Investment 'will take biggest hit'
By Hannah Jordan, Third Sector, 3 December 2008
Survey predicts investment, corporate and legacy income to plummet.
Investment, corporate and legacy income will be hit hardest during the recession, according to a survey published this week.
Managing in a Downturn, produced by the Institute of Fundraising, the Charity Finance Directors' Group and accountancy firm PricewaterhouseCoopers, looked at the effects of the economic downturn on the sector and how charities planned to react.
The accountancy firm concluded that there would be a £2.3bn shortfall in charity income in 2009 (Third Sector Online, 1 December).
A total of 71 per cent of the 362 respondents expected a reduction or no change in funding from trusts, the Big Lottery Fund and foundations. The same percentage expected no growth or a decline in corporate giving, with 37 per cent saying it was already affected and some already reporting a 50 per cent decrease. But 29 per cent said they expected growth in this area.
Small, medium and large charities had differing expectations of legacy donations. Forty-one per cent of large charities - with annual incomes of £10m or more - predicted a decline, compared with 4 per cent of small and medium-sized charities. Sixty-one per cent of small and medium charities said legacies would be static, compared with 40 per cent of large ones.
Income from shops had mixed predictions, with 43 per cent forecasting growth and the same proportion expecting no change. Forty per cent of small charities - with annual incomes of less than £1m - predicted growth of between 5 and 10 per cent, but only 7 per cent of respondents from large charities expected growth of more than 5 per cent.
Three-quarters of the respondents expected major donor income to fall or stay the same. The majority felt there would be no change in statutory funding and almost all said they expected investment income to decline.
Megan Pacey, director of policy and campaigns at the Institute of Fundraising, said it was surprising how much confidence organisations had shown in statutory funding given that government priorities were shifting.
Fundraisers select likely losers
By Hannah Jordan, Third Sector, 29 October 2008
International development, arts and culture and animal welfare charities will be worst hit by the global economic downturn, a new survey predicts.
The poll, carried out at the International Fundraising Congress in the Netherlands this month, asked 100 fundraisers from around the world to rate how badly the impending recession would affect fundraising in a range of cause areas.
Respondents were asked to assess the impact they thought the economic conditions would have on a variety of causes and rate them on a five-point scale from "relatively low" to "extremely severe".
Fifty-five per cent of those surveyed rated the impact on arts, heritage and culture charities as either severe or extremely severe, compared with only 3 per cent who gave it the lowest rating.
International development was rated by 40 per cent of respondents as at risk of being severely or extremely severely affected, and 4 per cent thought the impact would be relatively low. Twenty-two per cent said animal welfare charities would suffer severe or very severe effects; 5 per cent thought they would suffer relatively low impact.
Clive Tweedy, chief executive of Arts & Business, a charity that encourages relationships between business and the arts, agreed the downturn could be damaging.
"The arts are seen by many businesses as something they do in good times but not bad," he said. "Clearly arts will slip down people's priorities, but I am confident there are a lot of people out there who will not pull out."
John Cole, deputy director of marketing at veterinary charity PDSA, said the figures did not surprise him. "Fundraising is always a challenge and, with the recession looming, we have no doubt it will put our supporters under more pressure," he said.
Respondents generally agreed that children's causes, emergency relief, medical and faith-based causes would be least affected by the recession.
Only 1 per cent said children's causes would be severely affected, compared with 49 per cent who felt they would suffer low or relatively low impact.
Nearly 40 per cent of respondents felt they should expand to fight for market share, whereas 18 per cent felt downsizing was a realistic option, the survey showed.
KEY POINTS
Percentage of respondents saying causes will face severe losses
55% - Arts, heritage and culture
40% - International development
22% - Animal welfare
1% - Children's causes.
Long-term donors are key to surviving economic crisis, charities warned By Hannah Jordan, Third Sector Online, 9 October 2008
Charities should nurture loyal supporters to survive the looming recession, fundraisers at a conference in London have been told.
