Trusts and Foundations - the next to be hit?

Contribution by James Huitson

I have been chatting a lot recently to my friend and mentor Bill Bruty which is something I enjoy a lot, and occasionally in between comparing the relative tribulations of supporting Portsmouth and Leyton Orient football clubs we do talk about fundraising.

Now Bill is a real expert on trust and foundation fundraising and is unusual in this field in that he is as much of a data nerd as we are at Pareto. He likes nothing more than a pleasant afternoon at the Charity Commission in the UK wading through the information on the various charitable trusts who give in the UK and as seems to be ubiquitous these days, the chat turned to the recession. Once we had finished discussing bankers and whether they are now above or below lawyers in our lists of favourite people I asked the question – so Bill, I assume the trust market is shot at the moment then?

“Funny you should say that" he replied. "I’ve been looking into that. There are a lot of trust fundraisers who want to reduce their targets by a third because of something they have read about the Barings Foundation”.

For those of you who don’t know, the Barings Foundation was one attached to Barings Bank which was infamously brought down by Nick Leeson in the 90’s and they know a thing or two about financial crises. They have said that because they make decisions on their giving based on three year market forecasts, they are anticipating that in two years time they will reduce their giving by a third because they think that two out of the next three years are going to be bad.

That all sounds reasonable, but said Bill, “I’m not sure that that is going to be typical. Lets follow the money around”.

“Take the Garfield Weston Foundation. They give out around GBP39 million a year. Do you know how much of a percentage of their assets that is? Just over 1%, they have GBP3.6 billion in assets and they have a expendable capital fund which is worth almost three years of typical grant giving. They can continue their giving levels and ride out a pretty big storm. It’s similar for lots of the oldest and the biggest of the UK trusts and foundations – they have been around for a long time, they know how to smooth things out”.

It will probably be different for the corporate foundations. Lloyds TSB for example only get money from dividends from profits from the bank and well, there might not be any. But it is not all doom and gloom and setting targets lower is probably just a cop out.

Yes, you will probably have to run faster to stand still, and yes there is ever more pressure to put forward good pieces of work with demonstrable impact and outcomes, but when was that ever a bad idea?

The recession will impact on fundraising, but it might not be the disaster some people seem to think. One thing is certain, the way to guarantee you have problems will be assume you are going to have problems and give up and go home.