Phi Newsletter: October 2013

Welcome to the October 2013 issue of the Factary Phi Newsletter.

Major Giving News

Israeli billionaire to make £25m donation

After recently receiving a substantial gift of £10m from business man and philanthropist Nathan Kirsch, London Business School is now set to receive a further £25m donation from Israeli Billionaire Idan Ofer.

His donation will be used to re-furnish proposed new campus buildings in Old Marylebone Town Hall in London, which the school recently acquired in 2012. The work is set to begin in November, and the two buildings to be developed will then be renamed the Sammy Ofer Centre in honour of his father, who was also a notable philanthropist.

Mr Ofer, who graduated with an MBA from the school in the 1980’s said that the project is ‘an important step towards ensuring the school can continue to grow and prosper…creating new generations of leaders who can address the challenges of business and wider society’.

He also added that ‘One of the goals of the Idan and Batia Ofer Foundation is to ensure the next generation of Israeli entrepreneurs is equipped to cope with the challenges of globalisation. London Business School is at the forefront of helping to meet these challenges.’

LBS dean Sir Andrew Likierman described the gift as “in a completely different league” from any previous donation to the school, adding that “This is a game-changing event,”

Rhodes Trust to receive £25m

The McCall MacBain Foundation is set to commit a staggering £75m towards the expansion of the Rhodes Trust’s scholarship programme, which is itself considered to be the most prestigious international graduate scholarship programme in the world.

The donation will consist of a £25 million grant, a £25 million challenge and match donation to encourage additional fundraising and a further £25 million to be used for the expansion of the trust.

Billionaire businessman John MacBain, who is the founder of the McCall MacBain Foundation said that: ’Receiving the Rhodes Scholarship and attending Oxford were among the highlights of my life.

‘These Scholarships have been helping develop future leaders for over a century. With the world facing ever-increasing challenges, the need to help develop leadership skills is more important than ever. I hope that this gift will help secure them for another hundred years.’

Since its foundation in 1903, the Rhodes Trust has to date made it possible for nearly 8,000 young leaders from around world to come and study at the University of Oxford. Previous scholarship holders include Bill Clinton, six Commonwealth Prime Ministers and three Nobel Prize winners.

Animal charity nets £100,000 donation

Pets at Home are set to donate £100,000 to animal charity Dogs for the Disabled as part of a recent fundraising effort by staff in stores across the UK.

Steve Billington, Fundraising Director for Dogs for the Disabled, said ‘We’re hugely grateful for the fundraising efforts of all the Pets at Home staff involved. It costs nearly £20,000 to fund an Assistance Dog for its whole working life so this fantastic sum will truly transform the lives of adults or children with a disability and families with a child with autism’.

Colin Archibald, the company’s Central Regional Director said ‘We can’t thank our customers enough for their generosity. £100,000 is a staggering amount of money to raise and will give some much needed support for Dogs for the Disabled in their 25th anniversary year. My colleagues went above and beyond the call of duty and had an amazing amount of fun raising the funds through various activities in the last six months. I have been delighted with the response from all our customers and colleagues who together have made a real difference to the charity with this money raised’.

Next section: Report

Report: Applying behavioural insights to charitable giving

For this month’s edition of our report section, we have included our summary of a recent report on applying behavioural insights to fundraising techniques in order to explore new and innovative ways of charitable giving.

The full report, which is entitled ‘Applying behavioural insights to charitable giving’ is supported by the Charities Aid Foundation and was written by Michael Sanders, a member of the Cabinet Office’s Behavioural Insights Team (BIT), and a former BIT Research Fellow from the University of Bristol.

Introduction

The research paper is divided into two sections. The first of which identifies four behavioural insights that are found in the academic literature on giving and altruism and then discusses how they might be used to promote more effective charitable giving.

In its second section, the report details the results of five randomised controlled trials conducted by its behavioural insights team, and it then considers how effective the application of these insights can be in practise.

Part 1: Four Behavioural Insights

The four behavioural insights that are discussed in this paper suggest that some relatively small variations in the way people are asked to donate, or to increase their regular donations, can make a substantial difference to the amounts of money donated to charity.

Below, these insights are discussed in further detail

Insight one: making it easy

While it may seem obvious, it is noted in the report that one of the best possible ways to encourage charitable giving is to make it as easy as possible. This could include:

  • Giving people the option to increase their future payments to prevent donations being eroded by inflation
  • In payroll giving schemes, setting defaults that automatically enrol new senior staff into the scheme (with a clear option to decline)
  • Using prompted choice to encourage people to become charitable donors

Insight two: attract attention

Making giving as attractive and rewarding to an individual as possible can be highly effective way of increasing charitable donation. This can include:

  • Attracting an individual’s attention, for example by using personalised messages
  • Rewarding the behaviour you seek to encourage, for example through matched funding schemes
  • Encouraging reciprocity with small gifts

Insight three: focus on the social

Donors will always be influenced by the actions of others. As such when giving to charity is increasingly seen as a social ‘norm’, people will become more likely to give. Focusing on the social aspect of giving may involve:

  • Using prominent individuals to send out strong social signals
  • Drawing on peer effects, by making acts of giving more visible to others within one’s social group
  • Establishing group norms around which subsequent donors ‘anchor’ their own gifts

Insight four: timing matters

Timing appeals for charitable donations can also really help increase the effect of donations, for example by:

  • Ensuring that charitable appeals are made at the moments when they are likely to be most effective
  • Understanding that people may be more willing to commit to future increases in donations than in equivalent sums today

Part 2: Five Behavioural Trials

Part 2 explores how the Behavioural Insights Team has worked with various organisations and charities to test these insights in practice through five randomised controlled trials.

