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See page 45 for charity suppliers directory
Plus:
www.charitytimes.com
CHARITY TIMES AWARDS View the shortlist inside
Fund...
BEING BROAD-MINDED
WIDENS HORIZONS.
WHEN IT COMES TO INVESTMENT,
SEE HOW WE’RE THINKING
BEYOND THE OBVIOUS.
CALL WILLIAM R...
Editorial
Comment
Editor
Matt Ritchie
matthew.ritchie@charitytimes.com
020 7562 2411
Contributing Writers
David Adams, Car...
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charitytimesSeptember_2016[1]

  1. 1. See page 45 for charity suppliers directory Plus: www.charitytimes.com CHARITY TIMES AWARDS View the shortlist inside Funding: Risk management: Profile: Technology: Corporate partnerships How do you make sure you find the right company for your organisation? Insurance New legislation aims to create a fairer balance between insurers and policyholders Caron Bradshaw How CFG is placed to face the future after a major change programme Data management Charities could be sitting on a potential treasure trove in the data they hold Raising the bar News round-up Sector and investment columns Appointments August/September 2016 What steps have fundraisers taken to adjust practices and approaches in the wake of a difficult year?
  2. 2. BEING BROAD-MINDED WIDENS HORIZONS. WHEN IT COMES TO INVESTMENT, SEE HOW WE’RE THINKING BEYOND THE OBVIOUS. CALL WILLIAM REID HEAD OF CHARITIES TEL. +44 (0)20 7150 4000 OR VISIT WWW.QUILTERCHEVIOT.COM Belfast Birmingham Bristol Dublin Edinburgh Glasgow Jersey Leicester Liverpool London Manchester North Wales Salisbury Investors should remember that the value of investments, and the income from them, can go down as well as up. Quilter Cheviot Limited is registered in England with number 01923571. Quilter Cheviot Limited is a member of the London Stock Exchange and authorised and regulated by the UK Financial Conduct Authority.
  3. 3. Editorial Comment Editor Matt Ritchie matthew.ritchie@charitytimes.com 020 7562 2411 Contributing Writers David Adams, Caron Bradshaw, Craig Inches, David Kirk, Peter Lewis, Gillian McKay, Richard Nelson, Lynn Pates, Antony Savvas, Becky Slack, Antonia Swinson Design & Production Matt Mills matt.mills@perspectivepublishing.com 020 7562 2400 Advertising Manager Sam Ridley sam.ridley@charitytimes.com 020 7562 4386 Subscriptions perspectivesubs@dynamail.co.uk 01635 588 861 Subscription Rates (6 issues pa) £79pa registered charities £119pa rest of UK, £127pa EU £132pa elsewhere Printed by Buxton Press All rights reserved. The views expressed are not necessarily those of the publishers. ISSN : 1355-4573 Published by Perspective Publishing 6th Floor, 3 London Wall Buildings London EC2M 5PD www.perspectivepublishing.com Managing Director John Woods Publishing Director Mark Evans Getting on with it T here doesn’t seem to be a meaningful consensus on the regard in which charities are held by the general public. The Charity Commission caused a stir in the summer when publishing research indicating public trust in charities had plumbed depths not reached since its monitoring began. Having measured public confidence in the sector since 2005, this year’s survey found people’s trust in charities had fallen to a score of 5.7 out of 10 this year, from 6.7 last year. Reactions ranged from ‘the end is nigh’ catastrophising, to head-in-the -sand denialism. These extreme interpretations of what is a flawed but nonetheless useful measure of the state of the sector were unhelpful. It is good that the commission carries out these temperature checks. Indeed, it is arguably vital to the regulator’s work if it is to discharge its duty to develop public confidence in the sector. And it is helpful to know how the public, whose support is the lifeblood of so many charities, views civil society. It would be naive bordering on delusional to expect trust not to have taken a knock after the year the sector had. And it could have been far worse. As Institute of Fundraising chief executive Peter Lewis points out in his regular column (p16), people are still supporting charities in huge numbers despite the troubling picture the commission’s research paints. Many may be sceptical about their concept of the sector, but by and large they still trust and treasure the individual charities they know well. Data suggests that while recruiting new donors has been tougher, and this will have a range of drivers in addition to issues of trust, charities are holding on to existing supporters. Nevertheless it would be unwise to take the ostrich approach. It is not even an option, after a new regulatory framework for fundraising was introduced and is now in force. What is encouraging is the work charities and infrastructure bodies have done of their own accord to get the sector’s house in order. It is not surprising, charities are by nature ‘doers’, fixers rather than describers of problems. Our cover story this issue (p20) looks in detail at some of the great work that charities are doing to ensure their reputations, sustainability - and with it the ongoing health of the sector. Matt Ritchie, Editor 03www.charitytimes.com the ongoing health of the sector. Average net circulation of 9,426 copies for July 13 – June 14
  4. 4. In this issue Contents August/September 2016 20 18 Caron Bradshaw Charity Finance Group took on a lot in its nearly-completed change programme, and now faces the future refreshed. CEO Caron Bradshaw told Matt Ritchie about the charity’s new approach 20 Raising the bar Media coverage in 2015 made for uncomfortable reading for fundraisers. What steps has the sector taken to adjust practices and approaches in the wake of such an awful year? 06 Interview Fundraising News & views Regulars 06 News in brief 10 Appointments 12 Diary 40 Charity chatter Columns 13 Fraud prevention by David Kirk 14 Brexit by Caron Bradshaw 15 Social media by Gillian McKay 16 Trust by Peter Lewis 17 Property by Antonia Swinson 34 Seeking bond-like returns for cash by Craig Inches and Richard Nelson 43 Why use inflation based targets? by Lynn Pates Charity Services 45 Suppliers Directory 04 www.charitytimes.com 18
  5. 5. In this issue Contents 36 36 Knowledge is power Charities could be sitting on a potential treasure trove in the data they hold on supporters and data generated by their operations Data management 31 Taking cover The new Insurance Act seeks to create a fairer balance between insurers and policyholders. Charity Times covers the changes Insurance 05www.charitytimes.com 24 24 The perfect match Corporate partnerships can offer a wealth of benefits but how do you make sure you find the right company for your organisation? Corporate partnerships 31
  6. 6. News in brief depression aLLiance and mind have merged. The two charities said they have a lot in common, including their aims to support everyone with depression, give people with depression a voice to raise awareness, and bring people with experience of depression together to support each other. macmiLLan cancer support maintains its position as the top charity Brand, new analysis from YouGov’s mid-year CharityIndex shows. Every six months data firm YouGov releases its Buzz rankings; a study of which charity brands are generating the most positive sentiment. Macmillan Cancer Support has maintained its top position since YouGov started looking at the charity sector. Cancer Research UK is in second place with Help for Heroes in third. The top five is completed by the Dogs Trust and the British Heart Foundation. The list is rounded off by RNLI, and Guide Dogs, with Marie Curie, the National Trust, and the Alzheimer’s Society in joint eighth place. CharityIndex measures the public’s perception of 45 charities on a daily basis across a range of measures. YouGov’s 2016 mid-year rankings were compiled using Buzz scores from the start of January to the end of June. access – the Foundation For sociaL investment has invested £4.44m in the Health and Wellbeing Challenge Fund South West, to be delivered by Resonance. The South West Academic Health Science Network has also invested £400,000. The fund will offer funding of up to £150,000 to charities and social enterprises in the South West of England working to bring about positive impact in health and wellbeing. The new programme is an initiative of the £45m Growth Fund, which is designed to increase the availability of small, affordable, unsecured loans for