There was a reminder for everyone of an important lesson in charity fundraising yesterday.
When the Big Give Christmas Challenge charity match funding scheme was launched in the morning, so many people tried to access the site to make a donation that it crashed, leaving would-be-donors with a message that told them the appeal had been “temporarily halted”.
It isn’t the first time I have heard of such an incident.
My son turns three over the Christmas period. It’s a significant milestone for families these days because it’s the age at which all children receive up to 15 hours of government-funded childcare each week.
Potentially, it should save my household around £200 a month – or so I thought.
Earlier this week I went to the charity tribunal to watch a day-long hearing on a case brought against the Charity Commission by a group of four local residents from the Surrey village of Dunsfold.
It was a textbook example of how charity law can complicate what seem to be the most straightforward of matters.
At its heart, the dispute is a simple one. The village school closed in 2004 because of dwindling pupil numbers – but the building is bound by a 1957 legal requirement that it must be used as a Church of England school.
With all sides agreed that a church school is no longer feasible, the diocese of Guildford, the sole trustee of the charitable trust that governs the land, wants permission from the Charity Commission to sell or lease the building and use the money for charitable educational purposes. This was granted by the regulator earlier this year, in the scheme that the residents are now challenging.
The residents’ incentive is clear: they want to form a charity to buy the land and use it to house a private nursery school currently based in a sports pavilion. They want the commission to rule that the diocese must first try to use the building as a non-church school, and should only consider other uses if this is not possible.
This is where things get complicated. In making their case the residents, using the services of a well-respected barrister, have trawled back through the building’s history to the foundation of the school in 1839.
They say a nineteenth-century will made by a Miss Katharina Woods, considered in conjunction with a plaque on the school building, form a charitable trust that says the building must be used as a school. They argued during the hearing that the commission’s scheme “is mistakenly predicated on an assumption that the original trusts of the charity are contained in a conveyance made on 1st March 1957 rather than those evidenced in 1839.”
In response, the barrister representing the diocese devoted some time during the hearing to reading out the other provisions in Miss Woods’ 1839 will. His case was that religious beliefs were so central to her bequests that it would be wrong to prioritise a non-religious school over other uses for the building.
The commission’s head of legal services, Kenneth Dibble, said after the hearing that the regulator wanted a system that gave the school’s trustee as much freedom as possible to decide how the building should be used – without adding the onerous requirement that they should first have to think about using it as a school.
Given the emphasis the tribunal placed on the importance of trustees’ freedom to make their own decisions in its most recent judgement – on public benefit and fee-charging schools earlier this year – it seems unlikely to diverge too far from Dibble’s view.
In this case the charity tribunal, which was set up to provide quick, low-cost access to justice, has been complicated and presumably expensive, and it looks unlikely to result in a big win for the villagers. But at least it’s better that than the previous set-up, where the High Court was the only external way to challenge the commission’s decisions.
With the number of young people not in employment, education or training consistently teetering around the one million mark in recent times, it’s encouraging that the coalition government is taking action through its Youth Contract.
The plan to spend £1bn to provide work and training placements for up to half a million 18 to 24-year-olds over the next three years will no doubt give hope to some of the hundreds of thousands of young people sat at home aimlessly sending their CVs to employers knowing full well they stand little chance of landing a job. There’s no guarantee that the youth contract scheme will lead to a full-time job, but it will give a lot of young people what they have asked for – a foot in the door and an opportunity to prove themselves.
What remains a mystery is how charities fit into the picture. One of the successes of the Labour government’s Future Jobs Fund was that it supported young people into jobs in the public, private and third sectors, but so far the government has only stated that “businesses” will be eligible to take part in the Youth Contract scheme. The NCVO and others in the sector are currently seeking clarification from the government about exactly which types of organisations will be eligible, but the fact that charities were not explicitly mentioned will only reinforce the belief that the government only considers the private sector capable of generating genuine jobs.
The fund also fails to address the fact that charities will play a leading role in supporting the remaining hundreds of thousands of young people who will not benefit from the Youth Contract. Many of these organisations face ever-increasing demand for their services, yet ever-decreasing funding.
The Youth Contract is a welcome start, but far more is needed to solve this unemployment time bomb.
