Charity sector in 'phoney war' with recession, says Commission

Finance | Vibeka Mair | 19 Jan 2010

The charity sector is in a “phoney war” in terms of the true impact of the recession, according to a report from the Charity Commission on how trusts and foundations are responding to the economic downturn.

The Commission held discussions with the grantmaking sector on the recession last year, and has this week published a summary of the talks held. It found that many such charities were worried that the true impact of the recession would not be known till March 2010 or 2011 when many public sector contracts would come to an end.

No increase in grant applications

The talks also found that the grantmaking sector was mindful of a potential increase in demand, but has not yet seen the level of increase in applications they had anticipated.

It was suggested that a reason for both the lack of increase in grant applications and the recent poorer quality of applications could be related to the misconception by some that the grantmaking sector had “closed its doors” and to the fact that charities were focusing on securing their core business rather than looking at new projects and funding streams.

The talks raised the question of whether funders had raised the bar too high in terms of what they expected from funding applications. It was suggested that perhaps now was the time to reopen the debate about having more core funding as opposed to project funding.

Commission advice on reserve levels

Grantmakers had also suggested that the Commission should provide more prescriptive guidance on approaches to investments and reserves levels. However, the Commission said this is not within its role and that decisions regarding the running of a charity should be taken by trustees, acting in the best interests of the charity.

Call for foundations to give £1bn extra

Meanwhile, Peter Grant, a lecturer in voluntary sector management at Cass Business School has asserted in his new report that charitable foundations should be giving more money – to the tune of an extra £1bn – to charities.

Watch Grant discuss his new report below:

Directory: Charity Commission
Who's Who: Vibeka Mair

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