charities and social enterprises. The Growth Fund, managed by Access, provides a blend of loans from Big Society Capital and grants from the Big Lottery Fund, to social investors across England. city Bridge trust has awarded £312,100 in grants to organisations heLping Londoners engage in the perForming arts. Organisations to benefit from recent City Bridge Trust grants include Action Space London Events, which received £118,300 to help expand its arts provision for people with learning disabilities, and Stratford Circus Arts Centre which received £93,240 to help fund and develop its flagship Blue Sky Actors performing arts group for adult actors with learning difficulties and/or disabilities. the Big Lottery Fund has awarded a tech For good organisation 1.12m to improve charities’ digitaL eFFectiveness. The Centre for Acceleration of Social Technology (CAST) will use the funding for two initiatives over three years. An intensive product accelerator programme will work closely with 12 charities across the UK to build new digital services. CAST will also develop a set of learning tools, templates and publications delivered on- and off- line to provide support around digital development and facilitate knowledge sharing. CAST will invite applications for its digital accelerator later this year, with the first two charities starting in 2017. donations paid into charities aid Foundation’s charitaBLe accounts reached a record £524m Last year, according to CAF’s annual report. It was the first time donations paid into CAF exceeded £500m, and £462m was redistributed to good causes in 2015/16. Announcing its results CAF said it manages donations on behalf of wealthy philanthropists, 2,500 businesses and more than 250,000 people. There was a 10 per cent increase in donations into CAF Charitable Trust accounts and legacies in 2015/16, compared to the previous year. The amount they paid out to charities also rose - from £156m to £164m. Regular givers donated £104m through CAF, up £4m on the previous year. “It was the first time donations paid into CAF exceeded £500m, and £462m was redistributed to good causes” 06 www.charitytimes.com
  7. 7. News in brief LLoyds Bank Foundation has committed £4,122,132 in the second oF its three annuaL grant rounds to support local charities, the grant maker has announced. Across England and Wales, 88 small and medium-sized charities tackling disadvantage will receive grants up to £75,000 over three years. The funds will help charities with an income of £25,000 to £1m as they respond to the growing needs of those they support with increasingly limited resources. One-in-five grants were awarded to charities supporting those furthest away from the labour market into employment. Other top ranking issues among grants awarded were homelessness at 15 per cent, mental health issues 11 at per cent, and those abused or at risk of abuse at 15 per cent. Grants awarded to 58 charities through the foundation’s Invest programme will fund charities’ core organisational and programme delivery costs. Lloyds Bank Foundation said 30 charities received funds to develop and grow stronger through its Enable programme, with grants funding new areas of work, pilot programmes or income diversification initiatives like social enterprises. LaBour Leadership candidate owen smith has said a government he Leads wouLd end tax-advantaged charitaBLe status For private schooLs. Writing in the Guardian, Smith said it is “deeply unfair” that fee charging schools also receive tax breaks due to their charitable status. “On my watch, there will be no cautions or caveats about whether a private school is charitable or not, this wealthfare will end,” Smith wrote. The Labour MP for Pontypridd said scrapping the tax breaks would raise “hundreds of millions of pounds”. charities and community groups are Being encouraged to appLy For peopLe’s postcode Lottery’s £2.5m dream Fund. Funding from the scheme will be offered over two years from 2017. The Dream Fund encourages charities and community groups to work together on a project they have always wanted to deliver but did not previously have the opportunity to. This year’s prize is the biggest ever, with a top award of £1m and a total pot of £2.5m. Applications are invited from projects that fit within one or more of the charitable purposes, which include early child development, helping refugees in the community, conserving the marine environment, reconnecting with the natural world, and engaging people with arts culture and heritage. The Dream Fund has invested over £4.8m in 21 projects to date. Previous winners include Missing People’s ‘Child Rescue Alert’, Glasgow based ‘Play on Pedals’, and Valley Kids’ ‘Building our Dreams’. peopLe Born around the miLLennium are the most receptive age group to direct maiL From charities, a new study suggests. Research from direct marketing service provider Wilmington Millennium found 6 per cent of ‘Generation Z’ believe charities have been irresponsible with their direct mail targeting, compared with the mean consensus of 20 per cent. The survey of 2,000 people found Generation Z were most likely to boycott an organisation if it were to send poorly targeted mail. People in this age group received the least amount of direct mail, but the most non-personally addressed mail. Half of Generation Z respondents believed that a piece of personally addressed direct mail was worth opening, compared with the average of 19 per cent. charity campaign #givingtuesday has Launched For 2016, the third year in which the initiative will run in the UK. Led in the UK by the Charities Aid Foundation, #GivingTuesday will take place on 29 November this year. The day follows the pre-Christmas retail sprees of Black Friday and Cyber Monday, and encourages people and businesses to contribute to good causes. Announcing the launch of the campaign for 2016, CAF revealed a new logo and website for #GivingTuesday, alongside the new tagline ‘Do Good Stuff’. Last year #GivingTuesday broke a Guinness World Record for the most online donations in 24 hours, as people gave away £35m to good causes globally. 07www.charitytimes.com “Smith said it is ‘deeply unfair’ that fee charging schools also receive tax breaks due to their charitable status”
  8. 8. News in brief The ChariTy Commission widened The ChariTable objeCTs of a hisToriC almshouse to allow it to help its beneficiaries on a longer term basis, the regulator has announced. A report published today explains that the commission accepted St Nicholas Hospital’s application to widen its objects to allow it to provide financial assistance to beneficiaries when they can no longer live independently in the almshouses. The commission said it decided there was a legal case for widening the charity’s objects. St Nicholas Hospital’s beneficiaries were living longer, which combined with their health needs meant they had to receive specialist care. St Nicholas Hospital demonstrated it had sufficient funds to provide the support, the regulator said, and the change being requested was considered to be within the spirit of the existing purposes. allia impaCT finanCe has made The firsT alloCaTion of This year’s funding from iTs ChariTable bond programme for sCoTland, enabling Lochaber Housing Association to build 50 affordable homes in the Fort William area. Allia is working with the Scottish Government to fund the development of affordable housing across Scotland, helping them invest more than £50m in charitable bonds over two years. The investment will support almost 1,000 new homes. The bonds provide a new source of finance for housing associations, and are ethical financial products. No profit is taken by Allia, who issue the bonds on the Scottish Government’s behalf. The interest on the loan to Lochaber Housing Association, over half a million pounds, is converted into a charitable donation, which the Scottish Government gives to housing associations for the construction of new social housing. This latest bond means the Scottish Government have now provided development finance for 581 affordable homes, and generated over £9m for charities of which £6.7m will go towards the construction of new social housing. small ChariTies will pay less Towards The CosT of running The fundraising regulaTor Than originally proposed, the new organisation has announced. Announcing its levy framework the new