John Studzinski, a philanthropist and investment banker, told delegates at the Raising Funds from the Rich event this week that the economic conditions meant that donor behaviour would become polarised and charities would lose ‘fair-weather' supporters.
Loyal donors would want to help charities succeed, he said: "If you approach them appropriately, those who care most passionately about your work will stand by you and see you through this period."
Studzinski predicted major donors and foundations would cut back on grants because of their reduced income and donors would become more aggressive about seeing their money go towards the cause and not into overheads.
He also said that corporate giving would fall and warned charities not to rely on it for income. "Don't take companies too seriously - they tend to see you as a marketing tool," he said. "They will cut back on your donations before they cut back on people."
Governments are also likely to reduce community spending and cut charity funding, according to Studzinski. But charities should not panic, he said.
"This is going to be a tough period for charities, but I think that we can learn a lot and emerge stronger."
Donations 'will survive the credit crunch' but charities prepare for a legacy drop By David Ainsworth, Third Sector, 20 August 2008
Individual donations from the public are not expected to drop during the credit crunch, but legacy income could fall away, sector fundraisers have predicted.
Some large fundraising charities said they also expected costs to rise and beneficiary numbers to increase. Oxfam is preparing for possible staff and service cuts to cope with diminishing funds (Third Sector Online, 13 August).
"We haven't seen any effect on our voluntary income," said Giles Pegram, director of fundraising at the NSPCC. "Evidence and experience suggest that downturns in the economy don't have much effect on individual giving."
Pegram added that he was unsure what effect the economy would have on regular giving.
Richard Turner, director of fundraising at ActionAid, said it was a good time for charities to ensure they were offering regular donors a good service. "We have strong products and we've found that when incomes drop, something like child sponsorship is one of the last things to go," he said.
He added that ActionAid had seen rises in its costs and the number of people needing its help: "We're having to deliver more aid, and it's costing us more to do it."
Paul Breckell, finance director at the RNID, said there was no evidence that there would be a drop in legacies, but he said that, with house prices falling, the charity had downgraded its estimate for this year.
The situation could be more serious for the RNLI. Richard Popper, head of central fundraising at the charity, said legacies made up the majority of its income. The charity was also seeing the cost of fuel and materials rise.
Liz Cox, deputy director of fundraising at Barnardo's, said: "We're monitoring everything. If anything changes, we want to be able to react quickly."
Donations 'will survive the credit crunch' but charities prepare for a legacy drop
By David Ainsworth, Third Sector, 20 August 2008
RNLI: could be hit by fall in legacies, which make up a large part of its income
Individual donations from the public are not expected to drop during the credit crunch, but legacy income could fall away, sector fundraisers have predicted.
Some large fundraising charities said they also expected costs to rise and beneficiary numbers to increase. Oxfam is preparing for possible staff and service cuts to cope with diminishing funds (Third Sector Online, 13 August).
"We haven't seen any effect on our voluntary income," said Giles Pegram, director of fundraising at the NSPCC. "Evidence and experience suggest that downturns in the economy don't have much effect on individual giving."
Pegram added that he was unsure what effect the economy would have on regular giving.
Richard Turner, director of fundraising at ActionAid, said it was a good time for charities to ensure they were offering regular donors a good service. "We have strong products and we've found that when incomes drop, something like child sponsorship is one of the last things to go," he said.
He added that ActionAid had seen rises in its costs and the number of people needing its help: "We're having to deliver more aid, and it's costing us more to do it."
Paul Breckell, finance director at the RNID, said there was no evidence that there would be a drop in legacies, but he said that, with house prices falling, the charity had downgraded its estimate for this year.
The situation could be more serious for the RNLI. Richard Popper, head of central fundraising at the charity, said legacies made up the majority of its income. The charity was also seeing the cost of fuel and materials rise.
Liz Cox, deputy director of fundraising at Barnardo's, said: "We're monitoring everything. If anything changes, we want to be able to react quickly."
VAT windfall for animal charities
By Helen Warrell, Third Sector, 27 February 2008
Animal refuge charities will be able to claim back hundreds of thousands of pounds from government after a tribunal ruling that will make the sale of stray dogs and cats exempt from VAT.
