Charities need to keep their donors engaged at all times, of course, but this is an especially pressing concern during periods of economic and political turbulence.
Three years on since the Referendum vote, the question of what happens after we leave the EU still looms large.
In this climate, what concerns are donors facing and how are they reacting to the uncertainty? Moreover, has giving shifted in response to these changes?
In this piece CAF’s Private Client Manager Frank Page and Lead Advisory Manager James Moon provide their expertise on the issues that are affecting philanthropy clients, and list tips to help charities deal with potential hurdles.
Has Brexit formed a big part of recent discussions with clients?
Page: Yes, for a number of reasons.
The vast majority of our clients partner with us for a prolonged period of time (over 10 years) and as such, economic shocks such as Brexit have long-term implications for the performance of their investments, both in the UK and globally.
The potential for regulatory changes also worries clients and cross border flows of donations are likely to be impacted. Philanthropists who hold international assets and whose lifestyles are global face extra pressure.
Clients are also acutely aware of the loss of EU funding to more deprived areas of the UK. This has spurred on a trend of high net worth (HNW) donors giving to more local causes.
Moon’s tip: There are strong local movements taking shape across the UK, including place-based giving. Charities that may typically see themselves as too small or too local could benefit from this growing trend if they get their case for support right. At the same time there are a range of place-based funders and organisations, from well-established community foundations to newer local giving schemes. Charities must make sure that they establish and maintain relationships with these introducers and intermediaries.
Are clients worried about their wealth during this economically turbulent time?
Page: The economic climate definitely has an impact on donors, especially high net-worth and ultra- high net-worth individuals (HNW/UHNW). They can feel like they have less money to give, even in situations where their wealth hasn’t been dramatically affected.
We’ve seen over the years that the amount given to charity has remained relatively stable. Having said that these are unique times and the response is yet to be fully assessed.
We know that charitable giving is an important dimension of an individual’s or family’s wealth, so at the moment it’s unclear how the climate will impact it.
Moon’s tip: This highlights the importance of keeping your current donors as engaged as possible. There is a growing trend of donors engaging with charities beyond giving; as such charities should consider whether their current cultivation plans are appropriate in order to maximise the engagement of that donor. An example could be to focus on family philanthropy, which is recognised as a powerful engagement tool. If economic turbulence is making a client reconsider their funding altogether, engage with them on cost-effective strategies so that they can give regularly whilst still having a significant impact on their chosen area.
Are your clients looking to engage with charities beyond financial giving?
Page: Certainly among our clients, there has definitely been an increase in the number of them looking to offer more than financial support.
While they’re all very busy people, some others who may have retired want to help the charities they support in a more in-depth manner; whether that’s becoming a trustee, volunteering, or providing free consultancy.
Moon’s tip: Make sure to share volunteering opportunities at your organisation. And try to be flexible with your options. Also, be willing to share information; high net worth individuals, especially those who are retired, will take time to visit your organisation and do research into your charity. That’s one of the ways you can build a long-lasting relationship with those individuals. And depending on their skills, they can help with areas such as finances, corporate partnerships, etc. They could even open doors to wealth managers, solicitors and accountants, who will be advising other high net worth individuals.
Have you found clients responding to the need created by the current economic climate?
Page: Unfortunately, the economic climate has helped create the situation where many people need to use services like food banks and the decline in government funding has brought issues into visibility.
Clients feel the need to respond and we’ve observed an increase in clients donating to more local causes. In particular clients have been looking into splitting their charitable money more strategically into ‘pots’, with separate pots for different causes or geographical areas.
Moon’s tip: Again, we are seeing the importance of local giving and a response to need. This could particularly benefit causes that have a very clear or single focus. The example above of food banks is a great example, as donors are not left in any doubt what this type of organisation does. Charities, particularly small ones, are often quite humble about what they are doing; but this is often to their detriment, particularly if there are donors that want to support their specific cause.
Written by Frank Page, Private Client Manager and James Moon, Lead Advisory Manager, CAF