regulator also set out its plans for the Fundraising Preference Service which will allow people to opt out of almost all fundraising communications. Having consulted on its levy plans, the Fundraising Regulator has adjusted the allocation of costs so slightly higher fees are paid by charities spending more than £20m on fundraising. Around 2,000 will fall within the scope of the levy, but smaller charities will be able to use a registration scheme enabling them to highlight their support for and adoption of good practice. A new consultation on the FPS proposes that the system will apply to charities spending £100,000 a year or more on fundraising. The regulator recommends limiting the ability to register a vulnerable third-party member to those with power of attorney or equivalent, to ensure appropriate safeguards are in place for a legitimate decision to be made. Views are also sought on how the FPS is expected to work alongside the Telephone Preference Service and the Mail Preference Service, with charities being offered the opportunity to contact those persons that have donated previously, but are signed up to existing preference services. ChariTies need To make beTTer use of TeChnology To geT The mosT ouT of The younger generaTion, according to new research. A study from YouGov and the Charities Aid Foundation has suggested there are opportunities for charities to increase donations through better use of mobile apps, social media, and contactless payments. The paper, Appetite for donation, states 32 per cent of young adults would donate via an app in the next year if the technology was available. The survey of 2,000 British adults found 66 per cent now have contactless cards, and 34 per cent of those who use them carry less cash as a result. One in three young adults said they would use contactless payments to give to charity if they had the option. 08 www.charitytimes.com
  9. 9. News in brief finanCial baCking for The sir sTephen bubb-led ChariTy fuTures programme is being provided by the partners of Woodford Investment Management. The project is initially being funded by a contribution of £400,000 over two years. Bubb has stepped down as chief executive of Acevo to carry out the work. It aims to improve the effectiveness of charities, including through lifting standards of leadership and governance. Woodford Investment Management is the firm founded in 2014 by Neil Woodford after over 25 years at Invesco Perpetual. Jonathan Smith, head of corporate social responsibility at Woodford, spoke at the Charity Futures Programme’s launch event at the House of Lords in July. Attendees at the launch, which also served as a celebration of Bubb’s time at the helm of Acevo, heard that through his role Smith’s dealings with charities gave him the view that there needed to be greater focus on sustainability and how charities are run. Smith said he approached Bubb after hearing him on Radio 4’s Today programme after the collapse of Kids Company. Bubb was was making the case for stronger charity governance and for donors to think about sustainability and not just the next project. The regulaTor is invesTigaTing a ChariTy that it says does not appear to have had a bank account since last February. Deen Team also appears to have been operating outside the terms of its governing document, the regulator said, and the commission said the charity’s property is at risk due to poor governance and inadequate financial controls. The charity’s objects include the relief of poverty in the UK, helping young people via recreational and leisure activities, and disaster relief. Announcing the statutory inquiry, the commission said it carried out a compliance visit to the charity in July 2014 as it was newly registered and operating in Syria, “a high risk area”. The regulator issued regulatory guidance and advice, but upon re-engaging with the charity did not receive the requested information and trustees had “partially complied” with legal orders to provide information. “The regulator has concerns regarding the financial management of the charity by the trustees, including that the charity does not appear to have had a bank account since February 2015 and it is in default with filing its first charity’s accounts with the commission,” the regulator said. asseT risk ConsulTanTs has launChed a new porTfolio analysis serviCe for ChariTy TrusTees. The offer further develops the information ARC provides to the third sector. Charities and their advisers will be able to assess both the performance and suitability of their investments against benchmark, peer group and other similar charities’ portfolios, review the risk-adjusted returns generated for the charity sector and receive cost-effective independent performance reporting. Delivered through ARC’s research portal, www.suggestus.com, the inaugural ARC Multi-Asset Charity Fund Review gives an overview of multi-asset charity investment funds (CIFs) performance within the charity sector and is available at no cost. The ChariTy Commission has published updaTed guidanCe To refleCT The new sTaTuTory power for ChariTies To make soCial invesTmenTs. The guidance provides information about the new social investment power that was introduced as the first phase of the Charities (Protection and Social Investment) Act 2016 came into force. The aim is to give confidence to charities to undertake social investments. The new interim guidance supplements the commission’s existing guidance - Charities and investment matters (CC14). The new power was developed and introduced following a programme of work and subsequent Law Commission recommendation in 2014. bloCkChain TeChnology Could make ChariTy adminisTraTion requiremenTs like annual reporTing exTinCT, according to a discussion paper from Charities Aid Foundation. The paper considers that almost all functions of charity regulators could be automated using the technology. Blockchain technology, which underpins Bitcoin, is a decentralised public ledger. “One in three young adults said they would use contactless payments to give to charity if they had the option” 09www.charitytimes.com
  10. 10. Charity Appointments People on the move... The latest appointments from around the charity sector Peter Chambré Peter Chambré has joined the board of Cancer Research UK. Chambré chairs a number of life science and healthcare companies including Immatics Biotechnologies, a company developing new cancer immunotherapy treatments. He also chairs Cancer Research Technology. Graeme hodGe Graeme Hodge has joined All We Can as deputy chief executive. Hodge brings experience and knowledge of working and living overseas, having been involved in international development and public engagement initiatives focused on social justice, poverty alleviation and community action. Sara Naylor-Wild St Monica Trust has named Sara Naylor-Wild director of transformation and development. She joins from the Accord Group where she was assistant director of health, care and support. She has worked in senior management positions since being an inspector for the Commission for Social Care Inspection. lyNda WilliamS National children’s charity bibic has appointed Lynda Williams as its new chief executive. Williams was previously director for Off The Record, and has spent the past two decades within the third sector and working with young people. bibic, headquartered in Somerset, provides therapy and support for children with developmental difficulties. aliStair burNett Sightsavers has appointed Alistair Burnett in the new role of director of news. Burnett has more than 25 years of BBC experience including a decade as editor of The World Tonight on Radio 4 and, before that, as editor of Newshour on BBC World Service. The role will entail co-ordinating media outreach and social media, and supporting Sightsavers’ advocacy work. If you have any appointments to announce please contact matthew.ritchie@charitytimes.com 10 www.charitytimes.com