Charities do not have to charge VAT when selling donated items. Until now, animals were considered donations only if they were directly handed over by their owners, meaning sales of strays incurred VAT.
The case, brought successfully by Plymouth-based Gables Farm Dogs' and Cats' Home, invoked the common-law principle of 'finders keepers' to confer ownership on people who find strays and give them to a rehoming centre. Many charities will now be able to make retrospective VAT claims on sales of strays.
"It's a remarkable coup for a small home," said Tony Harris, general manager at Gables Farm. "The judgement will benefit charities around the country."
Gales Farm is owed £20,000 in backdated claims. The Dogs Trust estimates that it is owed £100,000.
Charity VAT win
By David Ainsworth, Third Sector Online, 11 July 2008
Charities involved in non-business activities should be able to use VAT saving schemes when renovating property, according to a new tribunal ruling.
The tribunal ruled that Whitechapel Art Gallery should be able to spread over 10 years the VAT cost of its £10m renovation project, at the former Whitechapel library above Aldgate East station.
In the past, HM Revenue and Customs has said a VAT saving scheme is available to charities if they are buying or constructing new buildings, but not if they are renovating existing buildings. But the VAT tribunal said this contravened EU law.
"This is very encouraging news for charities because the cost of building and renovation work is often their largest outlay," said Debbie Jennings, VAT director at PKF. "Having to pay all of the VAT up front can push the overall costs into the realm of unaffordable.
"This ruling gives charities hope that any substantial renovation work they do in future will now be eligible for the VAT saving scheme."
But she cautioned that the EU was looking at removing VAT saving schemes from land and building altogether.
Humour 'crucial' to legacy appeals
By Hannah Jordan, Third Sector, 2 July 2008.
Charities should use humour and soft language in their efforts to persuade donors to leave legacies, according to new research by marketing agency TDA.
The agency has completed the first stage of an extensive study, commissioned by a consortium of five major UK charities, into what prompts donors to remember charities in their wills. The study involved six focus groups of regular donors aged between 50 and 75.
Participants said they felt alienated by blunt requests or direct references to death, but humorous phrases such as "kick the bucket" received a positive response.
Jill Marsh, legacy manager at Save the Children, a member of the consortium, said: "It has been a real insight and it gives us some great pointers in terms of focusing our legacy fundraising and shaping our future strategy."
The second phase of the study is expected to be completed by August.
ILM NEWSFLASH - 15th May 2008 from Henmans LLP:
Maximising your charity’s interest: rental income pending the sale of a deceased’s property
A recent case has highlighted that someone living in a deceased's property may be required to pay rent until it is sold, even if that person is entitled to an interest in the property. The occupant of the property may be required to pay rent to the other beneficiaries of it until it is sold, so that all of the owners of the property are deemed to have benefitted from it.
The case in question, Rahnema v Rahbari & Ors Ch D 20 March 2008, concerned a claim involving a property that was occupied by the defendant, but which was held on trust in equal shares for both the claimant and the defendant. (The claimant had been married to the defendant's mother). The claimant and the defendant's mother had divorced following which, due to on-going disputes, the property remained unsold and un-let, but was occupied most of the time by the defendant rent free. The claimant, the defendant and the defendant's mother eventually agreed that the property should be sold and that the defendant should be allowed to buy it, but the issue arose as to whether or not the defendant was liable to account to the claimant for rent for the period she had been living in the property. The court held that, as equal co-owners, the claimant and the defendant were both to benefit from the property. Accordingly the court held that it was “necessary and appropriate”, in order to achieve broad justice between the parties, to order the defendant to pay an occupational rent to the claimant for her period of occupation of the property prior to its sale.
