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Part one of the series provided a very valuable insight, highlighting the effect of the cost-of-living crisis for many charities, and how they can adjust their fundraising model to relieve pressures.

In this piece, we discuss grant making foundations with Sianne Haldane, Philanthropy Consultant and Founder at Boon Impact.

Senior leaders of grant making foundations have highlighted a substantial increase in the number of charities seeking grants, some seeing double the number of applicants. What are your thoughts on this?
S: "Grant making foundations will increasingly be relied on by other charities (particularly smaller charities and local community organisations), which make up the bulk of the sector. Most of these organisations do not have the infrastructure or capacity to fundraise publicly, so they very much focus their fundraising efforts on grant making trusts and foundations. 

This can be quite time consuming and speculative still and many charities take a "spray and pray" approach or rely on their personal networks and trustees to help them identify funding opportunities."

How could grant making foundations provide further support?
S: "Grant making Foundations are starting to take some proactive steps to help support the sector, things I have noticed include:

Greater transparency - this is focussed on sharing data, so that charities can more easily apply for funding, there are some innovations in this space, like 360 Giving, which are really helping.

Unrestricted funding - which we touched on before, that really helps build resilience in charities so that they can use the funding as needed, usually to support core costs; and also an interesting trend around spending down of assets over a period. This is not always appropriate and depends on the charitable objectives as well as how the Trust is constituted. In each case, it is what the trustees have decided is the best way to achieve that mission in the current context.

If all foundations suddenly closed, then there would be a big gap. But there is also an opportunity for some quite significant transformational funding that could make a huge difference to civil society as well.”

Have you noticed any changes in how charities allocate their funds?
S: "Some may have a policy to simply spend more. Many Foundations in the US are criticised for holding onto assets and spending relatively small amounts relative to their assets under management.

Another trend is to make assets work in a more strategic way using a lens to ensure that the assets invested are aligned with their charitable objectives and this could mean investing assets thematically through sustainable and even impact investing to achieve total portfolio impact. The investment policy will need to reflect this of course.

Overall, Trusts and foundations should look at their reasons for being and whether their pot of money could be working better to achieve their objectives, and whether they could be more open and more straightforward in order to support their objectives and ultimately their beneficiaries.”

Is it true that some of the biggest risks to charities are inflation and failure to meet their objectives? If so, what are charities telling you and how is their business model being impacted?
S: "These factors are definitely major risks for charities – depending on the maturity or size of charities, they are considering many different options around their business models, like diversifying funding, providing services which are paid for, potentially partnering with other not for profits to achieve their goals/deliver services together, or sometimes even refining and trimming down their services. Some are partnering with corporates to use gifts in kind where they can cut down on costs. Examples are around food or electronic equipment, and skilled volunteering. 

In periods like now it is so essential to ensure that all your assets are working as effectively as possible – something that can be covered off in your investment policy document.” 

We have been working with a number of charities to help with their cashflow management. Utilising assets more effectively does not always mean exposure to greater risk. Charities should remain proactive, ensuring that their assets are used strategically. Doing nothing can be a much greater risk, and clearly security of assets remains of paramount importance.

EFG Harris Allday are available to review a charity’s cashflow management and assist with creating an investment policy document. The team are always available to help any charity when it comes to reviewing the options available.

Sianne Haldane is Founder of Boon Impact and is a Philanthropy Consultant providing philanthropy advice to individuals, corporates, and charities.

We look forward to welcoming Sianne to our training for charity trustees at Park House, London, this September.

More information about these events can be found at https://www.efgha.com/events.html