Trial one: Encouraging commitments to future increases in giving

For many donors, the idea of making several donations over a fixed period can often be a more attractive prospect than simply making a one-off donation. Unfortunately however, inflation can water down these donations by more than 15% over the life of a typical donor. To counteract this, it makes sense for charities to encourage their donors to commit to future increases.

In this trial, 702 participants who were already existing donors were asked via email to increase their giving in this way. However, the way in which the information was presented in each message differed so that the best possible method for asking could be determined (groups were divided according to three different giving options available).

The results were interesting, as even though only around 3% of those asked decided to increase their donations, the donors who committed to give more year-on-year would ultimately donate around three times as much over their lifetime than those in the ‘one off’ group.

Trial two: Changing the default

The behavioural insights team next worked with the Home Retail Group and the Charities Trust to test the effect of changing the default of payroll giving schemes to include automatic escalation – thus making it easier for individuals to participate.

If this were to be instituted across all payroll giving schemes, it is estimated that an additional £3m could be raised for charities per year, with a further £40m raised if the technique is applied to direct debits as well as payroll giving schemes.

Trial three: Using peer effects to encourage giving

For this trial, the Behavioural Insights Team worked with HMRC employees to see if more people could be encouraged to give through the use of ‘peer effects’. Using this simple method, individuals were told about the charitable efforts of their colleagues, thus encouraging them give more.

Two different types of e-cards were sent out with messages from HMRC employees who give to charity, explaining why they do so and inviting their colleagues to join them. The first group received only messages from their colleagues, while the second received an identical message alongside a picture of the person as well.

The results were striking: including the picture of the existing donor with the message increased the number of people signing up from 2.9% to 6.4% – more than doubling sign up rates.

Trial four: Using personalisation and a small ‘thank you’ to encourage giving

The fourth test conducted by the Behavioural Insights Team involved testing the effect of small ‘thank you’ gift to encourage the charitable giving of Deutche Bank’s fundraising team.

The company’s existing fundraising scheme, which involved employees donating a single day of their salary to charity for one day of the year, was already considered very tax effective and was matched by the bank.

The morning of the trial, one group of employees either received a ‘Dear colleague’ thank you email from the CEO or a more personalised thank you message that addressed them by name. As well as this, a second group of people were also greeted either by poster advertisements for the campaign, or volunteers with flyers or sweets.

In total, around 5% of employees gave a day of their salary, and this increased to 11% when people were also given sweets. It is interesting to note that this had roughly the same effect as receiving a more personalised thank you message, where 12% of people in the group also chose to give a day of their salary. However, by far the most pleasing results came when both techniques were used at the same time, leading to a tripling of donation rates to 17%. Indeed, if all staff had received the personalised email and sweets, it is predicted that the bank could have raised more than £1 million.

Trial five: Using personalisation and a small ‘thank you’ to encourage giving

In the final trial conducted by the Team, methods were tested to see if more people could be encouraged to become involved in Legacy Giving when writing their will. The Government has also encouraged this, for instance, through the discounted inheritance tax rate available for people who leave more than 10% of their estate to a good cause.

In this trial, the team worked with Co-Operative Legal Services and Remember a Charity to see if different social messages would work more effectively with others. When customers phoned in to book a will-writing appointment, will-writers were grouped into two teams, and the results of the test were compared with data from before the trial, during which, individuals were not asked specifically whether they wanted to donate money to charity in their will (this is the Baseline Group).

The first group of individuals were simply asked: ‘would you like to leave any money to charity in your will?’(‘plain ask’ question), while the second were met with the statement: “many of our customers like to leave money to charity in their will. Are there any causes you’re passionate about?” (‘Social Norm’ question).

The results of these two questions were then compared against the baseline data from before the trial (named the Baseline Group).

In the original ‘Baseline’ Group, 4.9% of individuals chose to leave a gift to charity. In comparison, the ‘Plain Ask’ group featured 10.8% who chose to give, while the ‘Social Norm’ group contained, 15.4% who chose to donate, representing a substantial 200% increase compared to the baseline.

This clearly demonstrates the importance of exactly how and when individuals are asked for their donations, and indeed, donations from people in the final group were on average £3,300 larger.

Overall, there were 1,000 people in each treatment group and in total, the Social Norm group alone raised a total of £990,000 which represents an increase of £825,000 above the baseline. The Plain Ask and Social Norm groups also collectively raised almost £1m above the baseline.

Based on these results, the research clearly shows that prompting donors to give can be a highly effective way of maximising donations.