Whilst the terms of a previous court order envisaging that the property would be let until it was sold gave particular support to the claimant’s argument that he should benefit financially from his co-ownership of the property, the judgment in this case does support the move away from the former rule that a co-owner in sole occupation is only required to give credit for an occupational rent if he/she had actually or constructively ousted the other co-owner(s) from property, to the modern position that an occupational rent may be ordered in any case where it is necessary to achieve broad justice or equity between the parties. In this regard, it is possible to envisage cases in which a court may deem it necessary to order an occupant of a deceased’s property (even if this person has an interest in the proceeds of sale of the property) to pay an occupational rent to other beneficiaries of the deceased’s estate, if those beneficiaries are entitled to a share of the proceeds of sale of the property.
Fiona Campbell-White, Associate,
Henmans LLP, Charities Probate Litigation Department
Report opens debate on value of specific charity legacy appeals
By Hannah Jordan, Third Sector, 7 May 2008
Charities should consider including legacy information in all their general communications instead of investing in specific legacy fundraising appeals, according to a new report. Andrew Papworth, a marketing consultant and author, reached this conclusion after analysing 23 charity legacy appeals in magazines and newspapers in 2007. But the conclusion, published in a report called Will It Work?, were challenged by two legacy experts, Richard Radcliffe and Paul Farthing, who argued that specific appeals do work.
The report says that many of the appeals offered information or advice about writing a will in return for a bequest. It concludes that few organisations encouraged people at the same time to become donors and to start relationships with charities.
"They just run ads saying 'please leave us some lovely money' and maybe put a telephone number and website address on the bottom," Papworth said. "It's the 'cast your bread on the water and hope' school of advertising. They might as well feed £50 notes into the shredder."
The report argues that people often make wills because of major life changes and that appeals for legacies are unlikely to be seen by people at the right time. Radcliffe, legacy consultant with charitable legacy agency Smee & Ford, disagreed with the report.
"Typically, 60 per cent of legacies are from people who have distant relationships with charities," he told Third Sector. "Maybe they are relatives or friends of people who have benefited from charity services in the past. If you don't advertise specifically to them, you will never get their legacies."
Farthing, director of high-value relationships at Cancer Research UK, said: "Legacy communications are there to try to get the message across about the impact of legacies and explain how their money is spent. We can't do that through a tick box."
For a copy of the report, contact ap@markquest.freeserve.co.uk.
How to ... Recruit and maintain major gift donors
(from Emma Rigby of Third Sector, 26 September 2007)
Major gift donors are increasingly important for charities. "The amount we receive this way is definitely going up," says Alan Gosschalk, director of fundraising at Shelter.
The Red Cross expects to double major donor income between 2004 and 2010 and will expand its major donor fundraising team from four to six people next year. NfpSynergy's report 21st Century Donor adds: "Giving to a cause they care about passionately will increasingly be as much a part of many rich people's lifestyles as mortgages, second homes and holidays."
It is also a cost-effective way to fundraise: for every pound spent, major donations bring in between £8 and £10, says Paul Marvell, head of major donors and events at the British Red Cross.
The number of occasions when individuals receive lump sums of money - from bonuses or divorce, say - has increased in the past five years, according to the Barclays Wealth Insights paper, and the amounts concerned are now large enough to make these people consider philanthropy. But how do charities woo big donors?
1. Identify your prospects Shelter's major donor research team scans its own databases for prospects. Susan Mackenzie, director of Philanthropy UK, recommends starting at home. "Look to your own organisation's trustees - they might be able to recommend potential prospects."
Marvell adds: "We sift our direct mail base for donors who have given above average donations."
The Red Cross identifies prospects from attendees and committee members at its high-value events as well as networking with existing donors and contacts made through corporate relationships. "We have a network of senior volunteers across the country," says Marvell. "In some cases they are extremely well connected and provide a rich source of donor prospects."
Research tools such as the Community Foundation Network website help identify individual or corporate donors outside the organisation, says Mackenzie.
The Red Cross keeps an eye on wealthy individuals in the City who are likely to come into money. But Shelter's Gosschalk says: "Its hard to contact someone cold and get a positive response. We ask existing supporters and regular donors if they have good contacts."
