When looking at monetary support in isolation, the UK is in an even stronger position, ranked 2^nd globally. According to the report, 79% of us donate to a charity each month – a staggering statistic. In another report ‘UK Giving 2010’, (which is available to download for free on the DSC website) we see that (discounting the peak year of 2007/8) there seems to be a steady increase in the amount of money individuals are choosing to give to charity on a monthly basis: in 2008/9 the median amount given was £10, and the mean amount £30; in 2009/10, this rose to a median amount of £12, and a mean amount of £31. Indeed, individual giving accounted for just over 20% of all charitable income in 2009/10 (valuing sector income at £52bn), reaching a grand total of £10.6bn.

Despite the difficulties individuals and families face due to squeezed household budgets and government austerity, the generosity and compassion of the UK public seems thankfully robust. One thing is certain, charitable funding available from government and statutory sources is going to decline for charities in 2012. There are going to be fewer funds available and increased competition for them; unless charities change the way they operate they may struggle. Charities may need to think much more innovatively about the ways in which they deliver their services, and meet their funding needs. Joining up services and collaborating more, not only with those in the charity sector, but with partners in the public and private sectors too, could not only save money, but also lead to a better, integrated, service for those in need, should it be done in the appropriate way. Joining up also provides an opportunity for joint fundraising initiatives, or bidding opportunities. BIG are strongly encouraging this type of working by creating funding opportunities that demand this type of collaborative approach.

2012 is not going to be easy, but it may not be as bad as most think, it is very positive to see that, as individuals, the UK public are continuing to support causes they care about. Charities will need them to be even more generous this year to help them meet their objectives, and perhaps encourage the companies to be as generous as possible, too!

This belief does not seem to be shared amongst many in the sector, and it seems to be widely thought that if charities do not ask beneficiaries what they want, then charities are being paternalistic. With this, I fundamentally disagree, and recite the old adage of ‘If Henry Ford had asked people what they wanted, they would have said a faster horse; he gave them the car’. Responding to need is good, but I think it is the job of charities to interpret that need, and innovate services accordingly.

Need is important to charities and all others in the not-for-profit sector, as these organisations exist to do something for others: to provide a service, to make lives better. The value of the organisation or the activity or service can be judged on how well it has met need, and whether or not people think the service is valuable.

In this time of fierce competition charities are increasingly being asked to answer harder questions, and demonstrate with greater precision that they are meeting the needs of their beneficiary group(s) (this is a good thing). As a result, and due to the view that charities should offer directly what people feel they want or need, a question along these lines seems to constantly be asked of charities: ‘How have you consulted with your beneficiaries ’ (BIG Lottery Reaching Communities: Page 7). This, for me, is a strange and disruptive question with regards to service development, and one that we simply do not encounter in other areas of life. Great to ask what people think of existing services, but consultation before implementation seems odd. It creates unnecessary work for charities, forces beneficiaries to answer questions they shouldn’t have to, and potentially limits innovation.

To think of the charity sector as a high street retailer better illustrates this. There are multiple shops on the high street, yet not one of them has consulted with me about the type of clothes I like, how much I would be willing to pay for them and in what months I’d be likely to purchase them. Shops stay open because of supply and demand. If their product isn’t good enough the shop will close.

I wish the same could be said of charities. I believe that charities should offer services, and it should be for people to decide whether they want to use the service or not. This isn’t advocating a paternalistic ‘take it or leave it’ view of charity, but instead aiming to promote a culture of choice. Demonstrating robust beneficiary figures should be enough to show that a charity is needed and that people like what it is doing. If beneficiary figures decline, or remain low, then this is enough of an indication to show something isn’t right, and the charity needs to innovate services or cease to operate. Jumping through hoops to demonstrate need isn’t useful.

A good, strong ethos isn’t something that you can quantify easily, but by and large, most NFPs have it in abundance. They care primarily about their client group/beneficiaries, and genuinely want to make their lives better. This ethos makes NFPs the perfect partner to public services. Their bottom line is the outcomes they achieve for service users rather than profit, so it is in their interest to ensure that services run well.

