Phi Newsletter – February 2017

Welcome to the February 2017 issue of the Factary Phi Newsletter.

Major Giving News

Steve Morgan donates £200m in shares to personal charity

The founder and Chairman of house building company Redrow has chosen to donate 42 million or 11.36% of his company shares to his personal foundation.

Its administrator, Jane Harris said ‘Steve Morgan’s incredible generosity will mean a huge and profound step-change for The Morgan Foundation’.

‘Our ethos is based on making a difference and Steve’s gift of over £200m means we will be able to help thousands of more people in need’.

His foundation supports children and vulnerable families in particular, and since its formation in 2001, it has reportedly committed £35m to causes in North Shropshire, West Cheshire, North Wales and Merseyside.

Business couple pledge £1m to new outpatient centre

Andrew and Christina Brownsword have pledged to match £1m worth of donations for the Forever Friends Appeal’s new ‘RNHRD and Therapies Centre’ Campaign at the Royal United Hospital.

The new centre, which has a campaign funding target of £2m, has been described as ‘a purpose-built outpatient facility which will provide treatment, care and education for patients to recover from episodes of illness or injury, or to manage their long-term condition.’

Mr Brownsword added that he hoped their funding challenge would ensure that ‘every pound the public donates is matched with another pound from us to help the appeal reach its target’.

Next section: Report

Report: ‘Charity Today 2017’

This month we have included our summary of several chapters of the Charity Today 2017 report, conducted by Acevo, Charity Comms, the Institute of Fundraising and CAF.

The report is concerned with the sector’s place in daily society and the recent and future challenges faced by charities.

Key facts and figures

  • In 2016, some 83% of people in the UK have made use of charity services, with eight out of ten people agreeing that charities play a very important role in their local community
  • There are over 160,000 registered charities in England and Wales, with many, many more informal charity groups
  • The sector’s overall income stands at approximately £43.8bn, and over £9.6bn has been given in donations by the British public in 2015.
  • The charity sector spends £1,578 every second, or £136.4m a day on charitable activities

The Big Issues

The last 18 months have been a tumultuous period for the charity sector. The report cites the collapse of Kids Company and reports of unacceptable fundraising practises as particularly damaging examples, with establishment of new legislation and a new fundraising regulator as a result.

In the face of these issues, there has been an erosion of public confidence which underpins the very survival and effectiveness of charities.

The Size and Scope of the UK Charity Sector

The importance of the charity and social sector for society cannot be underestimated. The sector is also incredibly diverse, employing some 827,000 people. For perspective, this is more than two and half times the number employed by Tesco and over half the total number of people who work for the NHS.

The emergence of £100m+ income charities

During the year of 2013/14 there was a notable increase in the number of charitable organisations with an annual income of over £100m, rising from 33 organisations to 40. While they make up only 0.2% of all charities in terms of number, they account for a significant 18.4% of the sectors income as a whole.

Smaller charities are more likely to be financially volatile

According to the research, smaller charities do not fare as well as their larger counterparts in terms of income stability. The latest data demonstrated this, with around a third of all charities with an annual income of less than £1m reporting that they have no reserves to fall back on, making them particularly vulnerable.

It is thought that this has not occurred as a result of bad management, but rather due to the fact that charities are operating during a period of previously unheard of financial constraint, coupled with an unprecedented public demand for their services.

Contribution to the economy

According to the report’s analysis, more than £1,578 is spent every second on charitable services in England and Wales. This is equivalent to charities spending £136.4m per day on improving lives and supporting communities

People’s goodwill and generosity remains the lifeblood of the sector

Consistent with the CAF World Giving Index, Britain is considered to be one the most generous countries in Europe and consistently one of the most generous on Earth. In Britain, for every £1 that is invested in fundraising activity, charities on average receive £4 in donations.