To Clarence House, home of the HRH the Prince of Wales, for a reception to mark the centenary of Macmillan Cancer Support: there were probably more than 150 people there, ranging from the tough former bankers who now inhabit charity boardrooms to the charity’s staff and major donors. All were slightly a-quiver at the prospect of meeting royalty.
It was, of course, perfectly choreographed: the firm-but-fair police officers at the gate, the servants dispensing Highgrove champagne, the organisers with clipboards moving through the knots of nervous people in the library, arranging and re-arranging them as the heir to the throne approached.
Prince Charles was sound: good handshake, sharp of mind, with an uncanny ability to stay genuinely engaged with a long succession of people for a short space of time. He moved smoothly on and around. Is it taught, or in the genes? My guess is he spoke to nearly everyone there, and that none felt short-changed.
Then into the hallway, with its royal portraits and fine bust of George VI, for the cutting of the cake and a speech. Prince Charles stood on the fourth step of the staircase and recounted how Douglas Macmillan founded the Society for the Prevention and Relief of Cancer in 1911, after watching his father’s pain and suffering as he died from the disease. Since then the charity has gone through many guises and become a household name – part of the nation’s infrastructure.
Prince Charles has been a patron since 1990, and he is a patron of Marie Curie Cancer Care as well. Has his support, his name on the letterhead, been a part of the charity’s growth and success in recent decades? It’s hard to know: how could you research or quantify it? Many charities have thrived without royal patronage. But I haven’t come across many that would turn it down.
As Christmas approaches, charities across the UK are embarking on festive fundraising campaigns – often their biggest campaigns of the year.
As they do, they may wish to bear in mind a story I heard recently.
A friend’s grandmother has taken the laudable decision that, instead of buying Christmas presents for her nearest and dearest this year, she will donate £500 to the charity Sightsavers .
How wonderful, you might reply. If only there were more people like her.
Or, if you’re one of the more driven fundraisers, you might be wondering how your charity could encourage more people to do this. Oxfam, for instance, has made great strides in persuading people to swap presents for donations.
But wait – things are not as simple as they seem. How did this generous donor’s son-in-law feel about her announcement that he shouldn’t expect a gift?
“I can’t believe it,” he huffed to another relative. “It’s Christmas and we’re not getting a present! I think it’s because she doesn’t like us.” The charity donation had sparked the reopening of an old family conflict.
There’s a lesson in here for festive fundraisers. Yes, do encourage people to swap their Christmas gift budget for a donation – but be aware of its implications. If a donor’s gift has given them a headache, they might need more thanks than you realise.
There was a refreshing, and in some ways quite surprising, degree of honestly among the philanthropists taking part in a panel discussion to launch the Family Foundations Giving Trends 2011 report this week.
Perhaps the most notable presence on the panel was Trevor Pears, a co-founder of the Pears Foundation, which has been playing a significant role in the UK’s philanthropy debate recently.
Pears said this was the first time he had appeared on such a panel to talk about his giving – as quite a private person, he said, he grappled with the decision of whether to speak out, but eventually decided it was important to.
“Most important is showing by example,” he said. “We need to be able to celebrate giving in this country and talk about these things.”
Thomas Hughes-Hallett, chief executive of Marie Curie Cancer Care, spoke very frankly about his philanthropy through the Emily Hughes-Hallett Fund, which was set up in memory of his daughter, who died in infancy.
“We feel passionately that giving should be fun,” he said. “You bonk that on the head at your peril. You’ve got to allow yourself humanity in your giving and not make it too much like an investment portfolio.”
He was also quite blunt about the tax benefits of his philanthropy – i.e. having to pay less of it, which was something a member of the audience tried to tackle him on. But neither he, nor Sir Tom Hunter, founder of the Hunter Foundation, who also appeared on the panel, were having any of it. They reacted quite strongly, almost angrily, at the suggestion that they might feel guilty for paying less tax.
It was also made clear that there is a careful thought process behind many of these gifts. These are successful business people, and it’s doubtful that a random, over-emotional approach is going to feature too often. As Nigel Doughty, a trustee of the Doughty Family Foundation and the Doughty Hanson Charitable Foundation, put it: “I think to nobly give is wonderful…but to do it with skill multiplies that effect.”
