22 Apr 2015
What trustees need to know about Funding the Future
What elements of the recent Funding the Future report are essential for trustees? Secretary of the Funding Commission Richard Gutch has the answers.
The Funding Commission was set up by NCVO in February 2009 to respond to the sector’s concerns and uncertainty about funding over the next ten years.
Its report, Funding the Future, was launched in December 2010. If ever a report was timely, this is the one. Its messages and recommendations are very relevant to trustees.
Trustees of fundraising charities
The headline message for trustees of fundraising charities is to engage more in helping develop and implement the charity’s fundraising strategy. We found that most trustees are much more interested in how the funds are being spent than in how they are being raised.
Directors of fundraising spoke of their frustration at being squeezed onto the end of a long agenda, rather than having the opportunity to discuss the fundraising strategy of the charity. Some spoke of being regarded as a ‘necessary evil’, rather than being seen as integral to the charity’s success.
One of our major recommendations is for a £10m ‘Better Asking Campaign’. We felt there is a limit to how successful campaigns urging people to give more are going to be. If charities get better at asking, more people will give. One of our aspirations is for ‘more giving millions and millions giving more’.
Social media and new electronic forms of giving provide enormous opportunities to engage more young people. Trustees need to ensure their charity is taking advantage of these opportunities. There is also potential for smaller charities, eg in the same area or working for the same cause, to run more joint fundraising campaigns, sharing the costs and the proceeds. The aim of the Better Asking Campaign is to provide more training for all those involved in running charities, not just fundraisers.
‘More giving millions’ is about engaging potential philanthropists better. Philanthropists spoke of wanting to do more than just writing a cheque; too often trustees and chief executives fail to engage sufficiently with them, thinking they can leave it to the fundraising department. The potential for more to give millions is there. By 2020 there will be two million more people over 65; the baby boomer generation, the wealthiest generation there has ever been, will be retiring and dying. Older people give more to charity than other age groups. If charities get better at involving them, we believe there is potential for almost doubling the amount of individual donations by 2020.
Other recommendations relevant to trustees include ensuring their charities get better at measuring, reporting and improving impact. The Funding Commission recommends an Increasing Impact Fund to help charities get better at doing this.
Trustees also need to be less risk-averse and develop a better understanding of the different options open to them for building up capital and financing their organisation’s activities. These options include borrowing, profit-share arrangements and trading, as well as grants and donations. The Funding Commission recommends a programme of financial capability programmes for chairs, treasurers, trustees and senior staff.
Trustees should also ensure their charities explore different ways of collaborating with others to increase impact for their beneficiaries, including considering whether merger may be the best option, rather than always trying to ensure the continuation of their charity.
Trustees of funding charities
Trusts and foundations hold £63bn assets which generate the income from which they give grants. Some of the larger trusts and foundations are pursuing social investment policies whereby they invest some of their capital in ways that promote their charitable objects, including lending to social investment agencies or direct to charities and investing in social impact bonds and other new financial mechanisms.
However, many simply delegate investment arrangements to an investment manager or look to one trustee with investment experience to lead in this area. The Funding Commission recommends that trusts and foundations regularly review whether they have the right range of skills and expertise for effective governance, including oversight of investment strategy. The Funding Commission also recommends that the Association of Charitable Foundations undertakes a survey of current practice and develops guidance on these issues for their members.
Richard Gutch is a trustee of the National Association for Voluntary and Community Action and Secretary of the Funding Commission
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