Increase in grant-making belies concerns for the future

Increase in grant-making belies concerns for the future

News

The value of UK private grant-making, excluding Big Lottery Fund grants, grew by 9.4% in 2007/08 over 2006/07 but figures may not capture the ‘great variety’ of trusts and foundations, according to the new Charity Market Monitor 2009, out this month.

Despite the overall growth in real terms, 41% of trusts saw a fall in the value of their grant expenditure as the net asset value of the top 300 charitable trusts fell by 10%, the report said.

Professor Cathy Pharoah, author of the report and co-Director of the ESRC Centre for Charitable Giving and Philanthropy at Cass Business School, London, said, “This is clear evidence of the toll the recession is taking.”

However, the report observed that grant-making by the major charitable trusts has been maintained as a result of some large gifts. These include a transfer of assets to the Children’s Investment Fund Foundation that led to a £447m increase in its net value, and a gift of £106m to The Monument Trust from Simon Sainsbury.

The researchers voiced concern that major gifts may be not be sustained in post-recession years. Pharoah’s colleague Paul Palmer, professor of Voluntary Service Management at Cass Business School, told Philanthropy UK that, “Nobody really knows if high-net-worth giving, including one-off capital gifts, will go up or down. There’s some evidence but no complete empirical data at present that donations are falling."

“There is a great variety of trusts and foundations in the UK and not all grant-makers have endowments," Palmer added. Many rely on fundraising,  which is a “a far less certain source of income than the majority of endowed foundations’ cautious investment strategies,” he said.

It is hard to predict the impact of recession on fundraising, Palmer said; Comic Relief raised a record £80m in March 2009. He said the upcoming BBC Children in Need in November will be an important indicator.

CMM did show that corporate giving was up in 2007-2008, contrary to expectations that it would be hit first by the recession. The top 300 corporate philanthropists increased giving by 18% to reach £1.7bn, including donations in-kind, or by 15% to reach £1.1bn without those gifts.

The fundraising income of the largest 300 fundraising charities grew by 0.9% in real terms. Although 37% experienced a reduction in fundraising income from the previous year, the top ten fundraising charities grew by 2.3%.

Pharoah said, “Charities are in a good position to establish priorities in beneficiaries’ needs, and to communicate these to individual and major donors to ensure that they continue to regard their charitable gifts as an important investment in society.”