  11. 11. Charity Appointments melaNie WaterS Melanie Waters is to join Help for Heroes as chief executive from November. Waters joins from The Poppy Factory, where she is chief executive. Waters is a director and commissioner of Forces in Mind Trust, a member of NHS England’s Armed Forces Clinical Reference Group, and elected vice-chair of Cobseo. SaNdy luk The Marine Conservation Society has appointed Sandy Luk as chief executive. Luk is currently director of programmes at leading environmental law NGO ClientEarth. MCS cares for the UK’s seas, shores and wildlife. The charity campaigns for clean seas and beaches, sustainable fisheries, and protection of marine life. JaSoN loo Jason Loo, a senior associate at KPMG, has joined CLIC Sargent after the charity supported him from his diagnosis through treatment for cancer. Loo, 26, has volunteered for the charity and spoken about his experiences at events. He is a member of CLIC Sargent’s Children and Young People’s Advisory Group. StePheN rimmer Barnardo’s has named Stephen Rimmer as impact and learning director. He will help ensure Barnardo’s new 10 year strategy is delivered effectively. A former director general of the Home Office’s Crime and Policing Group, he was most recently strategic adviser to the Commissioner of the Metropolitan Police. elliot baNCroft Rathbones has appointed Elliot Bancroft as an investment director in the charities team, based in London. Elliot has over 13 years’experience of advising and managing charitable assets. He previously worked at Investec Wealth & Investment for eight years in a similar capacity, and as trustee and treasurer of a young persons’charity he brings with him an understanding of the sector. terry riCh Terry Rich has been appointed chair of Avenues Group – a group of non-profit organisations supporting people with complex needs arising from learning disabilities, autism, acquired brain injury or dementia. In a long career in the health and social care sector of local government, Rich has worked to lift standards and introduce integration across health and social care. 11www.charitytimes.com
  12. 12. Events Diary money age awards 13 October Millennium Hotel Mayfair http://moneyage.co.uk/awards/ IFC 2016 18 - 21 October The Netherlands http://bit.ly/1VNahLn soCIal medIa rIsks Forum 17 November South Place Hotel, London http://socialmediarisks.co.uk/ Better soCIety awards 11 May 2017 Millennium Hotel London Mayfair http://bettersociety.net/awards/ CharIty tImes awards 2016 28 September 2016 Park Plaza Westminster Bridge, London The Charity Times Awards reaches its 17th year in 2016 and this highly successful, popular, and growing annual gala event will be bigger and better than ever. The Charity Times Awards continue to be the pre- eminent celebration of best practice in the UK charity and not-for-profit sector, and a key annual event in recognising and celebrating those who make a difference. Rewarding excellence across almost 30 categories, bookings are open now. charitytimes.com/awards/ CharIty Fraud ConFerenCe 28 October 2016 Royal College of Physicians, 11 St Andrews Place, London NW1 4LE The second national charity fraud conference will bring together senior figures from the charity and counter- fraud worlds to discuss the fraud challenges charities face, highlight risks, and share best practice in fraud prevention, detection and response. Confirmed speakers include representatives from: Amnesty International, Big Lottery Fund, Charity Commission, City of London Police, Fundraising Regulator, Oxfam GB, and Weber Shandwick. www.fraudadvisorypanel.org nCVo/BwB trustee ConFerenCe 7 November 2016 The Brewery, London Charities are under the spotlight. It is crucial to understand your responsibilities and keep up to date with the latest developments in governance. Attend this event to get essential updates on regulation, to explore what board leadership should look like in the current climate and for a unique opportunity to meet and learn from peers. Trustees, chairs, honorary treasurers, chief executives and anyone who works with a governance board will find the day particularly beneficial. www.ncvo.org.uk September 2016 Not to miss... 12 www.charitytimes.com
  13. 13. With public trust and confidence in charities strained it is important for the sector to be more open and honest about fraud Fraud Column A s the saying goes: prevention is better than cure, and this applies equally to sickness and fraud. In the current economic and political environment never has it been so important for charities to be aware of the risks of fraud and to maintain good housekeeping practices to protect themselves, their donors and their beneficiaries. There are three main reasons for this. the increasing threat Fraud is now the most common crime in the United Kingdom. The latest official statistics show that almost six million fraud and cyber crimes were committed last year. The average person is 10 times more likely to be the victim of fraud than theft. Although there are no recent figures available for how often charities are hit by fraud the cost to the sector could be approaching £2 billion a year. More generally, about one in every two UK organisations (regardless of size and sector) could become a victim of economic crime within the next two years. This means that for the vast majority of charities it is now a question of ‘when will we be hit’ rather than ‘if’. the police can’t deal with everything The sheer volume of fraud means that it is almost impossible for the police to deal with every reported case and it is unrealistic to expect them to. Over the past few years there have been sharp cuts to budgets in almost every area of criminal justice and the picture is bleak: limited police resources nationwide, few reported frauds investigated, long drawn-out prosecutions with unpredictable outcomes, and a poor deal for many victims. Although the police and prosecutors may be more likely to take action against charity fraudsters because it is in public interest, this is not inevitable (especially in cases perceived to be ‘low value’) and in any event it does not guarantee the return of any monies lost. public confidence matters immensely in fighting fraud With survey data from the Charity Commission showing public trust and confidence in charities at a 10-year low, it is important for the sector to be more open and honest about fraud and demonstrate that proactive steps are being taken to prevent it. Collectively the sector has already made some good progress in addressing fraud issues: a national charity fraud conference was held last year with another one planned for this coming October, a new Charity Sector Counter Fraud Group (CSCFG) has been set up by the Charity Commission to bring charities and professional bodies together to share information about fraud risks and good practice. A dedicated microsite is expected to be launched in the Autumn. fraud happens. it’s how you manage it that counts Fighting fraud is a job for everyone at every level. It begins with good governance, the right culture and sound financial management. Charities need to understand and assess the risks they face and then take proportionate steps to manage them. These measures do not need to be complicated or expensive and they can be as simple as segregating finance duties, regularly reviewing bank statements, and conducting reference checks on new employees and suppliers. Although the creation, adoption and maintenance of anti-fraud measures does cost money, they can act as a powerful deterrent to would-be fraudsters. Ultimately it is often cheaper to prevent fraud from happening in the first place than it is to deal with the consequences of inaction later. The Fraud Advisory Panel and Charity Commission are hosting the second national charity fraud conference on Friday 28 October in London. For more information visit, https://www. fraudadvisorypanel.org/events/ tackling-fraud-in-the-charity-sector/ Why fraud prevention matters david kirk is chair of the fraud advisory panel 13www.charitytimes.com
