Local approaches to giving

Values, passions, interests; available resources (including money, time, skills and networks); and an understanding of the local context are the key factors in giving locally.

For many, giving locally marks the start of a philanthropic adventure. At the outset it is useful to consider some questions about how to achieve your vision.

Coutts guide Inspiring Local Philanthropy suggests:

•           How do I find out what are the most pressing challenges or opportunities in the communities I care about?

•           How and where might my support make difference?

•           How do I find effective organisations to support?

•           How can my support lead to sustained change?

•           How might I measure success?

Others might include:

•           How much time do I have to commit to philanthropy?

•           What business or practical skills can I bring?

•           How can I use my networks to further my aims?

 

Understanding local context

There are many resources one can access to find out about local communities. The local press and media is a good starting point as are local council websites. Some say there is no better way of understanding the complexities of a community than getting out and about talking to the community leaders and local groups who know the area and its culture and faiths intimately.

There are also numerous research reports about communities available and the Philanthropy UK Report Database lists some of these.

 Ways to give

There are a wide range of approaches that philanthropists can adopt when supporting local communities, from working with Community Foundations and providing funding directly to charitable organisations or social enterprises, through to co-funding with peers or setting up an operating organisation. These require different commitments in terms of time, personal resources and levels of engagement. Philanthropy UK's Guide to Giving will give you lots of ideas on how to give effectively, who to give to or ideas on when and why to set up your organisation. Below we run through some the ways to give locally and offer advice and resources.

Community Foundations

 A Community Foundation is a geographically focused charity with a range of vehicles for giving time, money and expertise. Community Foundations exist in all parts of the UK.

There are many ways to use a Community Foundation. Donors can provide support (usually in the form of an endowed fund) to their community issue or area. One of the benefits of this approach is that overheads that every charity and private trust incurs are spread among many donors. Applicants benefit as one application to a community foundation potentially accesses funding from many funds. Community Foundations also provide support services including: research and knowledge of local opportunities; connections with charities and community groups, and for donors to offer their expertise; donor networking and co-funding with local grant-makers; and support to local businesses with their giving.

Visit  Community Foundations Network:  

Co-funding with a local grant-maker

Making grants is the most common way of directly supporting local organisations and can be done directly or through intermediaries. Working with an experienced local grant-maker can be a great support and overcome some of the more testing issues of giving such as carrying out due diligence on the charities you wish to support.

The Association of Charitable Foundations (ACF) is a good resource for finding established grant-makers operating throughout the UK. ACF is also a valuable source of publications and training for trusts and foundations. 

Giving with others

The pleasure of giving is often enhanced by giving within a group where issues relating to wealth and charity can be discussed freely, and where donors can learn together about their community and philanthropy.

These groups, known as giving circles and networks, can take many forms and generally involve groups of individuals coming together with a philanthropic purpose, pooling their pounds and resources, and deciding collectively where to give their money.

Within these basic parameters no two groups look or act the same.  One of the most appealing and effective aspects of giving circles and networks is the opportunity to shape the group to meet the particular needs of a community, and the interests and capabilities of participants.

They vary in size and structure, ranging from an informal group of friends meeting locally to large, formal organisations with employed staff members.

Types of giving circles

The focus of groups is wide ranging and the approach to giving just as broad as these examples –

Local – a group of like-minded people who give to local causes, such as the Women’s Trust Fund*

Interest-based – give to a specific cause as in the work of the Oxford Givers Circle*  or Rosa, or Coutts Donor Advised Funds (Micro-finance and environmental)

Project-based – micro-trusts or ‘giving clubs’ such as those set-up by Giving Works in which a group of people come together to focus on one project and then disband

Event-based – networks that draw people together for charitable events and giving as with the marketplace approach of The Funding Network, that brings together philanthropists who take a Dragon Den’s approach to giving. It is the UK’s largest giving network, with groups across the UK, including a Youth Funding Network and the UK’s first open giving circle.