During 2014/15, 14.2m people in the UK (equivalent to 27% of the population) were reported to have volunteered at least once in the last month. Equally, charity income from individuals also remained as the largest source of income for the sector (amounting to £19.4bn in 2013/14), a figure that continues to grow.

Although the longer term trend is downwards, 2013/14 saw a rise in the income of the sector as a whole, largely due to the increase in support from individual donors. Government grants to the sector are at £2.8bn. This represents a level of funding that is at less than half of what is was 10 years ago, but it has not declined any further. Most of the recent rise in government grants and contracts has apparently been accounted for by larger charities.

For charities, the external environment is forecast to become even more inhospitable

While it has been a challenging period for UK charities, with many questioning their role in society and how they go about campaigning in support of their beneficiaries, it should be noted that this is not a problem affecting the UK alone.

The sector on a global level has begun to face a greater degree of scepticism from governments, however there is little evidence to suggest these questions are directly translating into a falling level of support, whether from volunteers or from donations.

Indeed, the evidence suggests that even despite these questions over charities, the level of public generosity has remained as strong as ever.

Some of the sector’s more specific issues include:

The public services challenge

With public services under increasing pressure to meet the demand for their services, voluntary organisations and volunteering must be part of solution.

Charities provide many traditional services under contract from local and national government. Unfortunately however, the private sector is far larger and in some cases directly competes against charities in this respect. Attempting to reform how the government works with, and buys and funds services from charities is considered to be an important and ongoing issue.

The digital challenge

Just as any other sector might ask how it can continue to be relevant to the next generation, so too should charities. The report encourages charities to ask whether or not their work and volunteering as we know it is as relevant as it could be to a generation brought up in the digital age.

Charities must endeavour to remain efficient in a world where people buy, sell talk and meet in an online environment. With this in mind however, they must also recognise that a charity, regardless of its size, is not the same as a high-street supermarket or bank.

The sustainability challenge

There has been an increasing demand for voluntary services in recent times coupled with what the report describes as ‘unrelenting pressure’ to increase charities service delivery without an appropriate increase in funding. It is thought that reductions in income from statutory grants and contracts is likely to continue, which will in turn have a disproportionate effect on smaller and medium sized charities.

This challenge is compounded further by the fact that charities must also comply with tighter regulations and must make sure they act in line with the high expectations the public has of them. In some cases, this is likely to mean making changes to the way they approach fundraising and donor engagement, which in the short term could certainly have a negative impact on their income.

To combat financial shocks and create additional income streams, more charities are choosing to diversify their income streams and to also introduce trading arms, or provide goods and services to help them fund their activities.

Moving away from traditional models

Interestingly, there are now a variety of different forms of organisations who are working to improve the lives of their beneficiaries, with organisations that are legally constituted as charities no longer being the sole purveyors of public benefit. Existing charities are also moving away from the traditional, purely donation-driven model towards trading or providing goods and services.

Indeed, since 2003/4 this type of ‘earned income’ has become a more important part of charitable income than donations, with it currently making up 55% of the sector’s income.

The rise of social enterprise

A broad term, social enterprise is generally used to define the territory between charities and traditional private businesses. Broadly, such organisations can be described as those which carry out commercial activities but also deliver a public benefit without being a registered charity.

While accurately estimating their scope is difficult, the best data has come from the government’s Small Business Survey conducted in 2012, according to the report. Its research found 70,000 social enterprises across the country with a ‘gross value added’ of £18.5bn. These organisations were defined as self-identifying social enterprises which received more than a quarter of their income from trading and paid out less than half of their profits to owners or shareholders.

Since the date of the survey it is thought that this number has undeniably increased, with 35% of social enterprises surveyed in 2015 being less than three years old.

Buy social

Whilst volunteering was once considered to be the only real alternative to making cash donations to charity, both charities and social enterprises are increasingly beginning to focus on commercial activities to secure more funding. In practical terms, this has meant allowing individuals to show their support for their chosen charities through their own purchasing.