  14. 14. CFG Column Brexit Caron Bradshaw is Chief exeCutive offiCer of the Charity finanCe Group we need to Break the neGative CyCle and respond positively to Brexit E veryone is talking Brexit. My inbox is flooded with newsletters – mostly saying the same thing; we don’t know much yet and we need to watch this space. At the risk of adding my two pennies worth to the pile I want to invite you to consider what your charities should be doing in response. Brexit appears likely to have a mainly negative financial impact on the sector. Although some charities receiving dollar dividends from investments might see an increase in the value of their portfolios whilst the pound remains weak against the dollar. Our pension valuations, grant making, loss of EU funding, and the impact of foreign exchange on delivering overseas programmes all need to be considered. Charities need to examine their income streams and consider the sensitivities. I would encourage you to read the CFG, IoF and PWC Managing in a New Normal series, which charts the experiences of the sector since the credit crunch. It isn’t a roadmap for how charities will or should respond, but offers an indication of how the sector has previously responded in financially turbulent times and highlights income streams that may be affected. We need to use the time wisely before the final Brexit deal is made, to reflect and plan ahead. Charities need to think about the communities we serve. Many people desire change. There is disquiet about the hollowing out of our regionally based industries, anger at the widening gap between rich and poor, dismay at the lack of long term infrastructure investment by successive governments of all colours, and bemusement at the absence of a non-partisan solution to the challenges facing our NHS. Our political system incentivises short term thinking; pursuing objectives and policies which play to the populist mindset of the day. Charities can smooth out the impact of such thinking. We can offer solutions to the challenges highlighted by the Brexit vote and could play our most important role to date. To do this we need a united and strong sector. So, we must stop arguing over whether we have become detached and disconnected from those we serve and bloated on self-interest. We have not. It may be that overall our sector reflects a more ‘remain’ narrative and some will see us as part of the establishment. But that is not the whole story. Ask if the community group is seen as elite. I doubt the answer will be yes. We have become wrapped up in a narrative assigned to us and in negative press coverage, scandal and fear. We need to break the cycle and respond positively. The EU referendum is widely seen as a vote intended to give the establishment a bloody nose more than a reflection of a fact based rejection of how the EU operates and what it is. This disconnect and fear risks infecting and breaking the very thing that stands a chance of doing long term good in society – charity. How do we respond? Charities should speak up. We must advocate on behalf of the causes we serve. Not just seeking to influence politicians and regulators but to influence and shape what our communities think and feel. We must not just listen to and understand their challenges, we must find solutions and press all MPs to put the needs of our marginalised and disconnected communities before party politics. We must lead in what we do and not simply be the mouth piece for the loudest or more popular opinions. This is not about patting the public on the head and telling them we know best, it is about connecting with and co-creating the answers to the most difficult social questions that successive generations and successive governments have failed to crack. Although there will be more pressure to be quiet and less opportunity to speak to those in power, we must raise our voices not lower them. Society is crying out for an economy that deeply and lovingly serves the whole of society, one that connects us with the world. We have a chance to deliver positive change but we must be brave enough to lead in the turbulent times. To quote the great Mahatma Gandhi, ‘be the change you wish to see in the world’. ■ 14 www.charitytimes.com
  15. 15. the reCent outCry over a Charity employee’s Comments on soCial media hiGhliGhted some diffiCult issues ICAEW Column I was recently on leave for a week and, thanks to a flat battery, was largely disconnected from the internet. Before I left there had been some pictures released of Prince George to celebrate his birthday, when I returned I was quite unaware of the media storm that had taken place about them. Unless you were similarly disconnected I’m sure you know the story. But for those not in the loop, an employee of a very large London- headquartered charity made disparaging remarks about the Prince on her personal social media account. The comments were picked up by the press, sparking outcry among a section of readers and social media users. This is not about the rights and wrongs of what was said, nor what future actions if any should follow, but I think the event raised a clear example of further challenges for charities and individuals as the digital and social media world continues to develop. I doubt that the media storm was really driven by the content. What she said does make me uncomfortable, but it is far from the worst of what is out there on the internet. What made this a press story was the apparent contradiction between her position and her employer’s, and the issue of who should or shouldn’t be supported by the taxpayer. The issue of taxpayer support raised again the spectre of charity staff remuneration. Her salary may or may not be high based on London charity comparatives but it certainly is in relation to the national average wage, highlighting the challenge that charities face justifying to the tax paying public what they pay their staff. Many people on considerably lower wages than the charity employee in question feel they are justifiably rankled by the perception of high wages in charities. Furthermore, there is a large proportion of the population who support the royal family and consider the benefits outweigh the cost. On the other hand, the relationship between cost and benefit is often not something they understand about charities. In addition, the coverage of this raises for all of us the matter of what is public and private especially in relation to our employer. Leaving aside whether you agree or disagree with what the employee said, she believed she said it in a private forum, perhaps now she wishes she had not. However, we all say things outside of work which we would not be very happy to be made public. She is probably not someone who thought her private comments would ever attract press attention. This is true of most UK charity staff, while there may be some in the sector who are prepared for media attention due to family connections, past achievements or errors, the majority are reasonably unnoteworthy and entirely unprepared for something like this. Clearly what was said conflicts with the aims of her employer but we can’t delude ourselves that everything we say or think in our private lives would gain the approval of our employer. Perhaps the challenge for us as individuals is to reconsider our assumptions about what constitutes ‘private’ on social media. Her employer is investigating the incident under their procedures, the difficulty here I imagine is associating something done in private with the obligations to the employer. Most employment contracts have wording to the effect that prohibits behaviour which would bring the employer into disrepute. The issue here is to how far can that extend? This incident brought her employer into the public eye not because she made this public but because someone else did, how are we going to grapple with this in future? I can’t imagine how difficult this is to deal with but it forces us to notice that more of what we consider private may be changing. Charities may find greater complexity in managing the changing division of the public and personal lives of their employees. For charities facing the challenge of gaining public trust and confidence and continued donor support this presents a difficult risk to negotiate but one that won’t go away. ■ Social media Gillian mCkay is the head of Charities and voluntary seCtor at the iCaew 15www.charitytimes.com
