort? Does it really yield enough benefit?

Last week I read, with interest, Jenny Oppenheimer from The Pilgrim Trust’s blog on the evaluation of the Corston Independent Funders Coalition (CIFC). CIFC is a group of 22 grant-making trusts and foundations set up in response to 2007’s Corston Report into women and criminal justice. Concerned that their grant-making investments were being applied to a failing system, the foundations formed the CIFC to challenge the government to implement the report’s recommendations—calling for an end to putting non-violent women offenders in jail and moving towards placing them in far more effective community solutions. Their work includes advocacy, funding and critical partnership with charities and government.

CIFC commissioned an independent evaluation for two reasons: to evaluate the success of the collaborative model, and to evaluate the impact of the group’s work.

Some of the key findings of the evaluation of the model were:

• collaboration between funders is challenging and should not be undertaken lightly;
• successful collaborations share certain characteristics;
• funder collaboration which focuses on advocacy has its own distinct drivers, challenges and success factors;
• CIFC members found the collaborative experience to be interesting and rewarding, despite some early frustrations;
• through funder advocacy and collaboration the CIFC achieved outcomes that individual trusts and foundations could not have achieved alone.

The evaluation of the model highlights the challenges that collaboration involves, especially when starting out. Questions emerged such as: how do you make decisions when you have so many parties involved? How do you keep all partners on board? What is the right level to engage each partner? It is the learnings around these issues I think are most interesting. There are several lessons from CFIC’s evaluation to help other funders planning future collaborations:

• ensure that the collaboration begins with a supportive climate, a credible and passionate champion and the right timing;
• make time for planning, especially in the early stages;
• have clear roles and responsibilities with different levels of engagement for different partners;
• develop a democratic, participative and inclusive culture;
• nurture trust between partners;
• define common aims and goals; and above all
• remain open and flexible.

The evaluation is positive: despite some initial challenges, all the members interviewed felt they had benefited enormously by working together on a really interesting issue, getting to know one another better, exercising their collective voice and pooling their experience. Through collaboration the CIFC felt that it achieved outcomes that individual trusts and foundations could not have achieved alone. This, to me, shows how valuable a collaborative approach can be—as long as funders are prepared to invest in it properly, and learn from those who’ve already been there. Sharing resources and effort can increase the impact of your work; sharing what you’ve learned from the experience, like CFIC have, is equally important to help other funders take their first steps towards collaboration.

Digging down into donor motivation

At NPC we are passionate about helping the voluntary sector achieve as much as it can; helping charities and funders make the biggest possible difference to the lives of the people they help. One of the ways we do this is by trying to get donors—especially wealthy donors with a lot of money to give—to think hard about who they give to and the impact that giving has. But in order to do this successfully, we need to know why these high-net-worth individuals give to charity in the first place: what motivates them?

In 2009/10, US firm Hope Consulting carried out research into the motivations behind giving amongst wealthy Americans. One of their major findings was that donors were willing to give more if their giving experience better met their needs. They estimated that improved segmentation of donors, allowing charities to target and communicate with them better, could potentially unlock another $20bn in donations.

Just as any retail operation needs to understand what motivates its customers if it wants to maximise sales, so charities need to know as much as they can about the type of donors they’re trying to appeal to. Hope Consulting’s research suggests that understanding the different motivations of wealthy donors can increase the amount of money raised for charities doing good work. But it can also increase the impact of this funding—if charities can communicate with donors in a targeted way, more donors receive the information they need to make thoughtful, impact-focused choices.

With this in mind, we are delighted that NPC will soon be able to announce the details of a major new survey we will be carrying out looking into questions around donor motivation. We have secured funding which means we will be able to reproduce the study done in the USA that led to massively increased insights into donor motivations. So far we have had to rely on the findings from the Hope Consulting study as a guide to what may be going on here in the UK. But the two countries are very different, and the motivations of UK donors don’t necessarily mirror those of the USA. For one thing, in the USA there is a lot more faith-based and alma mater giving than here.

In the next few weeks we will say a bit more about this research. We hope to involve a number of experts from the sector as part of an advisory group so we can make sure our results are as useful as possible for the whole sector.

If we get it right, our research could help bring about a marked improvement in both the amount of charitable giving and the impact that giving has—increasing donor engagement, growing the size of the ‘funding pie’ and helping donors focus on where their money can make the biggest difference.