2. Understand donor motivation Philanthropy UK's research suggests that belief in the cause, the wish to leave a legacy, a sense of duty and having a good relationship with a charity are all motivators.
The Red Cross's Marvell says: "It could be affinity to the cause - for example, a cancer charity that a family has historically supported."
Gosschalk looks to moral responsibility. "People think it's wrong that others suffer hardships while they themselves are lucky," he says.
3. Engage them Philanthropy UK's Mackenzie says a bespoke approach works best, depending on donors' interests and their capacity to give: "We get them excited about the organisation, communicate the charity mission to them and point out the impact they could make."
This could happen at a trustee lunch or by means of a site visit, she says. "If it was a senior volunteer, the chairman of that project might make a peer-to-peer appeal," she adds.
A chief executive might make the initial approach to a really senior external prospect outside the organisation, according to Mackenzie; then senior level staff would maintain the relationship.
4. Find out what donors need "The key is finding out what kind of recognition the donor wants," says Marvell. "These can range from letters from the chief executive to the opportunity to have something named after them."
Sometimes a simple update on the results of their donations is sufficient; some people like to be taken to social events, gala dinners or balls.
"For really important cases we take donors on project visits around the UK - or, in exceptional cases, to see international work," Marvell adds. "It's something we try to avoid, but if they are really important we treat them as a stakeholder and get them involved."
5. Know what turns them off "A lack of professionalism, not listening to what they want and how they want to be treated, or being too pushy are all potential turn-offs," says Gosschalk.
"Not delivering what you promised," adds Marvell.
"Not being respected, thanked or appreciated," says Mackenzie. "Plus lack of evidence that their contribution has made any difference."
'Spend more to make the most of legacies'
(From Third Sector by Emma Rigby, 9 January 2008)
Charities are underinvesting in legacy marketing and should follow the lead of the NSPCC and Cancer Research UK by employing staff to explain legacies to potential donors, according to nfpSynergy.
A survey by the think tank found that three-quarters of the charities that were questioned spent £200,000 a year or less on marketing legacies, compared with an average annual legacy income of £14m. This equates to a marketing budget of up to 2 per cent of their legacy income.
The research, which was commissioned by the Arthritis Research Campaign to analyse legacy marketing, was based on information from 54 charities.
"It's surprising how little money charities are putting back into their marketing activities, considering how much money the charities in our survey were getting out of them," said Joe Saxton, co-founder of nfpSynergy.
"Legacy marketing is not an area where we see huge saturation, so there is a great deal of scope to increase the level of legacy giving without conflict between charities."
Charities could invest in staff to speak to potential legators, said Saxton.
"I don't think it is a coincidence that we have seen the NSPCC appointing a senior person to look after legacies," he added. "Cancer Research UK has done the same."
Discount to ILM members for purchase of STEP publication
ILM has recently been working closely with STEP (the Society of Trust and Estate Practitioners) on the Section 36 parliamentary lobby, as well on a number of other initiatives which serve the common interests of our respective members. In view of this stronger relationship between our organisations, STEP has kindly agreed to allow ILM members to purchase their publication, the STEP Guide to Trusts and Investments, at the STEP Member rate i.e. £55 instead of the full cost to non-members of £195. We are sure you will agree this constitutes a considerable saving for ILM members wishing to own a copy of this useful publication.
To order a copy of this publication, you need to go onto the STEP website
http://www.step.org
On the front page halfway down is the publication in question. Click on that, and you will see at the bottom of the page an order form (Acrobat/ Adobe) to download, which must then be completed. ILM members must tick the box of STEP membership for the reduced rate, and where it asks for the STEP membership number, simply insert ILM Member, and you will receive the publication at the STEP member rate. Payment is either by cheque or credit card, and the order form must be submitted as follows:
FAX to+44 (0)20 7838 4886 or POST to
Alexandra Roberts, STEP, 26 Grosvenor Gardens, London, SW1W 0GT, UK
S36 - revised factsheet, flowchart and McCall Opinion published on ILM website
We have published a revised factsheet on s36, together with Christopher McCall's Opinion and a revised flowchart. All are available for members on the website, Members Section ("Approved S36 Factsheet"), and for solicitors and others in the Solicitors Section. We are particularly grateful to Mr McCall for undertaking this work at a substantial discount, and to Alastair Collett of Farrer & Co for all his advice and assistance at no cost whatsoever.