  16. 16. Fundraising Column Trust Peter Lewis is chief executive of the institute of fundraising charities, and PoLiticians, need to focus on being trustworthy, not on generaL LeveLs of trust ‘T rust in charities at lowest level since monitoring began’ – we have all seen the headlines in recent months, and Charity Commission data on trust in charities shows it has fallen 10 percentage points in the past four years. But what does it really mean when we hear that ‘trust’ has fallen in our organisations, and what should or can we as charity leaders do about it? I believe leaders in the sector need to focus not on generic levels of trust, but on our organisations being trustworthy. I would urge everyone thinking about the future of the charity sector to listen to the erudite exposition on trust Baroness Onora O’Neil, Professor of Philosophy at Cambridge University and cross bench member of the House of Lords delivered at TEDxHousesofParliament1 . Baroness O’Neil’s basic proposition is that focussing on polling or survey data of generic levels of trust is wrongheaded, and that aiming to raise generic levels of trust is not in itself a good objective. We should be aiming for higher levels of trust in people or institutions that are indeed trustworthy, but not in ones that are not. We should trust charities who do what they say, but not ones who don’t. The lessons for leaders in the charity sector are clear – our organisations need to focus on being trustworthy, and proving our trustworthiness to the general public and supporters. To take the example of fundraising, the closer your relationship with your supporters, the easier it is to prove to them you are trustworthy. When someone has given money towards the cause you take forward, you demonstrate what you have achieved with their contribution, showing that you are trustworthy. In this context it is interesting to note that over the past year, data from the Managing in the New Normal report and from Rapidata shows that current donors are continuing to give to the causes they support. To me, this is evidence that people are continuing to trust the charities they already support, despite the negative headlines. I argue that Baroness O’Neil’s analysis is a positive one for UK charities. I believe the vast majority of charities are trustworthy. In the case of fundraising many have clearly demonstrated that trustworthiness over the past year by listening to donor and public feedback and improving their practices as a result. Perhaps the final stage is for those charities to provide even more evidence of these changes and improved practices, while talking about the positive change it is making in the world. My concern is that all this may not be enough to raise generic survey data of levels of trust in the short term, as these include the opinions of people who are further away from charities, less likely to have seen both the impact and the changes that charities are making. The most relevant questions we should be asking are, ‘do you trust the charities you donate to?’ or ‘do you trust the charities you volunteer for’ or ‘do you trust any charity from whom you receive services?’ where the answer is more likely to be informed and differentiated, showing people making judgements based on their actual experiences rather than on an abstract idea of trust. And a final thought: we are not alone! Trust in institutions is falling in many walks of life. Trust in politicians is notoriously low, but trust in an individual’s own MP is typically much higher. The EU Referendum provided another example. The vast weight of evidence from ‘recognised’ experts and institutions seemed to rest with the Remain campaign. But they, or the politicians putting their case, were clearly not seen as trustworthy by many members of the public who still chose to vote to leave. As charity leaders we need to focus efforts on ensuring that our charities act in a trustworthy way, and demonstrate this to the public. It might not be enough to shift generic levels of trust in the short-term, but it will show to those who donate to us and benefit from our work that they are right to put their faith in our organisations, and over time should also change wider public perceptions. ■ 1 https:// www.youtube.com/ watch?v=1PNX6M_ dVsk 16 www.charitytimes.com
  17. 17. thoughts from a former Life Property Column E leven years ago, after an enjoyable career as a business journalist writing for London and Scottish national papers, I decided the time had come to grow up and get a proper job. However as a non-profit CEO I soon learned the hard way just what an easy billet I’d had all those years, reporting on markets and writing up commercial property deals, compared to writing grant applications and dealing with trustee politics! Here I offer a few transferable thoughts from my former life. 1 - There are people everywhere hell bent on making your property their property As a business journalist one develops a nose for trouble and fly behaviour. Charity folk tend to be far more interested in their cause which makes them vulnerable to wolves in sheep’s clothing, keen to help out by taking the organisation’s property off their hands. Judge people by what they do, not what they say. Property is not just bricks and mortar, remember. Bankable assets can include intellectual properties, government contracts, even reputation. And once these assets are gone they’re gone. I could fill pages with the sorry tales of unworldly charities which lost assets because of entryism onto weak and unwary boards of trustees. Spare a thought for CEOs and FDs who can only watch as trustees are picked off so that Chummy and his/her acolytes can get their grubby hands on the assets. People can be surprisingly cheap. So what’s your price? Hopefully it is above rubies, and if you have to walk, make sure you hire the scariest lawyer you can afford. 2 - There is no special cuddly set of property rules for charities One of the reasons why charity folk are vulnerable in commercial property negotiations is that they think charities can play by different rules from the business world. No business makes this mistake. Thinking that you are all on the same side is about as realistic as arriving at your dream holiday destination and expecting there to be no crime. Last week a nice chair who sought advice about taking on a property from a charity, asked me if there was a special charity-to-charity lease – ‘nicer’ than a normal lease. Sadly a lease is a lease is a lease. In my experience there are good hearted, honourable people in every sector and if you’re lucky you’ll do business with them. But if you are in a renting situation, the old feudal relationship between landlord and tenant remains stuck in the Norman Conquest era. We have a long way to go before landlords start seeing tenants as clients. 3 - Disconnections bring opportunities As a journalist I was lucky to interview leading disrupter business people across every sector in the ’90s and the Zeros. Besides incredible self- belief they all shared the same attitude to disconnections, gaps in the market and recessions. They saw them as opportunities and worked around the dinosaurs who thought they had the world taped. Charities too can benefit when they are lean and can spot and offer the value others can’t. Way back in 1990, sellers were so desperate to offload London properties they would go from pub to pub selling raffle tickets. This was an early story of mine as a rookie writer. When I describe this to people who have only known rising property prices they look at me in disbelief. Yet property fortunes were made back then, even with 15% interest rates, and charities also bought cheap and created fantastic social benefit. So after 11 years as a business journalist- turned-CEO, I have learned that despite differences in governance and funding cycles, charities are no different from any other business: they fail and thrive for exactly the same reasons and crucially their attitudes toward property and assets play a major part. I’ve also learned that even on the stressful days, it so much more fun running an organisation than writing about it! ■ Property antonia swinson is chief executive of the ethicaL ProPerty foundation and author of‘root of aLL eviL?’ 17www.charitytimes.com
