An open letter to philanthropists, trustees of grant-making foundations, and other funders:
Some of the charities you fund are on the verge of going bust. If you haven’t heard from them yet, or it’s still just a trickle of enquiries, it’s quite possible this is because they’re in crisis mode and that letter or phone call to you is somewhere on a to-do list of 1000 other urgent priorities. It’s also possible that they’re terrified to call you in case you refuse to consider their requests or even pull the plug on the funding and so hasten their demise.
Why? The coronavirus pandemic and associated social lockdown means the charity sector is facing a sudden shortfall of an estimated £4.3 billion of income in the next three months. Fundraising events have been cancelled and trading has stopped overnight.
Despite your generous donations and grants, most charities have minimal, if any, reserves; many who have apparently generous reserves on paper will rapidly run out of cash in weeks. Their reserves are commonly in buildings or stock which cannot be liquidised quickly to pay staff costs when other revenue streams dry up. Those that do have sufficient reserves to get through the current crisis could collapse later if there’s a second wave of the pandemic or longer-lasting economic disruption.
They’re not going to rush about with a megaphone announcing to their funders that they’re going under – for fear of losing what they have from you, or creating panic among staff, donors and other stakeholders. Some may, Micawber-like, hope something will turn up.
But this isn’t about charities – it’s about the people they serve. No charity = no support. You have to think about whether the people and causes you’re passionate about are going to be served now and in the future by your grantees. Will those charities that you spent so much time and effort selecting, monitoring and even capacity-building even be around in three months’ time to serve them? It’s that serious.
But here’s the thing: YOU CAN HELP! By being a good grant-giving trustee – show you get it. Break some rules and chuck some conventions away. Take a few well-calculated risks. There are bigger considerations here than grant monitoring and reporting, KPIs and outcomes metrics.
Right across society, the normal rules are being suspended in order to deal with an emergency. What the Government is now doing would be unbelievable in normal circumstances. The norms of social behaviour have been turned upside down. Everybody is improvising and changing. You can make sure that as Trustees you’re also embracing the need for flexibility and suspending normal rules as necessary in an emergency, just as everybody else is.
Charities themselves are improvising and reconfiguring their ways of working and priorities as energetically as any other sector, if not more so. Here are some examples of how you can help. Many of your colleagues are doing this already:
1. Shift programmes to support core costs. You may be funding or considering funding a project. You may normally prefer that. But when charities are about to go under, the priority is to ensure survival. No charity = no project. Please suspend your normal preferences, because the times are not normal.
2. Be flexible about monitoring and reporting. Charity staff are focused desperately on urgent change and survival. Suspend the normal demanding written reports for now. A quick check in by telephone may be more appropriate. Don’t expect regular monitoring and evaluation or end-of-project reports as if there were no emergency.
3. Adjust your appetite for risk. Remember, in fulfilling your duties to support charitable causes, the normal rules of accountability are important BUT the survival of good charities is MORE important. Our priorities as Trustees must change in this emergency. It is right to accept higher risks when survival is at stake.
4. Don’t wait for hard pressed charity staff to come to you. Take the initiative and check they’re doing all right. Offer flexibility and support to ensure survival. Offer other help if you can’t offer further financial support.
5. Speed up the process of applying for emergency funds. Loosen your purse strings if you possibly can. The value of your endowments will surely recover one day, but a bust charity will not resurrect itself so easily.
6. Respond quickly to cash flow crises. Many charities are struggling to get overdrafts from banks yet income has dropped sharply or stopped completely. Think about how you can help their cash flow to tide them over. Keeping those key staff and volunteers working during a social crisis may be the very best investment you ever make!
7. Remove restrictions on your current grants, even temporarily. This can give the charity’s trustees more freedom to manoeuvre, if they can put your restricted grant towards cash flow or other operational emergencies even for a limited time. This could not only save the charity but paradoxically secure your investment – because if the charity goes under, you’ll lose it anyway.
8. Think how you might relax or adjust your normal strategic priorities and grant criteria. They can come back when the emergency is over; by then we might be living in a substantially different world, and your previous strategy could be obsolete.
9. Consider indirect or secondary effects of the crisis. Think how you might help more charities to help those afflicted directly or indirectly by the virus or by the near-term effects of the lockdown – even if that wouldn’t normally be your subject area.
10. Don’t wait for the next quarterly Board meeting to discuss your response. In a couple of weeks, let alone a couple of months, it will be too late for some charities to save themselves. This is urgent. As I am sure many of you already doing, use zoom or equivalent videoconferencing, convene emergency board meetings, see how you can save vital charitable work now. Every day matters.
Foundations are so important at the best of times but now so more than ever. Thank you for the incredibly important work you do to support the charity sector. You can be the superstars of helping the charity sector survive and thrive – thereby helping wider society to get through this with the minimum possible damage.
Protect your investment by protecting your charities!