CHARITY donors are increasingly regarding their giving as they would a stock market investment. Not only do they want to spread a single donation across a portfolio of effective charities, but they also see their gift as an investment in social change and expect regular reports of performance and achievement.
Knowing which charities to invest in, though, is less easy than picking shares. Existing voluntary sector league tables concentrate more on input, money raised and spent, than on the outputs that make a real difference to individual lives and to communities. And with 190,000 organisations on the Charity Commission register, deciding how to choose the right one can be both bewildering and time consuming.
The Charities Aid Foundation (CAF) thinks it has cracked this problem with the launch of two themed charity funds, which invest in a portfolio of voluntary sector organisations, rather like a unit trust invests in a portfolio of shares.
The Fulfilling Older Lives Fund aims to support active, healthy and independent lives for more older people. Its aim is to channel donations to charities dedicated to reducing the kinds of inequality which mean that the poorest tenth of the population in the UK today can expect to live almost ten years less than the richest tenth.
At the other end of the age spectrum, the Engaging Young Lives Fund supports charities that reach out to children and young people.
Donors to the fund, who must give a minimum of £500, are kept informed about the impact that their money makes.Stephen Ainger, chief executive of CAF, says the funds are a world first. “What we are trying to do is to help giving become a consumer product like anything else. We want to stop people who want to give from only doing so through the guilty feeling they get when an appeal envelope containing a pen drops through their letter box,” he says.
“We hope the funds will lead donor behaviour and at the same time give donors confidence that their gifts will be well spent.”
While CAF is responsible for managing the funds and distributing grants to the charities, it has handed over responsibility for researching the beneficiaries to New Philanthropy Capital (NPC), a charity that advises donors on how to give more effectively in much the same way that a stockbroker advises clients on their investments.
Jai Mukherjee, of NPC, says: “If a giver wants to support one cause, they probably won’t have access to the information they would need to decide which charity to support.
“The guarantee here is that the charities in these two funds have been allocated by an organisation that puts in two experts for several months to research them.”
In selecting seven charities for each fund, NPC has attempted to choose a broad range of organisations, each doing different types of work, rather than simply go for the top ten charities in each field.
“With most issues the route causes are very complex and no single charity has the answer,” says Mukherjee. “So we have a balanced portfolio, including some charities that are trying to tackle short-term problems and others that are trying to effect long-term change.
“The term of awards is agreed with charities in advance. Multiple commitment to charities has to go hand in hand with results from them. We hope that this approach helps the charities to improve, but that doesn’t mean that we will move away the second results are bad.”
NPC’s analyses take an unusually relaxed attitude towards administrative costs. Charities are often condemned for having inflated overheads, but NPC believes that sometimes it makes sense to increase this type of spending to build capacity. “For some charities, the most effective way of spending money is to employ more administrators so that their frontline staff can be freed up from admin and so do the job they were hired to do.”
If the funds are a success — and so far the two have attracted donations of £40,000 since December — CAF hopes to launch others, benefiting other specialist causes.
Ainger explains: “As things develop, we would increasingly seek other potential bodies to do the research as well as NPC. There could, for example, be a Royal Zoological Society fund for investing in endangered species.”
CHARITIES SUPPORTED BY THE ENGAGING YOUNG LIVES FUND
80:20 — works to break down divisions and prejudices between young people in Northern Ireland
Chance UK — pairs adult mentors with 5 to 11 year-olds at risk of offending
Circles Network — helps disabled children who lack opportunities to socialise with others
Forward Thinking — helps young Muslims to address the concerns that are making them feel alienated
Family Service Unit Scotland — works with marginalised children and families
Merseyside Access to Play (MAP) — enables disabled children to take part in out-of-school activities
The Place2Be — helps troubled primary school children.
CHARITIES SUPPORTED BY THE FULFILLING OLDER LIVES FUND
Action on Elder Abuse — helps to tackle the abuse over over 500,000 older people each year
Age Concern Swansea — provides practical advice and a social network for older people
Catholic Welfare Societies — provides everyday support to older people who are at risk of becoming housebound
Magic Me — gets people of different ages and backgrounds working together
Older People’s Advocacy Alliance — helps older people to get the housing, support and social services they need
RSVP — recruits, trains and manages older volunteers across the UK
Well & Wise — helps to get more older people in London living active and healthy lives.
