Is there a UK non-profit meltdown?
When philanthropy retreats; the sh*t hits the fan. It shouldn’t be that way.
It’s been a funny couple of weeks. There is a veritable swarming of butterflies in the colective tummy of the UK voluntary sector. In case you are wondering, this is not a ‘funders don’t understand us’ post (I’m not even sure if I’m ‘us’). The situation is far more nuanced than an us vs them dynamic can capture. What I’m going to say is that we are all swimming in the same messy, turbulent, but polluted pool, and it’s no good for any of us - or our society.
Are we in crisis?
We’ve all now seen many charities going under. We’re not really sure how many. We’ve also seen many funders closing their programmes temporarily - and some others closing down and spending out for good. Fundraising consultant and all-round funding sector guru Jo Jeffrey has been keeping an amazing list of funder statuses, and also gives an excellent summary of closures here (which sadly has only increased since). These funders are very significant - I’ve seen calculations in the region of £100m being withdrawn temporarily from the sector. Most say they are overwhelmed and need to reconsider their strategy. Need is increasing, so are applications. I can’t help wondering if more open criteria, as demanded by many applicants, have made it worse. Then again, each one that closes pushes up demand to the others.
As for closing charities, it’s always difficult to quantify these things. The thing is, while charities are closing all the time, thousands are being set up. The number of charities in existence is a very poor indicator of the texture and lived experience of the sector and the support it provides - as is the top-line amount of income. It covers so many different ‘things’.
Most of these new start-ups of charities are barely anything at all. Many are flash in the pan stuff or vanity projects (SO many vanity projects…). And many of the closures are of the same kind of thing. They have 50p on their balance sheet and will only be there until some founder gets bored, or the trustees fall out. Then, for example, some of the higher profile ones are Charity Commission-bothering disasters of individual avarice (champagne and flowers funds for celebs or swimming pool funds for the inheritors of media causes or tragedies). There have been quite a few Big Society Bonanza disruptors who rediscovered/ reinvented age old charity practices in the much the same way that tech bros reinvent buses. They made money hand over fist for a while from Tory donors, corporates, and the ‘think-tanks’ and ‘innovation units’ who later lost interest. And then off they pop. (And some of them did good work, of course.)
So it’s really hard to get any true sense of what is happening beyond the staring at the ceiling at 4am many of us in the sector are doing - beyond the usual. I think the closures we are all noticing are the ones that seem more significant to us with our knowledge of the sector itself. Some are highly unexpected. The closure of cancer charities, even those for children, for example. Donkeys. (Children with cancer and dogs or donkeys are the ones trust and foundation and individual-giving fundraisers always say you are competing against…)
Then there are things like Age UK branches. Infrastructure charities we all know and relied on. My own personal concern is the possible end of several local multi-purpose community organisations (always my favourites) who I know may not last out the year. Youth charities are dropping like the proverbial.
Children, dogs and cancer are the ones most reliant on individual giving - and have had to rely more on trusts to make up a shortfall as everyone experiences a recession that is absolutely not happening, no sir. The latter - welfare, local, infrastructure - are especially hit by trust closures, and indeed, the increased competition from others who relied on individual giving. For them, those big temporary closures of grantmakers are going to hit hardest.
Is anyone paying attention?
At the same time, it’s hard to prove anything is really happening at all to those who may wield any money, and particularly to those trusts and foundations who are taking a pause. When multiple large multi-purpose/ general welfare trusts all close or deeply restrict at once (see this article, paywalled), and the collective cry is ‘you’re killing us all,’ one of the problems is that funders are used to charities complaining about power and fairness, and saying they are on the verge of going under.
I mean, we have all sat in meetings of charities where the CEOs all sit there with their gameface on crowing about success, and then a funder walks in, and the piano music starts, and the stories of how much we achieve (numbers come out), and the desperate crisis, and then when that doesn’t seem to be going our way, we start hectoring. (Oh my god, the things I have seen….) I mean, can you remember a time working in charities when people weren’t complaing they were on the verge of going under? (27 years for me. Maybe in about 2000, but that was the New Labour heyday). It’s kind of the deal - not that I think it should be. (Let me be quite clear about this - this hand to mouth existence is profoundly unhelpful for everybody…)
But anyway, it’s not entirely suprising if anybody thinks we’re the 'boy who cried wolf'. It’s always difficult - how do we get them to see this is different? Jo's work here is absolutely crucial, because in my experience, charitable funders have very little knowledge about the sector as a whole, despite their often grandiose claims to the contrary. (They just as often complain that they don’t know enough about what others are doing - so again, we are not talking about just one thing or set of behaviours here.)
Who cares?
I’ve posted a few things on Linkedin which have been critical of this approach, despite, or perhaps, because of my work with quite a lot of funders. (When your career’s in the toilet, why not flush?) Plenty of others in the fundraising space - especially plucky/ ornery freelancers who are free to speak their minds, or just foolhardy like me, have done the same.
