Impacting investing: trends, issues and capabilities
by Secret Philanthropist
A couple of recent charity adverts have caught my attention recently. One was from a homeless charity “Just 40p per day can sponsor a room so that Sophie does not have to sleep on the streets tonight.” This makes me reflect on the difficulty of balancing the need to generate income with the responsibility for painting an accurate picture of a problem.
The homeless advert implies that Sophie is sleeping rough for want of 40p a night. While readers of this august publication will know enough to take this with a big pinch of salt, this advert is published in the wider press and members of the public who don’t spend much of their time researching the causes of rough sleeping could easily be appalled that we live in a society where MP’s salaries are rising but young people are apparently sleeping rough for want of such a tiny amount of money.
It is important to look at all charity issues in the wider context. Most money we give to charity is paying for something the state has refused to pay for. Every year we spend about £250 billion of taxpayers’ money on welfare, £100 billion on health and £97 billion on education. This is topped up by about £6 billion of voluntary funds from philanthropy of public fundraising. To understand the real impact of your philanthropy it is vital to understand where the state thinks its responsibility ends and charitable funding takes over. (I say charitable funding as opposed to charity because much of the government’s work in this area is carried out by charities but paid for by the state)
So what does the UK government do to prevent homelessness?
Firstly we spend £17 billion per year paying over 5 million people housing benefit to help them pay some or all of their rent (rent that is in itself subsidised to the tune of more billions in the case of local authority housing). So where it is only a question of money, this issue is largely dealt with.
At any given time some 40,000 people still slip through that net and need emergency accommodation. This can occur for any number of reasons including relationship breakdown, domestic abuse, eviction or inefficiency of the housing system in finding a suitable permanent home. Local authorities are obliged to provide hostel or B&B accommodation to these people. The accommodation element of this is covered through housing benefit.
On any given night in the UK about 2,000 people will be sleeping rough in the streets. Some of these will do so by choice and some will have slipped through the emergency accommodation safety net. Most of them will have issues with substance abuse or mental health issues.
I really wish this problem could be solved for 40p a night. It would cost £800 a day or about £300k per year to solve the problem. If only that were the case I would happily write the cheque myself. In truth the government spends about £350 million annually trying to solve the issue of homelessness, over and above the bill for housing benefit and still the figure for rough sleeping hasn’t improved much over time.
Over the course of the last sixty years we have built a welfare system in this country that our great grandparents would have marvelled at.
So what is the role of philanthropy in homelessness in our current system?
There are some independent organisations doing great work in helping those who have slipped through the net. They can help them apply for the benefits they are entitled to, they can offer counselling and therapy to help with mental health and addiction issues. Most of their costs will be covered by the state but philanthropy gives them independence to operate. Being independent from the state can in some cases enable them to cultivate trust with vulnerable people. Being a charity enables them to attract volunteers who can provide a friendly face. There are many who will argue that the state could spend more on the issue and in which case more philanthropic funding can only help.
I don’t have any issues with how this particular charity spends the money they raise but I would prefer to be realistic about what can be achieved. Philanthropy is picking up people who have fallen through several safety nets. Their problems are complex and expensive to resolve and they don’t always make it easy to be helped.
So, back to the advert - Does it matter that we leave the public with the illusion that we live in a callous society where young people live on the streets for sake of 40p a day. They get to feel good about their giving and while the 40p per day will not directly result in a young person like Sophie moving off the street, it will be spent on useful work. Without a doubt that message will get a better response than “40p per day will make a small contribution towards the costs of helping a middle aged alcoholic man straighten his life out a bit.”
Some might argue that the means justifies the end. I would argue that it is an insult to the work of those who created our welfare system, to the taxpayers who currently fund it, and to the social workers who work within it solving most of the problem. It is also an insult to donors to dupe them into giving money with misleading slogans. I appreciate the difficult job fundraisers have in conveying a complex issue but this case does nothing to improve public understanding of the issue of homelessness.