So, lessons for charities? It seems important to make it as fun as possible for a philanthropist to become involved with your cause, but bear in mind the natural business acumen of a lot of these people, and make a strong case for the effect that their gift could have.
Finally, a quick reminder of the tax benefits probably wouldn’t hurt.
I hope the fact that people such as Trevor Pears are starting to appear on panels like this is an indication that more philanthropists will talk openly and frankly about their giving over the coming years. It seems to be a great way to encourage others, no matter how wealthy they may be, to get involved in giving, and hopefully to normalise it more in this country – something the sector certainly needs right now.
This week, disability charity Scope announced a £20m bond issue, which is the first significant bond issue by an operational charity.
It’s unlikely to be the last. Geoff Burnand, co-founder of Investing for Good, a social investment organisation which worked with Scope to develop the bond, has already said he expects to see several other bond issues in short order, some of which may well be larger.
Ten or 12 more bond issues in the next few years looks like a very achievable target indeed. While it’s still very early to speculate, it looks very possible the charitable bond market will be worth hundreds of millions of pounds in the next decade.
Scope will use the money to hire new fundraisers and pay for more charity shops, which should easily produce a large enough surplus to cover the interest payments on the bond.
Bonds are an ideal method of funding new income-generating schemes such as this. Previously, charities have used loan finance, where usually the capital has to start being paid back immediately, or have just paid for it themselves – reducing the amount of money they can spend on beneficiaries.
The capital on a bond doesn’t have to be paid back for five years, giving Scope plenty of time to develop the finance to repay it.
Scope won’t have to pay much to raise the cash, either. It’s likely to be able to offer a very low interest rate on the bond, far lower than a conventional company issuing bonds for the first time, because the bond will appeal to what the Charity Commission calls “mixed motive” investors, who want a return on their capital but also a social good, and will take a below-market return to get it.
The bonds are also listed on an exchange, which means that they can be bought and sold relatively easily. This answers a typical criticism of other social finance products, which is that they lack liquidity.
CITR
We’ve already seen another bond issue in the same week, this time by a community interest company, working with Triodos Bank, who raised £600,000 and plans to raise another £1m.
Triodos say that private individuals who buy later tranches of this bond will attract community investment tax relief, which offers social investors a five per cent relief on income tax or capital gains tax.
In a stroke, this transforms a fairly marginal investment for a private investor into a fairly attractive one.
CITR has several limitations – it only applies to organisations paying tax, so it’s of no benefit to charitable investors, and it can’t be used for property acquisition – but it’s still very helpful.
The prospect of widespread use of CITR on third sector bonds could finally make this little-used tax relief into a valuable tool.
Social Impact Bonds
One thing to stress is that the two bond issues from last week are nothing like Social Impact Bonds.
SIB aren’t really bonds at all – they’re specialised payment-by-results contracts. They exist to fund much riskier propositions, which pay off on a much bigger scale, but over a much longer term.
Social impact bonds put the risk onto the investor. If a charity fails to deliver under an SIB, the investor will not get paid. With a regular bond, the investor is still likely to get some money even if the charity goes bust.
But with an SIB if the charity succeeds, the pay off for the investor is much greater.
SIBs and some other social finance products mirror the use of stocks and shares to provide “risk capital” for business.
Unfortunately, the sector can’t copy the way that the private sector acquires risk capital – effectively by selling a share of ownership in the company – and must develop its own tools, which will take time, and probably quite a lot of brainpower among social investment professionals.
Bonds, in contrast, are well-understood tools for raising quite large amounts of cash.
For this reason, it’s quite possible bond finance may take off in the sector in a big way, long before risk capital products hit the big time.
It’s not evident when you meet Terry Pratchett that he’s suffering from Alzheimers: he’s mentally sharp and there doesn’t seem to be anything wrong with his memory. He’s also just completed one book and is writing two more.
But he says he can feel it advancing, making him a little worse month by month. And one of the problems is that he can’t now use a keyboard, so he has an array of computer screens on his desk that magically convert his voice to printed words.
