GIVING IS GREAT A handbook to help philanthropists make better decisions when supporting charities and social enterprises The The 1 When I first started taking a closer interest in supporting charities, I assumed that it would be pretty similar to finding good investments. By carrying out research I would soon be able to identify those doing the best job. How wrong I was! Whereas companies need to attract more customers in order to grow, charities just need to get better at raising money. There is often no link between the success of their work and the amount of money raised. However, this is beginning to change. The emerging discipline of Impact Measurement is slowly providing the tools and data to allow donors and charity managers to understand better what works best. Selecting good charities is one of the toughest tasks that I’ve encountered. But if that sounds rather negative, don’t be put off. Helping others is THE most rewarding activity available to us and I recommend it heartily. I hope that you find this guide helpful and that your giving provides you with as much pleasure as mine. Currently more than 75% of the voluntary income raised by charities in the UK accrues to just 2% of charities. That’s mainly because they can afford national marketing campaigns to create name awareness. I’m keen to see those thousands of smaller but more effective charities gain an increased share of the pot. John Spiers Chief Executive, The EQ Foundation 2 Contents 1. Decide what you really want to achieve ........................................... 4 2. Essential principles ................................................................................. 6 3. Maximising your impact ..........................................................................7 4. Some common misconceptions ....................................................... 8 5. Early intervention beats treating symptoms .................................11 6. Deciding who to support ......................................................................12 7. Measuring impact ...................................................................................14 8. Reporting on your impact ....................................................................15 9. What is a Theory of Change? ..............................................................16 10. How to donate .........................................................................................18 11. Making life easier for charities ...........................................................20 12. Investing rather than donating ..........................................................22 13. Make full use of tax incentives ...........................................................24 Appendix – Useful Resources ...................................................................26 The 3 Decide what you really want to achieve Each of us has a unique life view of what seems important. Here 1are some common feelings that may be driving your philanthropic ambitions together with some ideas of how to achieve them: I’m new to philanthropy, don’t I’d prefer to focus my donations have strong views and want to on causes close to home so that ease my way in as I gain more I can take a look at what they do experience. and feel a local connection. ݉ Take it slowly, meet as many ݉ Use the map search function at other donors as possible via givingisgreat.org/charity-search organisations like The Funding ݉ See if there is a Community Network. Foundation in your region and, ݉ Read up on how impact should if so, whether they publish their be measured (Sections 7 & 9) donations. Visit givingisgreat. plus other sources listed in the org/donors Appendix. ݉ Try to ensure your decisions are based on objective analysis as well as emotional reaction. I already have some special causes in mind which are important to me. ݉ It’s still worth doing some I want to achieve the maximum research to check their impact with my donations. effectiveness: ݉ Look at their page on ݉ Focus most of your funding at givingisgreat.org the developing world, looking ݉ See who else is supporting carefully at indicators of impact them. achieved. ݉ Check what impact they are ݉ Look at specific ideas achieving. from givewell.org and givingwhatyoucan.org ݉ Resist high profile disaster relief campaigns unless they are struggling to raise funds. 4 I’d like to get actively involved I’d like to get actively involved locally as a volunteer. as a trustee. ݉ Look for organisations that can ݉ First get acquainted with the use any special skills that you responsibilities of a trustee: have. ݉ The Appendix has a list of gov.uk/government/publications/ websites that help match the-essential-trustee-what-you- volunteers to causes. If that’s need-to-know-cc3 not applicable then consider ݉ Identify your specialist skills. charity shops or organisations providing comfort to others ݉ Then find out what the main such as those looking after issues are and if you can add lonely people. value. ݉ Be conscious that an organisation is doing you a favour to take you on as a volunteer, unless you have I’d prefer to commit money in a relevant specialist skills. way that provides me with the ݉ If you have business skills, look potential for a financial return for ways in which charities rather than as just a donation. might be able to generate sustainable income through ݉ Consider investing in social social enterprises. enterprises, being mindful that the risk of capital loss is very high. ݉ Spread your risk and be I want my giving to be clearly prepared to take a very long recognised. term view (probably 10 years). ݉ Unless you have investment ݉ Look for organisations that analysis skills, use a dedicated can offer naming rights (e.g. specialist fund manager. on facilities) or publish lists of major donors or run high profile donor events. You’ll need to make a large donation. The 5 Essential principles It’s natural to let your emotions influence who to support. There’s 2 nothing wrong with listening to your heart but you are more likely to feel satisfied with your donation if your brain is also in support. Whether you’re being targeted in the Who else has been street or by post, by a friend seeking 3 supporting them? sponsorship, or just want to select good causes yourself, there are some Check which major grant makers questions that you should always ask: have donated recently. If none, ask why? Sustainable organisations seek to generate recurring revenues from organisations that benefit from their interventions. e.g. central and local government Is there a plan to develop a Does the programme that 4 reliable source of funding in 1 this charity offers actually the future? make a difference? If not, the organisation will always be You’d be dismayed to know that most reliant on charitable donations. Be charities actually don’t know the willing to support the development answer and some do more harm than of sustainable income generating good. See Section 7 for more on how to activities. measure impact. How great is the need? Is the organisation well run? 5 2 Is the charity already well The world is full of great ideas; funded, so your donation won’t make executing them well is where most fall a difference. How pressing is the issue down. See Section 6 for more on how that they are trying to solve? to evaluate an organisation. If you love the cause but can see gaps in the team, consider how these could be filled. 6 Maximising your impact If you want your donations to achieve maximum impact then be 3 aware that: A pound in the developing Money works harder in 1 world usually buys much 3 sectors that don’t tug more impact than in the UK. everyone’s heart strings. For example in Africa: Examples include mental health and • Less than 50p provides a helping reoffenders. In contrast almost deworming treatment that will everyone feels sympathy for pets and materially improve a child’s quality children in need, so charities in those of life sectors find it easier to raise funds and • Less than £50 restores sight to a are already able to carry out their most blind person effective programmes. • £4,000 provides 800 mosquito nets which will probably save at least Prevention/early intervention one life and improve the quality of 4 programmes are effective, life for many others. overwhelmingly good value for money and chronically High profile disaster underfunded. 2 appeals can represent poor value compared with everyday It is better to build a fence at the top programmes. of a cliff than provide an ambulance to deal with the people who fall off. See In the grand scale of human deprivation Section 5 for more. disasters are relatively unimportant; on average, more than 15,000 children Maximise your impact by aged under 5 die every day (source: 5 giving regularly with no World Health Orgnisation). Most of restrictions on how the money is those deaths are preventable and there used. are a host of interventions available with proven results that just need This allows the charity to spend less additional funding. on fundraising and management to allocate funds where they are most If you are keen to support disaster needed. appeals, check fts.unocha.org to see which are in most need of funding. The 7 Some common misconceptions 4 Do overheads really matter? We all want to support organisations that are run efficiently but a simple measure of admin costs as a proportion of total spending will not tell you anything useful. Effective programmes need an infrastructure capable of overseeing them and evaluating impact. Many charities rely heavily on volunteers, which can help them to publish low cost ratios. However, this approach also has downsides: volunteers can be tricky to manage; they often lack the specialist skills needed to do the job well. Worked example A critical requirement for backing any charity is to have confidence in the Charity A spends 30% of its income quality of senior management and on overheads, leaving 70% for to see evidence of the effectiveness programmes. Charity B only spends of the programmes.