  18. 18. Profile Interview I t’s not the Charity Finance Directors’ Group any more. Rebrands can often be little more than expensive ways of making an organisation’s website unfamiliar, but the change programme Charity Finance Group has pursued over the past six years has been no mere facelift. Chief executive Caron Bradshaw, named Charity Principal of the Year at the 2015 Charity Times Awards, has driven the overhaul of the CFG from the very beginning to now where all the major components are at or near completion. Joining CFG in 2010 and in her first chief executive role, Bradshaw was immediately asked to review the organisation’s new three- year strategy to determine whether it was fit for purpose. An opportunity she characterises alternately as “daunting” and “brilliant”, getting down to brass tacks started a journey that has represented one of the most significant changes to the organisation in its 29-year history. “The journey started the minute I walked in the door with the invitation to go away and think about where we go next as an organisation,” Bradshaw says. “It was a very explicit ‘we want you to take us to the next level’. My sense was the next level was around changing the way we think about finance and the way we talk about it.” Overall the refocus has been about relating finance and financial management back to the cause. Not just excellent financial management, but how this serves beneficiaries. “You don’t take on a role in finance in a charity so you can wave SORP compliant accounts in front of your friends at dinner parties. You do it because you’re passionate about the cause, you just happen to express it through a skillset that is rooted in finance.” This applies to CFG as well. Bradshaw says the organisation is focused on its part in how the sector delivers change. “Ultimately we’re not here to prop up charities. We’re here to deliver social change for beneficiaries.” CFG Established as a support and knowledge sharing network for charity finance professionals in 1987, since its early days CFG has steadily built up a diverse and widely-used suite of training and support resources across a variety of channels. The charity also offers a range of events at a regional and national level, and has developed a meaningful voice in its policy and advocacy work. Now counting almost 1,400 charities among its members, the group has widened its focus to take in a greater wedge of the sector than strictly finance professionals. “I think we’ve now started to change the Big bang theory Charity FinanCe Group took on a lot in its nearly-Completed ChanGe proGramme, and now FaCes the Future reFreshed. Ceo Caron bradshaw told matt ritChie about the Charity’s new approaCh Profile: Caron Bradshaw 18 www.charitytimes.com
  19. 19. Profile Interview conversation. I wouldn’t say that we’re there yet it but I certainly hear us talking much more about finance as an enabler, about financial leadership, about people and people skills rather than pure technical knowledge,” Bradshaw says. “CFG’s moved from being a really good solid organisation that did great financial skills stuff, to one that is talking much more about the way in which finance can change and make the sector more effective.” But the change programme has required significant energy and resource, and hasn’t always been easy. Change CFG’s change project saw the organisation restructure its executive team, carry out a governance review, change its name and branding, shift office and update its systems. Unsurprisingly given how comprehensive the project was, it wasn’t universally popular. Personnel changes in particular saw the organisation come in for criticism and Bradshaw admits it was a “really challenging” part of the process. Cost was also a factor, with the change project contributing to CFG’s free reserves falling from £249,096 in 2012/13 to £61,586 in 2013/14. However, this situation was reversed in less than 12 months with reserves back in the black at £184,271 at the end of 2014/15. CFG’s annual results also revealed an increase in income and a reversal in the trend of declining membership. Asked whether taking a more gradual approach to change may have resulted in a smoother process, Bradshaw points out that in the absence of a control scenario there’s no telling whether taking more time would have made a positive difference. “That big bang approach meant we had to tighten our belts and deal with quite a lot of problems at once, but if we’d have just done a little bit here and there would we have had the profound change in approach we’ve got? Although it’s taken us a lot of work and effort we were able to return our reserves to within our range within a single year. If we’d have done it a bit more ‘drip drip’ maybe we wouldn’t have achieved that so quickly.” the future CFG has now completed the thorniest parts of the programme and Bradshaw says she can’t see any further major restructuring projects on the immediate horizon. “But I think there is still huge change for us as an organisation because the sector in which we’re operating is massively changing,” she says. “We have to do a lot of thinking around how we help the sector position itself so it can square off the notion of it being a voluntary amateur sector, with the reality - particularly on the end we engage with and service - of being highly professionalised, dynamic, and strategic.” But a glance at CFG’s list of member charities does not tell the whole story about the service the organisation provides to the sector. “In the early days I said to the trustees that the dichotomy is that if you’re going to raise financial standards the people that need you most are the ones that can least afford you, probably don’t know you exist and so won’t be in membership. So how do you square that circle? We couldn’t possibly provide services to 165,000 charities. But we can provide support, resources, information, and a way to reach them.” Bradshaw points to CFG’s lobbying on the Gift Aid Small Donations Scheme as an example of how its advocacy work extends beyond the needs of its members. Members support the group’s focus on the health of the sector, Bradshaw says, and a new project is about to take the principle further still. Thanks to a “sizeable” grant from the Esmée Fairbairn Foundation, Charity Finance Group is piloting a small charities programme to help support those organisations that need it most but are least likely to be able to access help. “That excites me, particularly given the absence of any support for financial capability over successive governments and successive initiatives,” Bradshaw says. “I hope the project is going to be something fabulous that changes the way charities are supported across the sector.” ■ 19www.charitytimes.com “ultimately we’re not here to prop up Charities. we’re here to deliver soCial ChanGe For beneFiCiaries” www.cfg.org.uk
  20. 20. T he charity sector’s response to the annus horribilis that was 2015 has in many ways reflected the seven stages of grief. At first there was shock and denial, then pain, quickly followed by anger, blame and in many cases, depression and reflection. While there are some fundraisers who are still nursing their wounds and feeling quite demoralised by the whole state of affairs, others have been able to move on to the reconstruction phase and are beginning to take some real and practical steps towards improved fundraising practice. First, some context. For those at the centre of the scandals, it was hugely difficult. Agencies went into administration, hundreds of people lost their jobs and dealing with such public criticism was more than a little difficult. Donor recruitment also suffered – according to the Managing in the New Normal report from the IoF, CFG and PwC, acquisition rates were down from 37 per cent to 27 per cent, while organisations such as the RSPCA have reported that finding new donors has been harder than usual. Public trust and confidence has also been found to be in decline. However, it wasn’t all bad. Attrition rates (the number of donors that charities keep each year) were positive with only a 5 per cent fall being reported compared to 17 per cent the previous year. This finding was reflected in Rapidata’s direct debit tracking report, which found that although there were some marked differences in cancellation trends, overall there was no detrimental long-term impact on regular giving – all of which indicates that those people who already support charities are happy to continue doing so, regardless of what the British tabloid media may say. That aside, what the coverage did do was highlight some fundamental inadequacies within fundraising practice, which if left unaddressed, did have the potential to have long and lasting damage on income. Among these was the realisation that many charities did not embed their organisational values within their fundraising; that many of the techniques used were in drastic need of modernising; that trustees were woefully uninformed of fundraising practice; and that fundraisers’ relationships with their boards, their agencies, their comms teams and even their supporters had been seriously neglected. Change