Why giving is good—for all of us

This guest post comes from Josh Spero, editor of Spear’s. Before Spear’s, he worked at The Independent and has written for publications including The Guardian, The Times, The Sunday Times, The Economist and the National Theatre. He is a regular guest on CNBC and has appeared on the BBC World Service and radio and TV stations around the world to talk about everything from finance to art. He is a co-founder of theartsdesk.com, Britain’s first critic-run arts review website, and can be found on twitter @joshspero. Here, he talks about Spear’s campaign to boost philanthropy.

In contrast to our uniformly miserable economic news, we can at least look to philanthropy for some cheer—but only some. Arts & Business report that philanthropic donations to the arts by companies have fallen—but those by individuals have risen.

Sectors have been variously dis/encouraged too: heritage and museums are both up, theatre and community arts are down. Total philanthropy was up £28.5m to £686m.

So is the message that high-net-worths should give (whether you frame that as obligation or responsibility) getting through? It seems so, but not fast enough. We are starting from a low base, with the government’s figures that the wealthy give 1.1% of their annual income to charity but everyone else 3.8%. It will take freer discussion of philanthropy—its good and bad sides—and exemplary leadership from philanthropists to move this figure significantly higher.

That is why Spear’s has launched our 1 Per Cent Campaign, to encourage our readers to participate in philanthropy; not just by giving money, but time and expertise too. Wealthy entrepreneurs often feel like charities are only after them for cheques, but if there are spaces for them to help out with their experience and accumulated knowledge, then so much the better.

It might seem like everyone is talking about philanthropy right now, so any additional efforts risk tipping over into tedium. Our campaign—I hope—combats this by showing the enjoyable side of philanthropy along with the good it can do. As Dame Stephanie Shirley, our former National Ambassador for Philanthropy, says in this video, giving activates the brain’s pleasure centres.

The rewards that existing philanthropists talk about are numerous: the good you do, the pleasure you feel, the difference you make to a society you may not even realise you are a part of.

But philanthropy isn’t all ice-cream sundaes—sometimes it’s bran flakes—and we recognise that too. Giving should stem from passions and beliefs, and sometimes it requires a little emotional excavation to work out what those are. Giving takes time: you need a strategy to make it sustainable, research into charities to make sure they have an effective plan, relationships with charities’ CEOs.

And you need to keep your eye on all your donations: if cheques disappear into a black hole, it is as much the fault of the donor for not following up as the charity for keeping quiet.

If all this seems too simple—well, it is simple. That’s the point of the 1 Per Cent Campaign: philanthropy doesn’t need to be taxing (and indeed tax can be less taxing if you’re philanthropic). Forget ‘greed is good’—that’s so 20th-century: giving is good—for all of us.

From research to reality

The knowledge-sharing website: best thing since sliced bread?

When you publish research, it’s interesting (and occasionally unsettling) to look back a year on and ask what it has really achieved. Who has read the report? What impact has it had? Has anyone actually changed what they do as a result?

Often it can be very difficult to capture the impact of research or to attribute the change to what you did. So, it is always encouraging when there is something tangible to point to.

Last March, NPC published a report about knowledge sharing among funders. Our research found that funders were not sharing knowledge as well as they might and argued that there was a case for developing a specialist website to encourage a freer flow of ideas and information. In response to this, and despite some scepticism from funders, NPC, the Association of Charitable Foundations (ACF), and the City Bridge Trust decided to run a six-month pilot website. The website, www.fundernetwork.org.uk, was established in June 2011 with support from a group of foundations.

A year on from the research report, the website has over 300 members from 150 trusts and foundations, who are using the site to search for information, learn from peers, and share what they know. An evaluation of the site, published today, suggests that it has been a great success:

• 88% of those surveyed say that the site has given them a better understanding of what others are doing, and two-thirds say that it has helped them to learn about an issue.
• Nine in ten say that it is valuable resource that they would like to see continue, and that the website provides a ‘safe space’ for learning and sharing.
• A third say that it has helped them to save time in their work, and acts as a valuable support network. One funder says that it is ‘the best thing since sliced bread’.

The knowledge-sharing website is a great example of action being taken as a result of research—getting the findings of a report off the shelf and bringing them to life. It will now continue in 2012, with plans to build membership and improve the site. Although the site is aimed at funders, the report and website evaluation have relevance to other organisations that are concerned with learning from peers and sharing what they know, and for infrastructure organisations in particular. At a time when infrastructure is most under threat, and struggling to prove its value, this may be a small piece of evidence that it is worth taking risks and supporting efforts to encourage learning and knowledge sharing throughout the sector.