In-house corporate – networks within companies that give often via CSR practices, such as BT Women’s Network*

Social media networks – a flourishing trend of collective giving via online sites such as Facebook.

 *For more information on these examples, see Philanthropy UK’s report, Women & Philanthropy: Inspiring women, inspired giving, available from the Philanthropy UK website.

 Setting up a giving network

There are only a few basic guidelines in developing a giving circle –

•           Determine size and type of circle, and who you want to involve

•           Establish your purpose and objectives

•           Agree your focus areas 

•           Develop your giving approach 

•           Research and identify potential recipients 

•           Evaluate your impact before making further commitments

 

Giving tax efficiently

To have even more impact with your giving circle’s funds, you should ensure that your giving is tax efficient. Depending on the focus and approach of your giving circle you may want to explore the options offered via Gift Aid, setting up a charitable trust, or being hosted by a community foundation which will manage the financial aspects as well as offer opportunities for co-operation and shared learning.

 A final word

Most importantly, enjoy yourself and don’t sweat the small stuff – keep your eye on the big picture (the impact of your donations) and let your circle develop its shape over time. There is no one ‘right’ model for giving circles. Your original goals and purpose may change as the circle, and the impact of your giving, evolves.

 Useful resources

Community Foundation Network: 

Giving Works: A charity which fosters and supports micro-trusts, or small giving circles. 

The Funding Network: the UK’s largest giving network, with groups across the UK, including a Youth Funding Network.

 

Donor Advised Funds

Donor advised funds are simple and easy to set-up and use, and there are a variety of schemes available which suit most donors’ needs.

You decide how much you want to give and pay it into your fund. You can also fund the account through payroll giving or by gifts of shares.

One of the benefits of operating a donor advised fund is that the host organisation deals with the administration and distribution of funds, and provides you with all the tax benefits. Donor advised funds are a tax-efficient way of giving to charity, as they can claim back the tax on Gift Aid donations and add it to the amount in your account.  If you are a higher-rate taxpayer, the periodic statements you will receive provide a useful record of your giving and will help you make your personal tax claim on your Self Assessment tax return.

For example, you could start a fund with your local foundation. You can determine your level of involvement with funding decisions, while benefiting from the foundation’s local knowledge, grant-making expertise, monitoring and reporting processes.

Charity accounts, another type of donor-advised fund, are similar to bank accounts and are designed especially for charitable giving. There are many ways to give to your chosen charities through a charity account: generally donations can be made online, with charity cheque books, via debit cards or vouchers, or by telephone, post or standing order.

However, if you are giving relatively few donations of larger amounts, or if you use payroll giving and want to benefit a particular charity regularly, it may be less expensive (and not much more complicated) to give directly to your chosen causes. You would save the administration charges, and because no interest is paid on your charity account, there could be a sizeable cost if you maintain a significant balance in your account.

Useful resources

Charities Aid Foundation:

Community Foundation Network:

Coutts Philanthropy Services Microfinance Donor Advised Fund:

Prism the Gift Fund:

Stewardship:  

 

Investing in a local vision

 In recent years we have seen the philanthropy spectrum broaden to encompass social enterprise and social investment that deliver ‘blended’, i.e. social, financial and (sometimes) environmental returns.

Social enterprises come in all sizes and some are well-established, but the majority are small and fledgling.  The social investment market is an emerging one, and as yet underdeveloped, though government through Big Society Capital and other funds aims to help draw investment in to create a more robust social economy.

Venture Philanthropy, angel philanthropy and social (impact) investment are new ways for philanthropists to take part. In the last issue of the Philanthropy UK Magazine we focussed on social impact investing for philanthropists which offers a deep dive into the topic and sources of help and support. Find it here

Community Development Finance Institutions (CDFI)

Community Development Finance Institutions (CDFIs) lend money to businesses, social enterprises and individuals who struggle to get finance from high street banks and loan companies. They help deprived communities by offering loans and support at an affordable rate to people who cannot access credit elsewhere.