After all, most funders will want to see what difference their money is making (see my previous blog post: To Fund Impact or Activity… that is the Question!), and Government will be no different. This is further reinforced by  Government in its acceptance of MP Chris White’s private member’s bill requiring councils, the NHS and other bodies to consider more than just cost when awarding contracts. What’s more, the European Parliament has also ‘thrown its weight behind Social Value in Public Services’. If services deteriorate as part of this opening up of public services, Government will most definitely be left with egg on its face.

It’s not all good news though. On the whole NFPs just do not have the same capacity to bid for Public Sector contracts as their competitors. Large private sector companies such as Serco and Capita (to name just two) have a huge amount of resource, and know what councils will be looking for. Yet they continually return mixed results, naturally favouring profit over quality. The not-for-profit sector needs to skill itself up, and quickly, to benefit from this great opportunity. 3SC, for example, is an innovative and groundbreaking organisation that supports NFPs, and bids for public sector contracts on their behalf. They allow NFPs to do what they do best, and take care of the bidding process for them.

Whilst this is a great short-term fix for all and a longer term fix for many smaller organisations, for medium to large size NFPs I would like to see increased levels of sharing amongst organisations with successful bidding teams. The not-for-profit sector has traditionally always done this well; there is a fantastic culture of sharing experience and skills. The not-for-profit sector is essentially one of openness and improvement; what’s good for one is normally good for all; the whole sector shares in each organisation’s success.

For me the ‘powerhouse’ of NFPs delivering public services is Turning Point, a multi-million pound organisation delivering social care across England and Wales, to great effect. Elsewhere, social enterprises are springing up all over the place, in a bid to deliver better public services. Evidence has shown that they are better for the public, and more appropriate and better designed for staff. Notably in health, Central Surrey Health where the first of such organisations are recording fantastic results, improving the lives of patients and delivering a cost-efficient service at the same time. Their work has been commended time and time again, but they lost out on a £500m contract to a health care provider, possibly due to a lack of bidding expertise. If Turning Point and the other success stories out there embarked upon a real knowledge-sharing endeavour, and perhaps began offering training to social enterprises, we could see a great deal more success in NFPs winning Public Service contracts.

The government is doing its bit; now it’s time for the sector to play its part, help each other out, and further the good work of NFPs. I am positive we can see a drastic improvement in public services.

Not much can be done about competition, sadly, there is just not enough money to go around all of the worthy causes that deserve it, funds really are being very tightly stretched. This has never been more than in this age of austerity – funders are having to be even more selective about who they award grants to, and are, more often that not, using the impact.

Funders such as Big rightfully want to see what difference their grants will make to charities, and more importantly, how the money will improve the lives of their beneficiaries. Indeed in a recent interview Peter Wanless, Chief Executive at Big Lottery Fund recently stated ‘We’re interested in impact, not activity…Lots of applications describe what people are going to do, but don’t describe the difference they are going to make’.

Whilst I agree with Mr Wanless’ overall sentiment, I do think this can be slightly problematic for charities. What about the difference they are already making? More often than not to win the funding battle, charities are forced to show what more they would do if they were awarded a grant to increase their number of beneficiaries. Often this means expanding certain areas of their work, and increasing their level of activity, when they may not have the capacity or the need to do so. If charities have the capacity to grow, and want to… great! However, if they are already operating at optimum capacity and benefiting the optimum amount of people they can, why should they be forced to grow to secure funding?

Rapid, and sometimes un-necessary expansion can be very problematic for the future, Big say they want to see ‘Projects with the ability to have a lasting impact’, again, this is great, and obviously a good intention to have when funding a project, but by asking charities to increase their level of activity lasting impact can be damaged over the long run. After the funding period (say 3 years) has lapsed, charities that have not been lucky enough to secure alternative income streams could be faced with the prospect of withdrawing support for those that need it, or being saddled with an un-funded range of services that could eventually lead them into financial disrepute.

In these uncertain economic times, I would rather see charities consolidate what they are doing, ensure the short-medium term future of their services, and plan for future expansion if and when appropriate. For this reason I would urge Big and other funders to be more positive towards funding current activity and the outcomes charities are already achieving, rather than urging them to do more. It would be refreshing for a charity to put forward an application to Big (or one of the other large grant making bodies), based on maintaining its current level of beneficiaries, rather than increasing them and having that application accepted. If there are any charities out there that have had such a success I’d love to hear from you!