In 2013/14, charities received roughly £10bn in funding from the public through their own trading activities. The point is also made that this figure is in addition to the income of tens of thousands of social enterprises across the country.

Clickhere for a full version of the report.

Next section: Phi Database Update

Phi in Numbers: February 2017

During the course of this month, 5,531 new records of donations have been uploaded onto the Phi database worth in excess of £200m.

This brings us to a total of 724,693 records of donations in Phi overall, with the latest upload containing donations from several Trusts & Foundations made to a variety of UK universities and charities. Some examples of grant recipients include Age UK, Homestart, Mind, Mencap, The Children’s Society, The Two Blades Foundation and Women’s Aid amongst others.

For this month’s edition of our Database Update, we thought it might be interesting to survey the latest data to have been uploaded onto the database, which consists of over 5,000 new records made to a variety of different activity types. We have included a breakdown of these donations according to their activity type, featured below.

As the chart above demonstrates, Education/Training is the most widely represented activity type with a total of 2,482 records, followed by Welfare and Religious Activities. The largest single donation to have been uploaded in this batch is a £25m grant made by the Gatsby Charitable Foundation to University College London.

As Education/Training contains both the highest number of donations overall and several of the largest single donations in this month’s upload as mentioned above, it is perhaps surprising that it does not come in as the activity type with the largest average donation size (£180,922), overall.

Instead the International Development activity type ranks highest in this respect, with 53 records representing an average donation size of £511,780. This is followed by Arts/Culture (£250,256), with Education/Training, Development/Housing/Employment (£114,702) and the Mental Health activity type (£67,000) representing the top five.

Next section: Profile

Profile: The Golden Bottle Trust

The trust was formed in 1985 by the Partners of C. Hoare & Co. The family owned private bank established in 1672.

The trust takes its name from the sign of the Golden Bottle, which in the days before street numbering was the location where the bank’s founder, Richard Hoare, originally began trading during the 17th century.

The trust reportedly supports a range of causes in areas including the Arts, Education, Health, Environmental Sustainability and Social Investment. In terms of its funding, the Partners of the bank donate a portion of its profits both to support charities during that year and to create a reserve to support future giving. The Trustees also commit 25% of its funding to social investments.

Though the trust was established over thirty years previously, several of its founders continue to work for and hold senior positions with C. Hoare & Co. These individuals are Henry Hoare, Sir David Hoare and Richard Hoare OBE.

For the financial year ending the 27th July 2016 the trust reported an income of £1,665,934 and an expenditure of £1,621,095.

Factary Phi holds 91 records of donations made to various organisations since 2006. According to Phi, the largest proportion of these donations have been made to causes associated with Arts/Culture (32), Education/Training (10), Heritage (9), Environment (8), Religious Activities (7), International Development (5), Children/Youth and Animals (4), Dev/Housing/Employment and Health (3) and finally Disability, Mental Health, General Charitable Purposes, Rights/Law/Conflict and Welfare (1).

The Trustees

Henry Hoare has worked for C. Hoare & Co for almost his entire career. He joined the company shortly after graduating from Cambridge in 1953 and he was subsequently made a Partner in 1959. He is currently a senior Partner with the firm and he was formerly company Chairman from 1988 to 2001. He is the owner of the Stourhead Western Estate and he also has an interest in landed estate management and forestry.

Sir David Hoare joined the company in 1959. Before this, he completed his national service where he was commissioned as an officer. Prior to joining the family business, he also travelled for several years where he gained experience working in agricultural sector of New Zealand and Australia, and he was also formerly a banker in South Africa. He is a Partner with the company where he has also formerly company Chairman, deputy Chairman and the firm’s Managing Partner.

Richard Hoare OBE served in the Honourable Artillery Company after finishing his education. He then joined C. Hoare & Co and was appointed a Managing Partner in 1969. He has also worked for the Bulldog Trust and Bulldog Holdings Ltd and has been awarded an OBE for his services to philanthropy.

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