Philanthropy - state of the nation

Emma Turner (ET): Good morning everybody and thank you for joining us at nine o'clock on a Wednesday morning. As you heard, my name is Emma Turner and I run the Barclays Private Bank Philanthropy Service. For those of you that don't know, the service aims to guide our clients and their families to achieve their philanthropic aspirations. So convening speaker events is a key part of this service which is why we can't have them in situ at the moment. So we've moved them to these audio calls for you.

This morning we have our second philanthropy market call for you. As we continue to move through these new and uncertain times, we're trying to bring different experts to talk to you who can bring light to topics that it may be hard to find information about in the public domain. ‘Philanthropy in a crisis and beyond’ is one of them.

It gives me enormous pleasure to have Cath Dovey - she’s the co-founder of the Beacon Collaborative - with me this morning. The beacon collaborative is a network of philanthropist of organisations whose aim is to encourage celebrate and increase philanthropy in the UK.

I have to say that Cath is my go-to person for many, many things, but particularly in the recent weeks. She seems to have her finger on the pulse of exactly what is going on in the sector. Who's doing what, what numbers look hopeful and what numbers look quite worrying, which is why I'm so delighted to have her here today.

We're going to discuss the state of the nation in the charity sector, how the COVID pandemic has caused considerable disruption, what philanthropists are doing to help and what the future of the sector may look like. For those of you who may not be familiar with the sector, it's also known as the charity sector, the voluntary sector and the third sector. It comprises of just over a 160,000 charities in England, Wales and Northern Ireland (Scotland has its own register) with an annual income of about £50bn and personal donations make up about 40% of that total.

We looked at some numbers a few weeks ago that said there could be a £10bn shortfall in the first three months of COVID and we’re about at that point. So, Cath, I’m going to kick off with the first question for you: what is the scale of the challenge that we face at the moment?

Cath Dovey (CD): Good Morning Emma and good morning to everyone. You referenced a study that was put out by Pro Bono Economics last week that indicates that we could be facing a shortfall in funding of about £10bn in the charity sector over the next six months. That follows on from an earlier estimate from NCVO right at the start of the crisis that forecast a loss of income of £4.3bn in the next 12 weeks of the crisis, so obviously we’re just past that point.

To put that into context, the government has committed £750m of emergency funding to the charity sector. My maths puts that about 7.5% of the funding gap. So we’ve got an enormous challenge emerging in our charity sector.

There are different estimates on what this is likely to mean for the future shape of the sector. At one end of the spectrum, the Directory of Social Change estimates that 17% of charitable organisations in the UK could fail by the end of 2020. At the other end of the spectrum, Pro Bono Economics have estimated that 13% could be out of business in six months.

Other charities and aid foundations such as The Institute of Fundraising are coming in around the 50% mark. Clearly, we’re still in an uncertain phase but what is clear is that it’s extremely likely that we’ll see a lot of charitable organisations unable to continue beyond the end of this year with their current levels of funding.

The reason for coming on the call today - I did a quick scan of the news yesterday and so far this story has been covered by one national newspaper in one article. We have a real crisis emerging in our third sector and at the moment there isn't much spotlight on this in the national conversation.

ET: As the crisis has unfolded and continues to do so, you've mentioned some but I know you have some more of what we would call ‘key milestones’ since week one up until now, that you feel people might find interesting and enlightening to hear about.

CD: Yes, I was going to make a slight distinction between the charitable sector for the organisations of delivering services and receiving funding to do that and what I would call the philanthropy sector which really represents donors and funders. It's a slightly nuanced distinction but in the context of the COVID crisis in the first two weeks, even before lockdown happened, we saw an incredible mobilisation among the organisations that support donors. It really kicked off with London Funders launching what they call the funders pledge, which was targeted at trusts and foundations.

It was trying to provide them with guidance on how to fund effectively through a crisis, with a focus on greater flexibility, talking to grassroots organisations to understand what their needs are the likely to be, how to make sure you maintain those channels of communication with considerably restricted funding. It’s really good solid guidance for what I would call professional funders on how they could support the charitable sector. There were other tremendous initiatives - the launch of the National Emergencies Trust (NET). This is all happening before we went into lockdown.

The National Emergency Trust is a national net trying to provide emergency funding to organisations up and down the UK. It's a collaboration between the NET, the Red Cross and the UK Communities Foundations, who are responsible for channelling funding on to the front line. We saw the establishment of the London Community Response Fund (LCRF), which is a similar Initiative for London, which has undoubtedly been particularly hard-hit.

CAF launched an emergency fund called New Philanthropy Capital (NPC) came out with a guide for philanthropists talking about what the impact was likely to be in different sectors. This is all happening in the first couple of weeks of the crisis.

Since then, from week three onwards, I would say the focus of being how can we most effectively coordinate the available resources. I think there's a recognition among donors and the philanthropy sector that resources are going to be limited, so they are answering the question, ‘How can we use those resources effectively for society?’ Effectively not just in the emergency phase, but in the three phases that we are expecting to see.

