Helena Neave

Helena Neave

Private Client Advisor
Charities Aid Foundation

E: philanthropy@cafonline.org

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CAF Resilience Private Client webinar  8 July 2020

COVID-19 has shone a light on the lack of resilience across the charitable sector, as well as magnifying issues that already existed. However, a positive result of this pandemic is that it enables us to think about what kind of civil society we need, and how we can help charities to get there.

We hosted a discussion to focus on findings from our CAF Resilience programme, what lessons we can take from these findings to support the sector during this time, and what role philanthropy can play in helping charities to respond, reset, and rebuild in a more resilient manner.

We were joined by Anisha Chaudhuri (Senior Manager, CAF Advisory and Business Development), Beth Clarke (Programme Manager for CAF Resilience), and Cath Dovey (co-founder of the Beacon Collaborative) to explore this in more depth. Below is a summary of what was discussed.

CAF Resilience

CAF Resilience was launched with the aim of gathering data to better understand why there is not more resilience in the charitable sector, particularly among smaller organisations, and what can be done to improve this.

It was a two year pilot programme with a cohort of 10 small to medium sized charities (under £1 million). The programme provided financial support, strategic operational support, and advisory. Financial support meant that the cohort could step back from the day to day and think more deeply about what they were doing, and what they needed to do to better prepare for the future.

The cohort of charities mostly fared reasonably well during the pandemic, because for the past two years they have been refining their mission and paring their operations back to what will help them achieve that. When COVID-19 struck, these organisations were therefore well-placed to make important and difficult decisions about their operations precisely because they knew what they were ultimately trying to achieve and what was, and was not, important in getting there.

Unfortunately, many of the cohort who had spent time trying to diversify their funding streams into commercial areas, for example, have struggled to raise these funds to cover their operations. This is an ironic outcome as what would normally have been a positive development and a success in ‘normal’ times is now a problem that charities have to deal with.

Why are smaller charities not more resilient?

  1. Unable to invest in themselves

    Smaller charities often have very few staff at the top with the time to focus on their strategy and the bigger picture, and instead tend to be more focused on programme delivery. Often they don’t have sufficient funding to direct toward their infrastructure, not enough staff to ensure they follow their strategy and keep their governance up to scratch, and are not able to take a “step back” from their work to assess whether they are delivering the right balance of services, or whether it should be more targeted.  

    Smaller charities are keen to improve their reporting, but often don’t have the financial resources and systems to enable them to do this. With a lack of improved impact reporting, it is hard for such charities to assess how effective they are being at supporting their beneficiaries, and where improvements can be made to maximise this.

  2. Lack of income diversification

    Most of these size of organisations primarily rely on public generosity and grant funders for their income and are not well diversified. This creates two problems. The first is when a crisis like COVID-19 hits, both types of funding dry up; public donations because people have less money and opportunity to give and grant funds because those organisation may cease grantmaking to re-think their strategy. The second problem is that much of the funding from grants, and individuals is restricted to a specific programme or projects. The practical implication of this is that donors tend to care more about how an organisation spends its money, rather than whether it has achieved their goals or delivered for its beneficiaries. In some cases, the legitimate concerns that donors can have about whether organisations are keeping their costs as low as they should is understandable. However, the unintended consequence of this is that charities often lack infrastructure and don’t have enough money to invest in themselves for things such as reporting, governance, financial checks, and safeguarding.

  3. Minimal networks and partnerships

    It is important for small charities to be able to build up networks across the sector as they are usually best placed to work on the frontlines, and local areas may not be able to afford losing them. In terms of funding security, it is also important to develop established relationships with their funders in order to secure long-term funding.

However, because many small charities do not have time to think about their strategy and what they are trying to achieve, developing effective partnerships and networks is hard. Small charities are aware of the importance that partnerships can have. However, in order to be able to do this effectively, charities need to ensure that partners are aligned with their vision, strategy, finances and monitoring. Once they are able to do that, they can begin to develop strategic partnerships and networks based on a shared understanding.

What role can philanthropy play?

With an estimated £10 billion funding gap facing the UK’s charitable sector over the next 10 years, philanthropy is perhaps more needed now than it has been before. So, how can we ensure that philanthropy and donor behaviours are ‘reset’ and ‘rebuilt’ post-crisis, rather than simply responding in the same ways as we might previously have done?

One thing donors could consider doing differently is to fund new organisations or cause areas that may have been particularly badly hit. The majority of philanthropists want to focus on charities that they know well and have already supported in the past; helping them strengthen their operations to survive beyond the next two years. While it is important, and understandable, it may also be the case that those organisations are not the most in need, or do not support a beneficiary group that has been especially badly affected by the pandemic. In order to overcome increased levels of poverty and deprivation after the pandemic, it is equally important for funders to look beyond areas they may have supported in the past to ensure that their philanthropic capital really makes the most difference. Identifying where these needs are will require a lot more data, however some useful resources are included at the bottom of this article.

Donors who are particularly passionate about the survival and longevity of the charitable sector, and civil society more broadly for its own sake might also want to direct their support to smaller charities (annual turnover of <£1 million). Although these organisations make-up the majority of charitable organisations in the UK, they are also the most at risk of going under because they lack the brand-recognition and diversified funding streams of their larger peers.

Another idea that developed from the CAF resilience programme which is relevant now is that of the ‘thoughtful funder’. Irrespective of the organisations, or causes, that you fund, there are some universal principles which donors could consider adopting. These are qualities that charities say are hard to find amongst current funders but that they would like to see more of. These qualities are:

  • Being reflective and motivated about the charity’s work;
  • Being curious and willing to let the charities try new things and explore;
  • Being collaborative and listening to the charity and their needs, before coming with their own agenda;
  • Sharing the vision and purpose of the charity;
  • Being flexible and willing to let the charity start something and change along the way based on what is best, or most effective

 

What does the future hold?

A lot of the work that CAF has done so far has been responding directly to the crisis, and helping charities survive the immense cash flow shock that they were confronted with. We are now starting to shift our focus toward leveraging the lessons from CAF resilience, and how the sector more broadly is dealing with this crisis, to understand what characteristics enable organisations to adapt and thrive, and what giving mechanisms could promote this. To that end, we are about to launch a needs-based assessment to explore how the landscape has changed for civil society and what needs to be re-built. We hope to collaborate with other partner organisations working across the sector to validate our findings and build on those insights to inform future programmes. Please get in touch with us if you’d like to learn more or partner with us on CAF’s next programme.

Resources and further reading

Many charities have tried to adapt to the “new normal”, whether it be by changing how they deliver their programmes, or the types of conversations that they have with their funders. Unfortunately, it is clear that not all charities will survive this pandemic. Some organisations, which you can find at the end of this article, are beginning to conduct nationwide initiatives to try and identify which charities local areas cannot afford to loose.

 

If you have any questions or would like to find out more about CAF’s needs based assessment please contact your client manager, or our Private Client advisor, Helena.

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