Perspective

Coronavirus relief: six steps to make the most of your charitable donations


The hospitalisation of Boris Johnson led many in the media to declare the coronavirus a great leveller. While it's true that the virus does not discriminate, the harsh reality is that epidemics hit the poorest and most vulnerable communities the hardest. The reasons for this are complex, and inequality is a material factor.

Those in poverty are more likely to be in ill health, with existing conditions making them more susceptible to infection and death from COVID-19. Many are also often carers, disabled, the long-term unemployed or in insecure employment. With little savings to see them through a loss of income, a great many will turn to the charity sector for support.

But the charity sector is itself fighting for survival

Those in desperate need will be turning to charities for help just as they face their own existential crisis.

It is estimated that charities in the UK will lose £12.4bn of income due to lockdown measures introduced to contain the virus. While the recent £750m pledged by the UK Government is a welcome lifeline for the smaller charities it aims to assist, it is less than 10% of the estimated lost income for the sector – and far less than the fiscal stimulus provided to business.

What charities predict about their own futures

Assuming no extra help becomes available how long do you think your charity can operate in its current form, given the coronavirus  crisis?

6% up to four weeks
17% 1-3 months
14% 4-6 months
17% 7-12 months
42% more than 12 months
4% don't know

Source: CAF, March 2020. Survey of 271 charities

Charities and social enterprises find it difficult to access or qualify for other government arrangements. Many are unable to furlough staff because employees are needed to deliver services to the most vulnerable people in our society.

As one charity CEO put it “Now is the time for this sector to mobilise, not mothball”.

Charities faced challenges even before the pandemic, but there is now a stark and urgent need to ensure they survive.

Now is the time for this sector to mobilise, not mothball

With so much need and so many charities it is easy to become overwhelmed. The key question for many donors is how can I make my giving as effective as possible?

1: Set parameters for your giving

Who do you want to give to? Ask yourself what are you seeing and hearing that has touched or distressed you. Do you want to give broadly, or to specific groups disproportionately disadvantaged by the crisis? What has inspired you and made you want to get involved?

Set a budget as this will determine whether you support one or many different organisations. If funds permit, split this into two parts: a contribution toward a rapid-response strategy, and some funding for the longer-term implications of the crisis as the consequences of lockdown unfold.

Consider your geographic preferences. Do you want to strengthen the UK’s national effort, supporting those in the NHS and other frontline services, or give to those in need locally? Or do you want to contribute toward an international response?

Trust your instincts. Speed over perfection is important

Most importantly, trust your natural instincts. Any amount given now to any cause anywhere will make a huge difference as the need is so widespread and urgent. Speed over perfection is important.

2: Think beyond the immediate frontline

The consequences of social distancing will be far reaching. Economic disadvantage brings increases in suicide, substance abuse, domestic violence, homelessness, and food insecurity. Some charities are already  experiencing a significant demand for their services. Calls to Age UK have increased 40% as the elderly experience a triple effect of reducing social care, isolation and vulnerability to the virus itself.

In April, Refuge, the domestic violence charity, reported an increase in online traffic of 700% and said phonecalls more than doubled. Long waits for Universal Credit are forcing thousands of people to use food banks such as The Trussell Trust, causing the charity to launch the #5weeksTooLong campaign.

It’s clear that however long social distancing remains in place the impact is going to be felt across a wide range of charity sectors. This microsite from ThinkNPC will be updated as the crisis progresses, mapping the impact on various causes from the elderly through to refugees.

3: Be flexible

Once you have made your decisions on which organisations to fund, don’t impose restrictions on how your money is to be used. We firmly believe in providing unrestricted funding to the charities you decide to support. Most charities’ staff are fanatical about improving the lives of the beneficiaries they serve. They know best where your money will have the most impact.

If you are already funding charities, consider removing any restrictions you may have made in the past and give the charities breathing room on reporting requirements. Give them the freedom to direct your commitments to see them through.

Factor organisational survival into your decision making. As tough a decision as we know it will be, charities that were already on the brink prior to the pandemic are unlikely to survive.

4: Harnessing the power of collective giving

The efforts of Sir Tom, who raised over £30 million for the NHS Charities Together Campaign, highlight the power of collective giving.

While innovation is important, funding tried and tested organisations in times of crisis is normally the right thing to do. There are a number of rapid emergency response funds which have been established in the UK and internationally, acting as a conduit to direct capital to areas where it is needed the most and at speed. These funds draw on experience of previous disaster relief efforts.

5: National, local, or global?

National options

The National Emergencies Trust was established following the Grenfell Tower fire and Manchester bombing in 2017. The NET provides funds to those most in need at a time of national emergency. Over the past few months it has been establishing partnerships with a number of trusted organisations including local community foundations.

In your backyard

Many like to make a difference in their home town or region. For guidance on local organisations to fund look firstly to your local community foundation. They understand the specific needs of your area and will have partnered with effective grassroots organisations that work with the most vulnerable.

Further afield

Internationally, the greatest in need are the vulnerable communities in countries with poor healthcare systems. Providing support to track and contain the spread of the virus, ensuring supplies reach local community healthcare workers, funding testing, vaccine development and treatment are just some of the projects that are in urgent need of capital. The World Health Organisation has established a COVID-19 Solidarity Response Fund* to co-ordinate the global response.

6: Last but not least – safety first with your donations

While speed is of the essence, ensure that the charity you are supporting is legitimate. Check this via the Charity Commission website (or the equivalent in the country you are donating).

Here you will find information on the charity including its finances and board members. In addition you can research the charities’ own websites and see who is associated and already funding them. Are these organisations and people that you know and trust? Take extra care with newly established charities.

Sadly, charity scams including organisations purporting to be the WHO are already operating. Larger benefactors who are using a Donor Advised Fund structure will be able to take comfort in the knowledge that the required due diligence will have been undertaken by the trustees.

Need further help?

For those planning to make large gifts and establish their own, longer-term response fund there are a number of advisers who can help. Please do let us know your plans as we can help find you the expertise you need from a number of philanthropy advisory organisations.

*If you wish to donate to the WHO in order to claim UK tax relief, you will need to donate via their UK response fund The Charities AID Foundation COVID-19 Fund. If you are not a client of CAF you can still donate to the WHO COVID-19 Solidarity Response Fund by emailing CAF at ttge@cafonline.org and they will help you donate.

 

This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.

This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.

All data contained within this document is sourced from Cazenove Capital unless otherwise stated.