"Charities as Beneficiaries" booklet
We should also mention the Law Society publication "Charities as Beneficiaries 2008", a 40-page booklet written and recently updated for solicitors by ILM and the Law Society Probate Section. The booklet covers a very wide range of issues affecting taking instructions for wills where a charity is included, the information charities need to have when an estate in under administration and a number of specific issues such as the Royal Sign Manual, ex-gratia payments, charity taxation and the apportionment of Inheritance Tax, to name but a few. Copies are available from Probate Section free to members and additionally or to non-members at £25 (VAT is zero-rated). Please contact: probatesection@lawsociety.org.uk, Tel: 020 7316 5678, or send a cheque made payable to The Law Society to: Coordinator, Probate Section, The Law Society, 113 Chancery Lane, London WC2A 1PL (DX 56 London/Chancery Lane).
Valuations and advice through Allied Surveyors
Who are Allied Surveyors?
Allied Surveyors is one of the UK's largest residential property valuation companies in the UK, covering England, Wales, and Scotland.
What does the company offer charities?
Nationwide coverage at special rates for charities. All areas are covered by a system of allocation to individual surveyors through one telephone number / fax number / e-mail address. If your charity needs advice or a valuation of a residential property - for instance if you want a second opinion where you think there may be development potential, or a valuation on behalf of all the residuary beneficiary charities - then ILM has negotiated special rates and an easy way to instruct.
Why is ILM working with Allied Surveyors in particular?
The Institute specifically wanted to work with a non-profit, nationwide network incorporating uniform quality standards. We are confident that Allied Surveyors meets our criteria.
How much are valuations?
The Institute has agreed a scale of fees for a standard valuation and for a S36 valuation. Allied Surveyors are aware of charity requirements under S36 of the Charities Act 1993 and will supply an appropriate report on valuation and marketing.
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Value of property |
Standard valuation |
S36 Valuation |
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Up to £100,000 |
£200 |
£235 |
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£100,001 - £150,000 |
£260 |
£300 |
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£150,001 - £200,000 |
£315 |
£375 |
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£200,001 - £300,000 |
£375 |
£450 |
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£300,001 - £400,000 |
£495 |
£585 |
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£400,001 - £500,000 |
£600 |
£725 |
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£500,001 - £750,000 |
£700 |
£870 |
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£750,000 - £1m |
£800 |
£1,000 |
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Over £1m |
By negotiation |
By negotiation |
Please note that all fees shown include VAT. The cost to ILM of setting up and monitoring the service is included in the fee structure.
Opportunities to advertise in the ILM Newsletter
Up to half a page of advertising is available in the ILM Newsletter.
Advertising rates are:
|
1/8th page |
£150 |
|
1/6 page |
£175 |
|
1/4 page |
£235 |
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1/2 page |
£395 |
Contact Mike Jones via the Contact Us link in the menu bar to the left.
ILM Starter Manual
ILM has produced a 25-page Starter Manual for anyone new to charity legacy administration or who is taking on more responsibility in this area. The Starter Manual can be used on its own for learning and for reference. It is also written to be a lead-in to the ILM Certificate of Competence. The manual is free to ILM members and costs £15.00 for non-members. If you would like a copy, contact ILM's administrator, Dawn Pendergast for a copy. Just use the Contact Us link in the menu bar to the left.
New advertising rates for jobs
If your charity is considering advertising with ILM for a vacancy, please note that new advertising rates now apply:
A website advertisement is now £375.00, still excellent value for money. An insert in the ILM Newsletter is £350.00 on its own, but a combination of website ad and Newsletter insert together is just £575. This combination is the most effective way of reaching ILM members for speed and spread and costs a small fraction of the costs of an advertisement in a national daily.
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