Where is our sector going?

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This area of the site was written for very experienced trust fundraisers.

These are a few points about the UK trusts sector, if you have to do a PEST analysis for your strategy!

A few different drivers:

• Regarding the cost of living crisis, Third Sector reported in October 2022 that a minority of funders (including the National lottery Community Fund) were increasing their grant sizes in response to increased costs and pressure on services.
• On the same subject: the Association of Charitable Foundations is well networked with a lot of the biggest trusts and spends a lot of time talking about best practice and what’s new. The CEO of the ACF gave her view on the response to the cost of living crisis, saying: ‘Many grant-makers are adjusting the funding they have agreed, whether providing uplifts – some as much as 10 per cent – for rising energy bills or increased costs more generally. Others are easing the restrictions on how money already granted can be spent. Foundations are also looking to work together to co-ordinate responses and the ACF has supported those efforts through its Funders Collaborative Hub, which enables organisations to share information on grant-making activity or agree joint funding programmes, among other services.’
• The CEO of the ACF also said some trusts will experience falling income and/or asset values. But she says this follows several years of growth in endowment values. However, a huge rise in demand for funding was expected over the coming period. ‘As they look to the difficult winter months ahead, foundations are anticipating increased calls on their funding, with NCVO research suggesting demand will be up by 62 per cent. Already funders are seeing different types of demand as charities adjust to meet current needs. ‘While foundations are well-placed to get the money to where it is needed, it’s clear that only the government can act at the scale that is required.’
• She also urged charities to alert their funders if they anticipated financial problems: ‘[The trusts funding them] will certainly want to know and might be able to help.’
• Third Sector reported the crisis as one reason behind the limited numbers of new core costs funding streams (e.g., BBC Children in Need).
• As of 2022: Bill Bruty has made the point that, during the last economic crisis, trusts maintained a high level of giving because they felt called to act. This theme appears a bit in the recent ACF survey on responses to the pandemic.
• There may be more charities starting to fundraise from trusts for the first time, making it more competitive. There are anecdotal accounts of community fundraisers, for example, switching to trusts to try and shore up income at their charities. I did a small ring around of recruitment agencies the year before, which found that a lot of charities had been setting up new trusts posts.
• Over the longer term, the trusts sector has been growing and it appears it will continue to do so, with increased numbers of new trusts set up. This is against a backdrop of (1) the super rich (people who are in a position to set up foundations) are getting significantly wealthier; (2) more “self made” rich people than in previous eras; and (3) acknowledgement in some quarters that it’s actually incredibly difficult to “use up” stupendous amounts of wealth and a trust may offer one way. (Against the latter point – it’s not necessarily easy to do and can provoke fights with your family!)
• In 2021, Forbes magazine identified that 63 billionaires were resident in London alone, a growth of seven on 2020 and they were on average 37% richer. (Academic Beth Breeze’s analysis is that only 9% of the very rich are involved in philanthropy, perhaps demonstrating the truth of psychological research saying that people tend to get meaner as they get richer – but still, that’s a good sized starting group!)
• At the top, eight British billionaires have so far pledged through Bill Gates’ The Giving Pledge to give away at least half their fortunes. They often set up foundations and very few of them are yet operating at the level of giving 10s or 100s of millions in giving that they would need to be.
• Tom Hall, Managing Director of Global Philanthropy Services at UBS bank, also said in an October 2021 Bright Spot talk that there’s a significant increase in philanthropy coming. These people would be the people described in the footnote about David Callahan’s book: not risk averse, ambitious and data-led. It’s a long-term change, rather than something happening in the next few years. This is a major donor issue in the first instance, but it can lead to the founding for more trusts.
• There’s perhaps a trend in the sector over decades towards professionalisation by the funder (and in the States, there are plenty of stories about this leading to foundations being more prescriptiveness / wanting to own more of the decisions). When I started in the 90s, a lot of senior trusts staffers were ex-military people and there was more emphasis on capital and unrestricted funds, rather than funding of revenue projects. There are a lot more out-and-out “grants professionals” now. Regarding taking more ownership in the field: selecting specific projects is more prescriptive and there a few more trusts like Fairbairn, LankellyChase and Trust for London that have significantly tightened their criteria.
• On the back of that, there’s possibly a slight move towards a more interventionist, policy-led approach to Foundations, where, rather than reacting to an agenda defined in good part by applicants, the Foundations set the debate. The biggest foundations are much more like that in the States. If you read Trust and Foundation News, a more interventionist approach is getting discussed a bit. If you compare the way that the Lottery talked under Dawn Austwick compared to, say, her predecessor Peter Wanless, there’s more confidence that they know what’s right (e.g., on service user involvement) and are going to spread it.
• At the same time, there are a number of interventions that people have been hyping in the sector for over a decade, but that seem a bit stalled;
  • Social investment or loans, instead of grants
  • Venture philanthropy
  • (One or two successful COVID initiatives aside) partnerships between funders

If you look longer term at where impact measurement in our sector has gone, it significantly professionalised at around the time of contracts, there have been some good tools come in (like outcome stars, WEMBWS). Now, outcomes measurement might become more of a thing again: J-PAL in overseas development is ratcheting things up again in overseas development and the emergence of more data-driven rich philanthropists is creating a new (at present, small) demand. I’m not saying this will be an issue, but it might.