Reading tea leaves #21: There's good news and not so good news

The most recent reports on how the recently-ended recession has affected UK philanthropy contain good news, bad news and no news. The extent of the mixed bag of views is reflected in headlines that range from ‘Survey reveals fall in donations’ to ‘Record year for CFN [Community Foundation Network] despite recession’. What’s really going on?

Firstly, the good news.

An extra £33.5m was donated by private philanthropists to support local communities during last year’s recession, according to “record-breaking figures” released by the Community Foundation Network (CFN). Furthermore, the number of individual donors setting up charitable funds to support local groups rose by a record breaking 60% over the course of the year. CFN claims the huge increase in the number of philanthropists shows the resilience of community-based philanthropy. CFN chief executive, Stephen Hammersley, says “the ‘spirit of the blitz’ in hard times is alive and well in Britain today.” and points to local community giving as having “the potential to underpin recovery and to make a real difference across the country.”

Community Foundations have undoubtedly benefited from increased investment and effort in fundraising, for example through the government-sponsored ‘grassroots grants’ matched funding schemes, But a different method of giving has also reported better-than-expected results. According to Fundraising magazine (previously known as Professional Fundraising), legacy income during the recession has not fallen as drastically as predicted. The 2009 Legacy Foresight  prediction that the value of legacies could fall by as much as 12% from its height in the third quarter of 2007 has now been revised down to a 5% drop from peak to trough.

Meg Abdy, director of Legacy Foresight, told Fundraising: “The general consensus is that the economy is picking up more than had been predicted, although it’s still going to be quite a slow and painstaking recovery.” Fundraising also notes that the Legacy consortium, which reports the legacy income of its 38 members, reported a fall of just 1.2%, with £864m for the year ending September 2009.

The final indication that the recessionary impact has not been uniformly bleak for UK philanthropy is the response to the disaster that hit Haiti on 12th January 2010. According to a survey of more than 1,000 adults carried out for the Charities Aid Foundation by Gfk NOP, nearly half the UK (48%) population have donated to the Haiti disaster appeal. And of those who hadn’t given by the time the survey was carried out, nearly two thirds (62%) said they will, or might do so, in the future. The Disasters Emergency Committee (DEC), which is running an umbrella appeal for thirteen of the biggest and best-known humanitarian aid agencies – has raised £58m (as we go to press) in the fortnight since the disaster]. The willingness of much of the UK population to donate is notable not just because of the recession but also in spite of January being a difficult month for many whose finances have been stretched by the traditional Christmas excess.

In good news from abroad, that Christmas excess appears to extend to charitable giving according to The Chronicle of Philanthropy, which reports that, “a flurry of last-minute giving lifted charities’ holiday appeals” . 48% of the 181 US charities surveyed by the Chronicle said year-end donations were higher in 2009 than the previous year and some reported an increase in stock gifts and a speedy return to giving from donors who had anticipated it might be years before they could contribute again.

Staying in the US, the Hope for Haiti Now appeal was billed as ‘a global benefit for earthquake relief’ and featured an array of UK stars including James Bond star Daniel Craig and Coldplay frontman Chris Martin, but was organised by the US-based Entertainment Industry Foundation. According to Reuters, the event staged on 23rd January has raised $61m (£38m) so far, a sum that does not include the amount raised through corporate donations and iTunes sales of the ‘Hope for Haiti Now’ album and tracks from the benefit concert.

So much for the positive news, but there is also bad news to report.

A survey conducted by Investec Private Bank claims that charity donations fell by 10% during 2009 as a result of public reaction to the recession. This figure closely resembles the 11% drop in giving identified in the UK Giving 2009 survey, conducted by CAF/NCVO. According to the Investec figures, one in five people reported a reduction in the amount they donated compared with 2008, while 11% of people claimed they had increased their donations. However, echoing the US experience, the Investec survey claims the UK experienced a  Christmas giving spurt;  nearly a fifth of the money charities received during 2009 was donated in December, and 8% of people who gave money to a good cause during 2009 made all of their donations during this month, the research shows.

Portents of further difficult times ahead appear in the latest Charity Awareness Monitor, published by nfpSynergy, which predicts that people will continue to cut back on their charitable giving even though spending on goods such as clothes, food, petrol and gas bills is returning to normal. The survey of 1,000 people aged 16 or over and living in mainland Britain, found the number of people planning to cut their charitable giving rose from 34% in November 2008 to 42% in September 2009, whilst those planning to cut back on their weekly shop fell from 52% to 45% over the same period. The survey found that donations by people from lower socio economic groups would be hardest hit, with 49% of C2 groups saying they were likely to cut charity donations over the next 12 months, compared to 42% of the public overall.

Carving a thoughtful path through this flurry of good and bad news is a contribution from NCVO’s director of research, Dr Karl Wilding, whose latest blog points out the difficulties in getting accurate and timely information about the recessionary impact on charities. On the basis of the evidence that does exist Karl points out that, contrary to predictions and despite persistently low confidence levels across the charity sector, there has been no mass closure or mergers in the UK charity sector; that charitable giving has declined by less than was widely feared; that government funding has held up so far and that the number of enquiries from potential volunteers has “shot through the roof”.

Karl concludes with an upbeat hypothesis, suggesting that, “despite many chronic problems, the sector was in better shape than when it entered the last recession of the early 1990s; the staff, management and governance of organisations are more effective than we sometimes give them credit for; the support and advice of funders and infrastructure bodies helped; and at the macro level, fiscal and monetary policy averted the deeper recession that some expected”.