One of his jokes when I went to see him recently was trying to get this prudish machine to reproduce a word that it would only render as “our soul.” Combative humour is Terry’s speciality, and we had an entertaining hour with him in his home near Salisbury.
My visit with our cameraman Tas was to record him receiving his award as Celebrity Charity Champion in Third Sector‘s Britain’s Most Admired Charity Awards: he wasn’t able to come to the awards night because he was doing An Evening with Terry Pratchett in the theatre that night.
It wasn’t my first meeting with him: in the seventies, four young journalists including him and me did the 40-mile Lyke Wake Walk across the North York Moors together. As we slogged for seventeen hours across the boggy expanses of Fylingdales and Goathland, Terry moaned a lot. So did the rest of us.
At the finish at Ravenscar, as we leaned wearily on the village sign, Terry puffed up his chest and struck a pose like an Arctic explorer (I still have the photo.) Since then he has created Discworld, written fifty books, acquired millions of readers, made several millions and given some of them to charities.
Perhaps the most impressive thing about him now is the way he faces his predicament. He recalled coming back from his diagnosis four years ago wondering “who shall I tell?” and deciding “everyone.” He mused about whether it takes greater courage to be open about your illness or to keep it to yourself, but, either way, he has chosen not to shy away from it.
He said he plays a game of sorts with interviewers: he knows they want at some stage to talk about Alzheimers, and watches them circling round it. And sometimes he puts them out of their misery by raising the subject himself.
Terry works in an office with a hint of gothic in the design – high ceilings, oak bookcases, a stone fireplace with a tapering chimney breast. His assistant Rob sits invisible in a sort of mezzanine, calling
disembodied answers to questions. I couldn’t help thinking Terry would have made a fine character is Mervyn Peake’s novel Gormenghast.
What came over strongly were his humour, his irony, and his eye for contradiction and hypocrisy in the world around us. And there was something liberating in his willingness to talk about illness and mortality in a way that most people don’t.
He’s planning to set up a charitable trust to receive most of his wealth when he dies. But he admitted he’s finding it hard to decide exactly when to set it up: he wants to die poor, he said, but he also wants to go on being a millionaire for just a bit longer.
It’s a well-known fact that cats always land on their feet, and toast always lands butter-side down. With the obvious result that if you tie a slice of toast to the back of a cat, you create an anti-gravity machine.
It’s a bit like the situation that trustees of independent schools find themselves in, following the recent confirmation, via the Charity Tribunal, that schools must have more than a “token or de minimis” regard to the poor.
In my opinion, it’s impossible to achieve.
If you’re the trustee of an independent school, you’re bound to feel answerable, primarily, to the parents of the kids at your school, who want the best possible education for their kids. By extension, this must be a better education than that of the less privileged pupil down the road. People would hardly pay £12,000 a year for their kids to get educated at a school if you can get the same quality of education elsewhere for free.
But you are also answerable to the law of the land, which tells you that you must have regard for the poor. You must, in other words, spend a portion of the school fees those parents provide on supporting the education of the less privileged pupil down the road, even though making sure your pupils have a better education than him is the reason you exist.
After all, while education is without a doubt a collaborative process, it is also a competitive one. We may argue that our schools exist not just to teach to the exam, but to turn our children into better human beings – more rounded individuals, with compassion for their peers and an assortment of life skills.
But in practice, education is seen by schools and parents – particularly by public schools and public school parents – as a race for the best grades.
The ISC has expressly argued from day one that provision for the poor is an unnecessary nonsense – schools, they say, are charitable just by purposes of providing education.
I don’t think it’s possible for fee-charging schools to have more than tokenistic regard for the poor and still do what they exist to do.
Certainly you can benefit the poor by allowing the hoi polloi to use your music centre, your swimming pool, and your gym, and handing out a few bursaries to promising chaps who you think can add something to the atmosphere in the common room.
But you can never say: “We exist to help the poor”. You can only ever say: “We exist to help the rich and we’ve helped a few poor folk out while we’re at it” – which sounds pretty tokenistic to me.
The law now, in effect, requires schools and the Charity Commission to pretend that this is not the case, but in my view it can never be more than an elaborate fiction.