9th April 2020
The impact of Covid-19 on the third sector will be enormous. Already charities are folding, and many have had to furlough a large percentage of their staff. This challenging and unpredictable time means that organisations and charities need to work more collaboratively than ever. There is great potential for a powerful and engaged response to the crisis, but this needs to be thoughtful and organised to achieve real impact. This will be difficult given a large percentage of the population are working from home. However, there has already been a fantastic response to the outbreak visible in the launch of new funding from various sources including National Emergencies Trust, London Community Response, The Arts Council and National Lottery Community Fund to name but a few. The importance now is to mobilise and deploy funds in an effective and efficient way. Once some normality has returned, we will then better understand the impact this funding has had. If the sector continues to be more data savvy and reports more transparently on the use of funds, will this improve the public’s trust rating in charities?
The UK is one of the most generous countries in the world for public giving behaviour and, although fewer people are donating, the level of financial support has remained the same (CAF UK Giving 2018 report). Yet, by the end of 2018, public trust in charities had fallen to its lowest since 2005 with a score of 5.5/10 (1). This is in part due to controversies surrounding large charities whose actions had been called into question and publicly ousted such as Kids Company, Oxfam and Age UK. However, the proportion of people who said their trust in charities had fallen over the past two years has grown. To continue to maintain and grow a charities support, having the trust of the public is hugely important. Reporting is an important part of how a charity communicates its successes and the positive impact of their projects with the public.
The Charity Commission conducted a study to investigate what encourages the public to donate to charities and what obstacles prevent donors supporting their causes. The key findings of the 2018 report, ‘Trust in Charities’, showed that when charities demonstrate the majority of donations reach their end cause directly with quantifiable results, trust and donations increase 1. Researchers found that “transparent about where money goes” was the most important factor, with an average score of 8.8 out of 10, followed by being “true to their values”, on 8.5. The report also found that people with less trust in charities donate less. Reporting can increase transparency in how a donor’s support has been used and therefore increase the level of trust in the charity’s operations. If a charity knows how to increase public trust, they can focus on these areas with the hope of increasing their donor support and financial reserves. These areas include highlighting the positive difference and impact the cause makes, and how the charity demonstrates and delivers their mission with ethical decision making. The Charity Commission research proves the more the public know about a charity, the more trust they have in them and the more likely they are to donate.
The Charity Commission study showed that donors like to understand that their money is going towards achieving the charity’s mission. There is a public expectation that charities should not abuse the good faith of donors and behave in a trustworthy way, using their donations to benefit society. Charities can gain trust from the public by publishing their spending, budgets and plans in annual reports. Donors want to see the positive effect of their generosity and greater transparency in data reporting from a charity can go a long way to show this.
Prism the Gift Fund, ‘Prism’, is a UK registered charity that administers the giving of groups, individuals and foundations making significant to charities around the world. Prism had income of £45million and distributed £32million to charities at the end of June 2019 and understand the imperative for transparency and accountability when administering grants in the UK and internationally.
Charity Commission findings of what makes a charity more trusted in the eyes of the public.
The importance of knowing the plans, spending and impact of our grant giving cannot be underestimated. The group giving Prism facilities is via structures called ‘Collective Funds’ that enable groups of donors to tax effectively raise money for a cause. At Prism, our due diligence and grant administration process is robust. We collect annual reports from all of our Collective Funds, ensuring our team and trustees are fully informed on their spending and progress. As a Collective Fund under the auspices of Prism, it allows these charitable groups to make significant savings on administrative costs, focusing on fundraising so they can deliver their project services and programmes to where they are needed most. This in turn, ensures more money is going towards the group’s mission and donors supporting their cause are assured their donations are being maximised for impact.
Prism’s mission is to increase the flow of funds into the sector. More donations can deliver an ever-increasing positive impact on society, but this has to be delivered in a rigorous and diligent way. Public scrutiny can be beneficial to charities to encourage them to be more thoughtful with how they disperse and utilise donations. For example, one of our Collective Funds, ‘Action For Education’, outline their classroom impact in this figure below.
Action For Education 2019 Annual Report
The role of the media can be compelling in how charities are perceived and trusted by the public. Today, with increased media coverage and access, charities can use these powerful engagement tools, such as social media, to keep the public up to date on their activities. As per the Charity Commission’s report: the more the public know the greater their trust and so the increased likelihood of them making donations. Management Today discussed how charities can engage young people who have a shorter attention span and less lifetime loyalty to a charity. In 2019, Millennials were the largest donor cohort in the UK, gifting £2.7 billion. Compared to older generations, Millennials and Gen Z find information about charities through social media and prefer storytelling narratives.
Worldwide Tribe 2019 Annual Report
Prism’s Collective Fund ‘Worldwide Tribe’ have engaged with this trend and predominantly uses social media to create videos and podcasts to educate its audience with refugee stories. 18-24-year olds have the most trust in charities and as future philanthropist’s, it is important to harness this trust and use it as an asset to continue to grow their support.
The digital revolution has created conscious consumers, who can now publicly hold to account the miscellaneous actions of businesses and charities. Social media is an instant and engaging way to report a charity’s activity. At Prism, we regularly post blogs about our work, and use Twitter and Linked In to promote the amazing work of our Collective Fund groups and wider philanthropy conversations.
So, what do the public want to know? Donors want the information about the charity’s achievements and impact of the issues they are trying to address. When charity reports include explanations about internal decision making it involves their donors and the public. Social media can make this information available in a quick and accessible way. Reporting is not only helpful for charities to gain the trust of the public and increase donations, but it is also a helpful tool to monitor and measure their continued impact and clearly see which initiatives are working.
As we become more data driven as a society, there is a greater opportunity for transparency, trust and charitable giving. However, reporting requirements can be quite burdensome for some charitable institutions and so, as grant givers, donors need to be aware of the pressure they may be putting on charities. Some donors don’t see the value of covering operational costs with donations and so restrict funds to particular programmes, and yet, without core costs being funded, groups can’t deliver their programmes. With new sharing platforms, such as 360Giving, funders have the opportunity to share their grant data with other funders to maximise the impact of grants with a more integrated and collaborative funding approach.
Given the enormous funding burden on the sector, it is imperative that funders work together to ensure no sectors are underfunded or left behind during coronavirus. Charities will need to be adaptable, responsive and work hard to keep up with beneficiary demands in a new quarantined environment. Whilst at the same time keeping up with their monitoring and reporting to assess their overall impact. It may well be traditional reporting methods aren’t useful in this time of crisis. With annual reports being produced so long after an organisations programme delivery, this may be an opportunity to produce innovative reporting models that keep donors and funders up to date with projects on a more frequent basis. At Prism, we will continue to respond in a swift and flexible manner to our Donor Advised Fund and Collective Fund clients with our continued mission to increase the flow of funds into the sector.