Clickhere for a full version of the report.

Next section: Phi Database Update

Phi in Numbers October 2013

During the course of this month we have uploaded 13,292 new records of donations onto the Factary Phi database, bringing us to a grand total of 455,111 searchable records.

The data in the latest upload has been taken from a number of different trusts and foundations, including Creative Scotland, The Arts Council of England, The Garfield Weston Foundation, The Henry Smith Foundation, The Scottish Arts Council and also the Wellcome Trust.

For this month’s edition of our Database Update, we have decided to compare individual donations from men (titled Mr) and women (titled Mrs, Ms) to various activity types across the database. Please note that in order to compare these donations more accurately, we have chosen to exclude any joint donations from both sexes. It should also be noted that the data used is based on its appearance in Phi, and as such it is not necessarily representative of the wider giving sector as a whole.

The database contains 76,487 donations from those titled Mr, and 35,385 from those titled Mrs or Ms. Below, we have included two charts showing the percentage split of donations from both groups into various activity types.

indiv-donations-mr-ms-mrs-comp

As is demonstrated above, donations to Education/Training are by far the most heavily represented activity type by both groups, with a slightly higher proportion of male donations going to Education, (83%) compared with 78% coming from women.

As this activity type holds the largest number of donations from both groups, we have also included a breakdown of those donations according to banding (where an amount for the donation was available).

donations-bands-mr-ms-mrs

As is demonstrated by the graph provided, the donation bandings are spread relatively evenly from both groups. Although interestingly, there is a slight spike in donations in the £50,000-£99,999 bracket from women, and a similar spike in the £1m+ bracket for men.

Next section: Profile

Profile: The Hobson Charity

According to the wishes of Sir Ronald Hobson, The Hobson Charity was established in 1985 with the intention of supporting charitable causes associated with social welfare and education in the UK.

Ronald and his business partner Donald Gosling made their names by jointly founding Central Car Parks (NCP) in 1948. Their company, which began with a relatively modest £200 investment in a bombsite in Holborn, central London, has now gone on to become one of the UK’s largest private car operators, with over 200,000 spaces across 700 different locations throughout the country.

After making their initial investment, Hobson and Gosling were able to successfully expand the company while Britain was still very much in a position of post-war redevelopment. The pair began buying more sites in central London, and later NCP also began managing sites on behalf of third parties and expanded further.

National Parking Corporation was then formed in 1986 as the holding company for NCP and its subsidiaries, including the roadside assistance firm Green Flag. The company continued to expand, and by the 1990’s NCP had become one of the largest and most successful private businesses in the UK. However this period was not entirely trouble free, as NCP narrowly avoided a scandal when it was accused of planting spies in rival car parking group Europarks. Fortunately however, NCP survived the controversy and Britain’s then biggest ever industrial espionage trial ended with the acquittal of NCP chief executive Gordon Layton.

By 1998, after a late abortion of the flotation of the business on the London Stock Exchange, NCP was bought by US-based property and travel services provider Cendant for £801m. Hobson, Gosling, and their family trusts who owned 72.5% of the National Parking Corporation, made £580m from its sale.

For the financial year ending 31st March 2012, the trust reported an income of £8,138,535 and an expenditure of £2,300,296. Factary Phi holds 233 records made between 2006 and 2012 worth a minimum of £8,863,047

From these, the highest single donation was made to the Outward Bound Trust for £1.3m and according to Phi, the largest number of donations have typically been made to causes associated with Education/Training (37) followed by Arts/Culture (35), Health (32), Children/Youth (31), Welfare (21), Heritage (18), Religious Activities (16), General Charitable Purposes (14), Development/Housing /Unemployment (11), Disability (9), Rights/Law/Conflict (4), Animals (3), Mental Health (2).

The Trustees

Rear Admiral Sir Donald Gosling

Rear Admiral Sir Donald Gosling helped found NCP alongside his business partner Sir Ronald and he also served as co-Chairman of the company for a number of years until his retirement in 1998. Prior to founding NCP, he served in the Royal Navy aboard the HMS Lander, a cruiser, during the Second World War. In 1993, he was appointed an honorary Captain of the Royal Navy Reserve and subsequently, he was then promoted to Commodore, honorary Rear Admiral of the Reserve and finally Vice-Admiral of the United Kingdom in 2012, an honorary position. Furthermore, he is also President of the White Ensign Association, a Trustee of the Saints and Sinners Trust and also his own Gosling Foundation.

Sir Ronald Hobson

Sir Ronald Hobson, also an ex-serviceman, collected £290m from the sale of NCP in 1998 and he currently has £12m stakes in several small property companies. He is a major supporter of the White Ensign Association and he too is a Trustee of the Gosling Foundation.

Lady Marina Hobson MBE

His wife, Lady Marina Hobson MBE is a Patron of both Mill Hill Preservation Society and the Royal Opera House.

Deborah Hobson

Their daughter, Deborah Hobson jointly runs Mote End Farm, a livery stable for racehorses that was originally developed by her parents.

Jennifer Richardson

Jennifer Richardson is a Director of Monkswell Consulting Ltd.

Next section: News

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