And while there has been silence from the biggies involved, quite a few funders have been in touch, with me at least, to say they too are horrified, angry, and anxious. This is especially the smaller ones, who are relied on by local charities, but also know they can't bear the burden alone. They know their money contributes to the ecosystem best alongside larger grants from major trusts. And they know they are going to watch their own work and money - and charities - disappearing. They're close to the ground and know how real lives will be affected. There was a regional meeting of funders last week where everyone was very aware of these issues - but according to my sources (!) none of the big (closed) ones turned up despite being just down the street.
Here is the thing. Executive staff and officers in funders know the problem, and I haven't met any who think these closures are a good idea. That goes right to the top. The problem in some (not all) is a significant proportion of trustees on the board who don't want to 'waste' money when they are seeing so many applications. They are concerned that they may not choose the ‘right’ causes. And for some, there is also - and I know this because I hear it all the time in strategy meetings (I call them out; they don’t like it) - a concern that funds may be spent on the undeserving poor. They are totally out of touch, and also unreachable by reason or persuasion for the same reasons. Some organisations pushing better work by grantmakers do get to work with trustees, but I don't believe they're getting much traction. I’ve done this myself, but the pushback is very hard.
Dare we complain?
On all this, and other matters, we all have a bit of a choice to make. I was struck when I made some Linkedin posts - a bit direct, perhaps, and one rather satirical - that called out this and some other funder practices, openly. I was struck by the outpouring of support I received from small charities (as well as some funders), but most of all by the fact that they said I was ‘bold’ and ‘brave’. I mean, that sounds like when someone sees your new miniskirt and wellies combo and says ‘Gosh what a brave outfit’. When they really mean, ‘If you wear that in Catford, you’re going to get a kicking.’
What does that say about power and transparency, that grantees are scared to speak up? This is not about philanthropic (powerful) individuals (I mean, you wouldn’t want to upset Daddy Warbucks if he is literally your personal funder), but about organisations constituted to support charitable activities. Are people right to be actually scared to speak out? Why? (Maybe I’m more at risk - I just tendered to support one of the closed ones, I guess I won’t hold my breath…)
I think there is value in some pressure, some criticism, and occasionally some trouble-making. Philanthropy only works if powerful people feel terribly pleased with themselves. Take that away and you take away their fun. Of course, whether they will even hear the criticism is another thing.
This is not about good guys and bad guys
I probably need to stress again that I am absolutely not suggesting that trusts and foundations are in some way all filled with ‘people who ‘don’t care’. This is absolutely not the case. Right up to CEO level, I see people in those organisations who care deeply, desperately, about what they do, what it supports, and the people who survive because of it.
I do think at least part of the problem lies elsewhere: as I’ve made clear before, I believe there is an intractable problem with a model of charity governance which, at delivery and funding level, is no longer fit for purpose. That is, the trustee model, which is a hangover of a bygone age of Vistorian philanthropy - most especially where grants are involved. If any funder wants a quick fix, I would recommend that grants committees are drawn from representatives of communities served, and the organisations who serve them.
That would ensure better knowledge, transparency, and, I think, decisions. And then, fine, have your hedge fund managers and a selection of OBEs and Baronets looking after the bank balance.
But here is my biggest caveat. When the closure of a few philanthropic foundations is potentially going to stop the vital care of thousands of people, we have reached the absolute endpoint of voluntarism, and especially of philanthropy. If you support the joyful and ‘nice to have’, I can well understand that it might be worth a pause to consider your strategy. But if you are providing support to the most ‘vulnerable’ and disadvantaged, the ability to suddenly, voluntaristically withdraw support is exactly the reason we can’t rely on philanthropy to build a just society. That goes the same for the voluntarism of smaller individual giving (the cancer charities and the donkeys are suffering most from this). I don’t mind people choosing whether to pay for a community fete or a new wing of a museum so much - I do mind people choosing individually whether abused children get therapy or people starve for lack of a food bank.
Okay, there are bad guys and guess who…
Tories! I bet you guessed that already. Austerity - draped in bunting, as the Big Society, as you may remember me saying - has been the biggest problem. Taking away the funds, alongside talking up voluntarism.
And indeed, some bits of profoundly unhelpful funding have driven a boom. Around the time of the ConDem Government, a quarter of a billion pounds (£250m) was put into a fund specifically to start up new social enterprise and charities in local areas. And a whole apparatus for ‘sharing the learning’ and monitoring the grants. So many of the localities they funded already had tentpole organisations who had been in existence for years. But they gave the money to find the new. Why? And now, with a year to go on the programme, all these little start-ups are desperately looking for ‘legacy’ funding. This is going to be a serious problem for funders - especially the National Lottery.