There is the immediate emergency phase into stabilization, and then considering what we want our charity sector look like in the long term and how we can support it to develop greater resilience in the future. So yes, coordination has been I think very much the yield of the day over the last three weeks.

ET: Leading on from that nicely, do you want to give us some good examples of collaboration? I know that you’ve seen some really extraordinary things happen alongside some of the things that you've just mentioned.

CD: Yes, I’ve already mentioned the NET in some detail. I think in London I would point to the LCRF. It's an incredible mechanism for aligning funders so that we can meet the needs that are out there. There are basically two tracks within the LCRF, those that have an established foundation grant-making capability are aligned. They provide the resource to screen proposals as they come in from ground-roots organisations on what funding they need.

Either individual foundations who screen those proposals can fund them, or if they’re unable to, they go into a general pool.  There is a general level of funding which is then being used to try and fulfil as many of those proposals as possible. Again, they've got a substantial number of organisations now within this alignment and is providing a valuable resource within the City.

NET is trying to do something similar across the UK. There are also initiatives such as the Association of Charitable Foundations, which is in the process of launching a standard collaborative hub. That is trying to bring together leaders from the charity sector with funders. That’s not just professional funders, but philanthropic funders and all kinds of funders so that once needs have been identified on the front line, funding can be aligned against that. It’s a hub that’s going to give us a really good sense of what's happening on the ground and how to fund against it.

NPC has been gathering data. They have an extraordinary free resource on their website that shows, you can really drill down into the data to see where communities are vulnerable across the UK, using the number of different indicators. Then if you look out beyond the UK, my area of focus is the UK, but similar initiatives are emerging. UNITAS have come together as a pan-European collaboration hub for five of the fundamental networks across Europe.

Internationally, you could look for example at the World Health Organization who have prepared a global response plan. They are estimating that the minimum of US$675m is going to be needed to support countries that don't have frontline services to get themselves ready for when the pandemic reached their borders.

ET: Why don't you just give a bit of a shout-out for the Beacon Collaborative which you co-founded and you be doing right from the start? You mobilise a lot of us to get on calls and talk about things. Talk us through your weekly update and some of the things that you've been particularly working on.

CD: The Beacon Collaborative was founded really to try and encourage greater collaboration among philanthropy sector organisations. We have quite a small sector in the UK and historically have had. We came together with the goal of trying to enable the wider community to reach many more new donors with the goal of increasing philanthropic giving in the UK. We’re effectively a collective impact movement. We convene and support organisations to deliver projects that they need for their strategic goals.

Throughout the crisis we have really tried to maintain to role and maintain the communications function so that we can shout out across the whole network when an initiative comes forward with the goal of trying to support the wider community verses serving donors, high-net-worth individuals and philanthropists.

ET: I have to say, I found your weekly update which anyone can find on your website incredibly helpful because it's like a one-stop-shop for who’s doing what, depending whether you’re wanting to give money away or you're sitting the other side of the fence and you're trying to raise awareness for what your particular group is doing. What's been the response of what you would call experienced philanthropist? I'm sure we have some on the call today.

We may have some clients on the call today that are sitting there at the other end of the spectrum thinking, ‘maybe today's the day that I should do something’. We'll come to that in a second. I know you’ve seen some rather wonderful things from your experience of that. If you want to give us a couple of examples of those.

CD: Yes, of course. I've been saying that the data is still incredibly patchy around how much is being contributed. If you sum up all of the information that's out there you get to just over £1bn that has been given or pledged specifically to support organisations on the front line of COVID-19. So, that's the big picture. Anecdotally I would say that among experienced philanthropists, those who have been giving money for some time with a clear strategic approach that they take, we’ve seen a number of different strategies deployed. And one of them is communication - public appeals.

You had Fran Perrin on the call last week who has done an incredible job of being quite open and transparent about what she's doing for the Indigo Trust as a way of potentially guiding and encouraging others to consider giving to this emerging crisis in the charity sector.

The second area I would focus on, which is somewhat closely linked, is leverage. It is people using their resources to try and encourage others through potentially matched funding, for example, or coming together through co-funding to try and scale up responses. Again, that requires a level of knowledge and partnership that you really need to have experience of as a funder to bring that one off. Other approaches are seeing include community-based giving.

Where funders have a particularly strong local or regional focus, they've been aligning with others in their local communities to try and make sure that we support the charities in the regions that we can't afford to lose. They know who those organisations are and can provide that local safety nets.

innovation

Then there’s innovation - I think there's a recognition that we need some innovative new ideas to tackle this problem whether that's collaborative hubs, technology to support collaboration or to support volunteering. Also, we've seen a focus on innovation around new needs. What are the new needs that are emerging? Philanthropy is incredibly good at moving quickly to respond to those new need, to provide seed capital to get new projects and programs up and running so that we’re meeting those gaps that there are out there, that are coming through as a result of the crisis.