Outcome measurement and demonstration is though, clearly a problematic area for charities. Regardless of whether funders are asking for outcomes or not, we would strongly encourage you to measure them. For all those hoping to improve their impact reporting, please do take a look a the following links (courtesy of New Philanthropy Capital (NPC)). I hope they help:

Principles of good impact reporting

Little Blue Book

www.well-beingmeasure.com

Full interview with Peter Wanless, Chief Executive, Big Lottery Fund

Lotteries are not the most effective way to give to charity, but the best run lotteries do retain a fantastic proportion of every pound (around 75 pence, with the remainder used to fund administrative costs, prizes and so on), but many lotteries, especially those run by third parties, are far less lucrative for charities. Running a successful lottery takes time, effort and a lot of resource, meaning that the majority of charities starting a new lottery operate at a loss for the first few months, and struggle to see any significant return on investment for the first few years of operating. Therefore, only charities in a very strong financial position are to take the lottery leap, others are forced to look at other options.

Whilst some third party lotteries are not very lucrative for charities at all, some provide a very reasonable return. On top of being fairly profitable third party lottery organisations absorb all of the risk which a charity would be faced with if they decided to ‘go it alone’. This makes the proposition of a third party lottery very attractive, especially for those in a less than perfect financial situation. In light of this, I was very disappointed to read about a new lottery product which was launched last week. The ‘Health Lottery’ was rightfully condemned by the Hospice Lotteries Association (HLA), as it poses a serious threat to the profitability of all other lotteries operating in the Health Sector. Moreover, positive publicity around the Health Lottery fails to recognise that only 20 pence of every pound will be passed on to charitable causes (the lowest legal requirement), with the other 80 pence disappearing into the unknown!

Lotteries have a key role in the charity sector, they encourage a different group of people to support charities, increasing giving and providing sustainability to a wide range of causes. They must though, be made as accessible and profitable to as many charities as possible.

Philanthropy comes in many different forms in the UK, with different people supporting different causes in a number of ways. Two well known ways of supporting a charity are individual giving, and corporate support. Individuals can raise money for charity by taking part in challenge events (such as cycle rides, or running events), holding an event such as a coffee morning or garden party in the community, or by donating a set amount of money each month to support a charity or charities. Companies do their bit too, either by providing charities with donations of old equipment (such as IT hardware or office furniture), by seconding staff as volunteers as part of their corporate responsibility programme, or by donating funds directly to support charities financially. Charitable trusts are less well known to the general public but account for just under £2billion of charitable giving each year. Funded by companies, wealthy individuals, or from funds left to a trust in memory of someone who has passed away, funds from trusts are a huge source of income for many charities. They directly support projects, activities and services, and some fund salaries, support is usually given over a period of years, providing sustainability for projects over the long term. Trusts usually support a wide range of charities, but have set preferences for their giving favouring, for example, health related or poverty related charities.

Empath UK could be described as a charitable trust, but we are significantly different to all others. We are funded by the public, and pass all donations on to a very broad range of charities. There are so many worthy charities in theUK, but it would be impossible for an individual to support a broad range of them. By bringing people together, we allow individuals to have a real, and significant impact on a number of charitable causes. We research and select valuable projects in seven different areas, including education, health and disability and emergencies and development and so on. We then work closely with our donors to see what matters to them most, and split donations among projects accordingly.

We are a new, innovative and effective way for individuals to give to charity, it would not be financially viable for individuals to support every charity that matters to them on their own; but by bringing like minded donors together we enable them to do just that, use one donation to support ever cause that matters to them.  We are a good solution for charities too. By brining donors together in this way we create sustainable income streams for charities, so vital for effective planning and project development. Moreover, we don’t ask for intensive reporting and want to leave charities with as much time as possible to do what they do best, if a charity runs a project we feel we should support, we make it as easy as possible for them to access funds.

We, at Empath UK feel that we fill a gap in the charity sector and offer what no one else can – a really innovative way for individuals to support a broad range of causes, whilst at the same time creating sustainable income streams for charities – we hope you agree!

For more information on how Empath UK works, or to donate, please visit our website www.empathuk.org, and do spread the word, the more people who donate to charity through us, the more successful this idea will be.

This blog will be updated regularly, and will be used to commentate and provide option on all things ‘not-for-profit’, so do watch this space! Any questions for us, tweet us @empathuk, or search for us on face book. We’ll look forward to hearing from you.

Thanks for reading!