Meanwhile, Local Authorities have had most of their targets removed around any kind of voluntary sector and community engagement. And of course, their funding for the sector has fallen by £13bn over the last few years - in concert with their own funding from central government. Not to mention the cuts of 70% on community youth work - straight after the first riots, and continuing until the mst recent riots which had a huge percentage of under 21 participants. Again, philanthropists have been taking up the slack. As Paul Streets (former Lloyds Foundation CEO) has pointed out - this cutting of local government funding has been perhaps the biggest blow to the VCS. Certainly, it is what has hit infrastructure hardest - as VCS umbrellas have died, smaller specialist charities for finding board members, or volunteers, have set up to plug the gap. Now they are going too.
And now it’s up to Labour
None of which lets ‘philanthropy’ or specifically the large trusts off the hook (why have they got all that money…? Shouldn’t they be accountable?). But it does make it all the clearer that they cannot solve the problem - which indeed is perhaps why their choice has been, for a while at least, to step out of the situation.
And with that, the buck stops at our new Government. We know there is no money. But we need to find it. If that means more public sector support for the people charities are supporting who fall through the cracks, great. If that means some charities shrink because they are no longer needed - no problem. That happened before, with the birth of the welfare state after all.
Many charities (admittedly by no means all) would be willing to shut up shop if they weren’t needed. But the need is not going away.
Meanwhile, for trusts and foundations, just throwing up your hands and saying ‘we need a break’ isn’t really very responsible.
And finally, I want to be clear again. To funders, I only say this, and write my naughty little satirical pieces, with respect and friendship and appreciation for the fact that many of you/ us actually do very good stuff.
Of course, I still know that saying it won’t do my career any favours.
That naughty post
On pausing your grants programmme
It’s a bit of a strange one, closing your grants programme while you have a think.
That really wouldn’t happen with a delivery charity, would it? And yet that, one step down the chain, is the effect it has. Imagine this:
ANNOUNCEMENT
[Children’s Cancer Charity] won't be able to support children with cancer this year, because our trustees have decided we'd like to have a long think about what impact means, how we make decisions, and who the most deserving children are. Also, should it be children? Or cats. We’re not sure. We’ve also run out of admin staff because people just won’t stop asking us for help.
We look forward to supporting your child with their cancer if they survive until next year. We will be continuing to support some existing children with cancer, but most importantly, commissioning research into our own work and how awesome we are in the meantime. We will be doing a lot of thinking, but especially talking, about power imbalance and humility, and just how hard it is to be us, with such heavy responsibilities.
We're sure you will understand that this is important, as we wouldn't want to waste our services by giving them to the slightly less deserving children with cancer while we're thinking about it.
- The Trustees
Oh, I know, this is a bit mean. And it is certainly true that delivery charities sometimes have to close their books. But only if they absolutely have to. Indeed, before they do, they dip into their reserves. And they never close to new applicants just because they’re thinking about their strategy - delivery charities have to rethink their strategy all the time, and they have to keep on keeping-on while they do it.
Nor indeed do they close for lack of admin staff - unless, again, there is simply no way to pay for that. And that just isn’t the case for big funders is it?
Nobody can deny that the sheer weight of austerity and disinvestment is making it impossible to meet the needs - and I still think philanthropy shouldn’t have to.
But in the meantime, saying you need to just stop and have a little lie down isn’t really helping is it?
And, you know what, I think many of us are starting to feel that there are too many charities. But it’s by no means sure that the best and most needed will survive this strategy. In fact, quite the opposite.
The other naughty post
‘Vranyo’ and the Grantmaking Dynamic
Oh, the dances we do as funders and charities. I was facilitating a grantmaker's strategy session and the Chair and I shared a giggle about “The process where they pretend this is a one-off grant for a brand new project. And you pretend to believe them.“ But we all know this is really to cover the costs of the charity's desperately needed ongoing service, tied up in a ribbon to look enticing to trustees. The Chair is an ex-delivery person too, and they got it - it was refreshing. But I sighed a bit inside. Can we not just drop this? Who are we trying to kid?
It reminded me of the Russian word ‘Vranyo’. It is the word - most common during the Soviet era - for when I am lying, and you know I am lying, and I know you know I am lying, but we both know it’s better for everyone if we just accept it as the truth. And for now, it is…
To be clear, it's not 'lying'. Nobody is really trying to be dishonest here. We’re all just navigating a system that we all know doesn’t make sense (at least, those working at operational levels do). And the remarkable thing is that there are plenty of people within this system on both 'sides' - 'poacher' and 'gamekeeper' - who know this. But it persists.
This is not necessary. Let’s fund the damned service. In my experience, by grantmakers constantly demanding novelty, we’re often just trying to keep ourselves and trustees interested. But that’s not what grantmakers are there for.
Even worse than the wasted effort, I've seen that it can tend to encourage unnecessary growth, and even, please god no, the setting up of more and more charities.
If it's good, let's just fund what they do. And if we want to be constantly entertained with new content, stick to Netflix.