Those are probably the main areas that experienced funders have been focused on. I think there's also a very large body of established philanthropists trusts and foundations, perhaps those are the small and mid-sized that have really just been focusing on their existing organisations. There's a lot of complexity out there.

One incredibly powerful thing that scientists can do is just support the organisation's they were already invested in and supported. I think many are now saying, ‘okay, we've made that commitment. We're continuing to fund these organisations. Now, let's look to the horizon.

What can we do to help with the wider response? I think we're in that period now between emergency and stabilisation where we need to create the pathways for funders who are in that position to try and consider how they can fund most effectively over the next six months, over the next 12 months and over the next two years.

ET: That is great. Now if you were listening to this call and thinking, ‘what can I do?’ given that we don't know who's on this call. There could be a wide range of experience and you've talked about experience, but if I was sitting on this call thinking, ‘okay, I now understand there is a big problem out there and I would like to try and do something. I'd like to play my part in this’, what would be the two or three things that you would advise someone to think about?

I know unrestricted donations is something that's talked about a lot at the moment. You might want to maybe briefly mention what they are? What would your two or three key points be to somebody who was in that situation?

CD: Well hit the key thing to remember is that we are in a crisis. This is an emergency. As in any international emergency, there's a lot of complexity. It's hard to get a very clear picture of what's actually happening on the frontline, and therefore where donations are most effective. I suppose my number one team message is in a situation like this nobody should be trying to fund alone. It's really important that you reach out and try and get the input that you need to make the decisions that will make your donation as effective as possible.

Broadly, seek advice. That maybe from your wealth advisor, from your foundation team. It may be a trustee that you know. Emma, what you do at the Philanthropy Service is incredible. Nobody should be doing this alone. They need input. They need to understand where they can get the knowledge that they need to make the kind of donation that they want to make.

We do have a number of organisations that have been set up specifically support those who want to give to the general response. So I've already mentioned the NET, the LCRF. Within some of these are ways of connecting directly with charities. For example, the UK Community Foundation's movement (UKCF) has local community foundations across the UK. They’re working very hard to identify needs in the local area and will guide philanthropist and donors to organisations that need support. They're also collecting that data centrally so we'll get a much better picture of these needs on the frontlines.

You can give to the general response. That will be an incredibly useful thing to do. There are ways that you can connect with individual organisations.

The others advice I would give is get into knowledge networks if you can. If this is something you want to commit to, perhaps you have a trust or foundation, there are these knowledge networks being set up where we're going to try and as clearer pictures possible on where funding is needed most.

ET: Fantastic. My last question, no pressure, is what does the future hold? I know that you like to be optimistic. Give us your crystal ball thinking on that.

CD: Of course. As I say, we're in the emergency phase so it’s a little bit difficult to read the runes, but I think there were a few clear trends that are emerging. Number one is that we’re very likely to have a small charity sector. I think it's incumbent upon us all and there's a lot of focus on the phrase ‘build back better’.

We have to consider the shape of the future of the civil society that we want. We have to identify the organisation's we can't see fail, whether that's locally regionally or nationally. We have to make sure that we align funding to make sure that we support that.

A lot of focus is happening at the moment on how we want different sectors of the civil society to emerge, whether that's been mental health whether that's been frontline social care, whether that's in education in young people. A lot of thinking is going into these things about the future civil society that we need to see in this country. I think that is optimistic. It's born out of necessity and a terrible situation, but I think it does offer us some optimism for the future.

I think we'll see a much greater local focus again. I've mentioned NPC’s data sources. It really highlights vulnerabilities on a district by district basis across the UK. It’s an insight into the shape of the third sector that we might need on the local and national basis. A core focus is probably something that will emerge as we have new insight that we didn't have before at a centralised level.

The other area where I'm focusing a lot of my optimism is it's going to be very difficult to roll back from the level of collaboration and coordination that we're seeing.

It’s not just between funders but between funders and charitable sector leaders. We’re seeing greater diversity of insight coming from the decisions that are being made. I think that's got to be a really positive trend. I can't see how we will roll back from that. I really hope somebody like ACF Funders Collaborative Hub will really forge a new kind of collaboration that we haven't seen in the UK in the past.

There are many other things that I could point to but those would be my top three. I think it does provide some space for optimism around the shape of our future society and our future charity sector.

ET: That's a lovely way to end. Just to let everyone know on the call today that we will have the names of the organisation available if you didn't manage to catch them. If you want to know what they are or you want to know more about the Philanthropy Service, please just contact your Private Banker, and they will get in touch with me and we can get you the details. I can also set up a call with you to talk about anything you might want to discuss.

Cath, I cannot thank you enough. Even I, who knows about a lot of the things that we've talked about, have learned a bit more this morning. Very generous with your time and very clear. Thank you so much for joining us and I look forward to seeing you soon.

CD: Thank you. Thanks for having me.

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