They tackle poverty through wealth creation and offer investors a tax efficient way to give that delivers both financial and social returns. CDFIs increase the impact of your investment through recycling funds: as loans are repaid, they are re-loaned.

 The Community Investment Tax Relief (CITR) scheme, set up under the Finance Act 2002, offers a tax incentive to investors in accredited community development finance institutions (CDFIs). It is run jointly by HM Revenue & Customs (HMRC) and the Department for Business, Enterprise & Regulatory Reform (BERR).

CITR is available to any individual or company with a UK tax liability investing in an accredited CDFI where the investment is held for at least five years. The taxpayer, who can either be an individual or company, receives a relief to offset against their income or corporation tax liability of 5% of the amount invested in the year the investment is made, and a further 5% in each of the subsequent four years.

The total relief is worth up to 25% of the value of the investment. This tax relief is in addition to any interest or dividend paid by the CDFI.

Example

An individual subscribes £10,000 for shares in a CDFI on 1 June 2010. CITR would reduce the individual’s income tax liability for the tax year 2010/11 and for each of the four subsequent tax years by £500 (5% of £10,000). Total income tax reduction over the five years would be £2,500.

Useful resources

Community Development Finance Association: A list of accredited CDFIs, where your investment will qualify for tax relief under CITR, is available from the Department for Business Enterprise and Regulatory Reform 

Giving locally through your business

Businesses, particularly family-owned businesses, which support local organisations report many benefits in doing so –  ‘bringing employees together and energising them’, ‘developing skills’, but most clearly by ‘giving something back to a local community’.

Place is important for businesses. J Barbour and Sons, for example, originally made weatherproof clothing for the fishing industry on the Tyne, and The Barbour Trust still predominately supports North East causes. It is easier to give locally in regions that have a strong identity, like the North East, and more difficult in major capital cities like London, but the imperative ‘to look after one’s own’ is nevertheless still strong.

Being strategic about giving, by giving in a way that echoes your business so you can concentrate on what you do best, is becoming more prevalent as a Deloitte report More than just giving6 reveals. There are a number of ways that businesses can get involved with local groups. These include allocating a share of profits to a corporate foundation and distributing this to local organisations, encouraging staff to volunteer in their local communities and establishing payroll giving schemes.

 Useful resources

 Business in the Community advises businesses on social responsibility, including volunteering and charitable giving. www.bitc.org.uk

Heart of the City provides free support for businesses in the City wanting to develop or expand their existing Corporate Social Responsibility (CSR) programmes.

 

Volunteering

Giving time or expertise is a vital way to support local organisations and can be done alongside giving financial support or not. It is an effective way to get under the skin of local issues and can be a way of learning and developing new skills. Volunteering can be done at all levels of an organisation from being a trustee, on the executive board, a committee member or on the frontline. It could be about being an advocate or ambassador for an organisation and using social capital and networks to help bring in more support or raise the profile of an organisation. The opportunities are vast. For those who have built successful businesses themselves it can be a very rewarding and strategic way to approach philanthropy.

Useful resources

For volunteering opportunities, contact your local volunteer centre: www.volunteering.org.uk

Timebank helps people find things to do close to where they live or work

For trustee vacancies, search the Trustee Network’s database

Getting on Board:

Pilotlight matches talented business people with charities and manages the relationship:  

City Action is a free volunteer matchmaking service for City-based companies and community organisations in the City and City fringe boroughs.

National Association for Voluntary and Community Action (NAVCA) is the national voice of local support and development organisations in England. Setting up a charitable organisation

Setting up an organisation

For some, setting up an organisation is the best option, particularly if the ambition is to address a novel or unique courses. It requires significant time and resources so it is worth exploring whether there are existing organisations that can be supported or developed rather than reinventing the wheel. Using the local information network by talking to community experts (grant-making trusts and foundations, the local council, community foundations or existing organisations operating in a given field or area) can help establish what currently exists.

 Useful resources

The charity commission provides useful guidance on setting up charitable organisations:

Philanthropy UK Guide to giving: