Why do some charities make giving so difficult?

Much of my work with Charityflow involves researching and contacting charities to see whether they are the right organisations for my clients to engage with to make the difference they want to make. Put simply I’m seeing if they are the right place for my clients money.

Inevitably when I am able to reach the right person in an organisation they are interested in talking to me. After all I represent their lifeblood - funding. However in some cases I am amazed how difficult it can be get to the right person to start the conversation - how difficult it can be to get a charity interested in being funded.

In order to reduce their administration some charities websites’ only “contact us” link is an info@… or similar email address. No names, no telephone numbers given. This would be fine, if not a little impersonal, if properly administered. It rarely is. Some of these charities also profiled their Trust and Foundation managers on their websites but without contact links they are pretty useless.

A recent attempt to reach a number of sports based charities who operated only using such a link has resulted in either (a) no response at all; (b) “we are very busy and will be in touch soon”, followed by silence and (c) in one case a response saying that they are not considering any grant applications at the moment. I emailed the latter one back saying I was trying to give them money, not get it but I have not heard nothing more.

So far only one of the charities I have contacted this way has positively engaged with me even though all my advances have referred to significant funding opportunities for them. Perhaps it is because they really are particularly busy, or maybe closed for Christmas (more on this in a moment). I will persevere because I believe the work they do is good but I wish they would at least try to meet me half way.

Charities also hamstring themselves by closing for prolonged holidays, especially over Christmas. Christmas is the season of giving. The time many families  sit down and decide how to distribute their annual giving. This is one time they are together and the moment when they want to know more about the work of their target charities.

Research in the US has shown that 30% of annual giving occurs between Thanksgiving and New Year, with most of this occurring in the last few days of the year, yet many UK charities decide to close for some or even all of the part working weeks at this time of year. Nice for the staff, not great for the beneficiaries.

Finally, when thinking about funding a charity there is no such a thing as too much information on a website. Annual accounts, impact statements, mission statements, current and recent projects are all examples of the sorts of things funders want to see but frequently don’t find.

Unless they’ve got something to hide (in which case they shouldn’t be looking for money) charities should make life easier for the funders. Much of the information can be got elsewhere. Their accounts are available via the relevant regulator.

Foundations, Trusts and Corporate donors are major funders of the sector and their decisions are based on being able to get in touch with right people who understand what they are looking for and on getting as clear a picture as possible about the charity. Most charities understand this but I’m surprised how many don’t.

Comic Relief - if it wasn't so sad it might be funny

The entirely foreseeable problems that the management of Comic Relief have heaped upon themselves by signing a petition calling for an immediate ceasefire in the Israel-Gaza war is a good example of a charity coming unstuck when it strays from its core mission. There are lessons to be learned here for anyone involved in running a charity.

I don’t pretend to have an answer to the Middle East tragedy but I am certain that those who didn’t sign the petition are not motivated be seeing more innocent people being killed. They just believe that it is not the best way to achieve a long term sustainable peace. It’s an incredibly complex issue. and it divides opinion nationally and internationally

I have no issue with the petition itself and I quite understand why hundreds of charities who are in the front line want to call for a ceasefire; charities which Comic Relief partner with and support. Charities whose mission is to alleviate suffering. They might have staff and families trapped in Gaza and they are the people dealing with the immediate consequences of what is happening on the ground.

The problem for Comic Relief is that it has a different role which can only be damaged by getting involved in such a divisive issue.

Since it was founded in 1986 Comic Relief has raised about £1.5 billion. Their annual highlight is Red Nose Day when the BBC gives them an annual telethon. This year it raised over £35 million. They don’t do the work on the ground themselves, they partner with other organisations. They raise money. They are one of the most effective fund raisers of recent years. Why endanger this by getting involved in this divisive issue?

I wonder if their management consulted the BBC on whom they rely. The BBC’s commitment to impartiality has meant that the broadcaster has needed to tread an incredibly fine line on the conflict? This cant have helped the relationship between the 2 organisations.

What about all their supporters who don’t believe that an immediate ceasefire is the best way to achieve a lasting peace? Will they now just put their hands in their pockets and leave them there?

To make matters worse its management didn’t consult or even inform its board before signing the petition. Its chair has resigned publicly stating that he doesn’t agree with their position drawing added attention to their naivety.

People who manage a charity need to remember that their first duty is to act in its best interest. Comic Relief didn’t need to get involved in this complex debate. Of course management individually are entitled to their own thoughts on the matter but whenever there is a conflict of interest between the individual and the work of the charity then the charity must come first. Instead, in the instance, its management used the goodwill attached to Comic Relief’s brand to promote their own views which have nothing to do with (and will probably damage) the charity’s core mission - to raise money.

Comic Relief’s reputation has been badly dented by what is, at best, virtue signalling and the losers will be precisely the causes that the public, who so generously tune in every Red Nose Day, want to support.

Grant making charities needn't cost so much to run

Grant making charities needn’t cost so much to run.

The reason that most people get involved in philanthropy is to be able to focus on making the world a better place and advancing the philanthropic mission of the fund they are engaged with. They don’t do it to get bogged down in governance but good governance is vital if philanthropy is to be effective..

The burden of running grant making charities continues to grow with trustee’s precious time increasingly being taken up by regulatory compliance and more of the trusts limited financial resources being spent on non charitable activities such as legal, secretarial, audit and accounting costs.

There are also increased fiduciary duties being placed on charity trustees with all the legal jeopardy this involves.

Setting up new stand alone grant-making trusts is expensive and it is taking much longer to get recognition as a charity from either the Charity Commission or OSCR, without which none of the tax advantages of being a charity accrue.

However there is a great way to reduce both the governance burden and the regulatory compliance costs which it is worth both trustees of existing charities and philanthropists wanting to set up grant-giving charities considering.

For many year in the USA philanthropists have channeled giving through vehicles known as Donor Advised Funds (DAFs). They are also now one of the fastest growing types of charitable fund in the UK. They could be the answer to all these problems.

What are they and why don’t we use them more often?

What exactly are they?

A DAF is a stand alone charitable fund under the umbrella of a larger fund of funds which itself is a registered charity and which manages the fund on behalf of either the donor, or in the case of a charitable trust which has become a DAF, on behalf of its trustees.

As a minimum the umbrella fund takes care of all accounting and audit compliance with all the advantages and benefits that their scale can add resulting in significant cost savings. They also ensure that the fund operates legally, protecting the trustees from legal threats.

In some cases the DAF operators can also take on administration of the grant making process itself further reducing administrative costs.

The trustees retain control over the mission and strategic direction of the DAF and also of how funds are distributed. They can also retain control over how the DAFs funds are invested.

Why are they so effective?

Within reason the DAF can be called whatever you want and transferring an existing trust to a DAF doesn’t necessitate changing the trust’s name. Provided the existing trusts constitution allows, converting to a DAF is a very simple process.

DAFs can be set up very quickly. The umbrella charity already exists so all that is needed is for its own trustees to be satisfied that your fund meets their criteria and the transfer can be made.

There is no maximum, or perhaps more importantly minimum size for a DAF. Because audit and accounting fees are shared across the whole of the umbrella fund so DAFs are ideal for smaller sums.

This feature can make DAFs ideal vehicles for annual grant giving. For example a business much decide to donate 10% of its profits every year to charity. If it does this to its own DAF it can then engage much more effectively with the causes it believes in and make multi year commitments to ongoing programs. Much better for the donor and much more effective for the recipient.

Finding the right DAF provider that suits you is important. Both the charitable sectors you want to engage with and the amounts you want to give are factors. Some expect you to use their investment services and if you are happy with this their costs may be even lower. Others give you much greater flexibility allowing you to integrate your charitable activities with the rest of your wealth planning.

So in conclusion DAFs offer significant cost savings. For example a stand alone grant giving charity distributing £50,000pa could easily be facing audit and administrative costs of 10-20% of that sum, money that could otherwise be doing good. Using a DAF it is possible to significantly reduce this cost.

DAFs offer greater flexibility, legal comfort, easier administration and simpler reporting requirements whilst retaining all the advantages of stand alone grant giving charities. Well worth thinking about if you run one.