We have heard much about sector- wide changes, such as the enhanced Code of Practice from the Institute of Fundraising (IoF), the launch of the new Fundraising Regulator, and the merger of the IoF and the PFRA. But how have individual charities reacted to the scandals and what changes are they making as a result? One of the initial responses from those implicated in the coverage, either directly or indirectly, was to contact supporters to explain how and why they fundraise, and to invite feedback about the level of communications they receive. “Asking supporters how they wanted to be contacted helped make them more loyal.” says Peter Lewis, chief executive of the Institute of Fundraising. “In a way, making yourself vulnerable by opening yourself up to feedback and the possibility that people may say they don’t want to hear from you, contributes towards making yourself trustworthy” Other charities quickly launched reassuring statements and initiatives, such as Save the Children and its Supporter Promise, in which it presented new safeguards to ensure its supporters have greater control over how they give and are contacted. Among its list of promises was the commitment to never contact people if they ask the charity not to and a change to the opt-in and opt-out messages on its online form. The impact of this was swift – leading to a rise in the proportion of supporters opting out of communications from less than 5 per cent to 60 per cent. Since then, other charities, including RNLI, Barnardos and Cancer Research UK, have gone on to introduce ‘opt-in only’ policies Fundraising Standards 20 www.charitytimes.com Raising the bar F U N D R A I S I N G Media coverage in 2015 made for uncomfortable reading for fundraisers. What steps has the sector taken to adjust practices and approaches in the wake of such an awful year? WRITTEN BY BECKY SLACK, A FREELANCE JOURNALIST
  21. 21. – often at great risk to short-term fundraising income. The RNLI for example predicts that the policy will lose the charity £36m in income over the next five years (equating to around 19 per cent of its 2014 total), while Cancer Research UK (CRUK) also anticipates losing millions as a result of the change. However, as Ed Aspel, executive director of fundraising and marketing at CRUK, explains, the short-term pain should be off-set by long-term gain. “There is no doubt that when you move to opt-in there are fewer people to contact so it does have an impact. However, we believe that the greater level of trust and commitment we will receive will serve us well into the future,” he says, before confirming that already the charity is enjoying greater engagement from its face-to-face relationships. “What this tells us is that if we can start to invest more time and effort into local activities and those personal connections, then there is real value for us,” he says. New approaches It is high time that charities developed some new tools and techniques by which to reach supporters. As Joe Jenkins, director of fundraising and supporter engagement at the Children’s Society, noted in a recent blog for the fundraising think tank, Rogare, “…every time any charity creates a new approach, its concept is immediately imitated, replicated at scale, and oversaturated. Time and again, what initially feels fresh and remarkable quickly become stale, laughable and irritating. Like a rampant virus, every success quickly spreads across our sector – and suffocates its host.” Grant Leboff, founder at Sticky Marketing and a commissioner on the newly formed Commission on the Donor Experience builds on this theme: “Charities are struggling, as are many commercial brands, to come to terms with a digital world. Customers identify with brands in a very different way to years ago. What this means is that as traditional interruption marketing has become less effective, charities’ response has been to do more, rather than change what they do.” In his view, charities have got to stop interrupting people and start being more interesting. “We’re living in an experience economy, where marketing isn’t something that is done to you but with you. Click and share, we want to be part of it. That means you have to be much better at narrative and storytelling. It’s about providing value, not just about shouting at people.” Since the Olive Cooke tragedy, this message has well and truly been brought home and many charities of all shapes and sizes are looking at how to provide a better experience. World Vision, for example, recently launched a pop-up “Story Shop” in London’s Westfield shopping malls, which offers shoppers the opportunity to interact with around 100 individual stories about World Vision’s work around the world. Cancer Research UK too is looking at how to improve the supporter experience, having recruited new team members to focus on precisely this issue. It is also in the midst of developing new, yet-to-be-announced fundraising products and platforms that put the supporter more in control of how and when they want to offer support. One of the many criticisms levelled at fundraisers was around the way in which they managed supporter data, and again charities have been busy adapting and amending their policies. Take the RSPCA, for example. It no longer shares supporter data with any third party, has improved its statements around its use of data, and has Fundraising Standards www.charitytimes.com 21www.charitytimes.com
  22. 22. made it much easier for donors to change their preferences at any time. “There is far more oversight, quality assurance and monitoring of the agencies that work on our behalf,” explains Julian Holmes Taylor, RSPCA’s assistant director of income generation. “We also apply the same enhanced rigor internally around the use of data, consent and managing outbound communications with our supporters.” For the IoF’s Lewis, these changes are welcome. However, in his view there is something more fundamental that is needed than just altering statements and developing new products, and that is that charities absolutely have to put their core values at the heart of all their fundraising. “The big lesson for me has been about the need to embed a charity’s values in its fundraising. Some charities had perhaps not focused on delivering their values through their fundraising in the same way they would do through their services and through their campaigns, and at a strategic level this realisation has been a big wake-up call,” he says. “This means not just looking at fundraising from a legal perspective but from a values perspective as well. To a certain extent this is because trustees and CEOs have been more interested in delivering the charity’s work than they have in fundraising,” he adds. Governance Indeed, the lack of fundraising oversight afforded by trustees was another area that was singled out for criticism, and just as charities are now looking for ways to enhance the supporter experience, so too are they looking to strengthen the relationships between their boards and their fundraisers. Again, the RSPCA offers a case in point – it has put in place an Income Generation Committee, attended by trustees, to enable the board to have “closer oversight and understanding of our fundraising activity”. However, there are some in the sector who feel that these relationships will not be as easy to build as one would hope. A review of relationship fundraising by Rogare, for example, found that most participants felt their boards would not back them in delivering long-term fundraising goals but would instead force them to focus on short-term targets. Only time will tell whether trustees have listened to what is needed from them. Trustees are not the only groups of individuals with whom fundraisers are trying to build better relationships with. Perhaps not surprisingly, PR teams are another, with many fundraisers working more closely with their communications peers to identify both potential risks and storytelling opportunities – activity that is supported both directly and indirectly by the likes of the Understanding Charities group and the Commission on the Donor Experience. Agencies Quite rightly, relationships with fundraising agencies have not escaped internal scrutiny either. In the wake of the negative coverage, charities have reviewed the way in which they work with commercial Fundraising Standards 22 www.charitytimes.com
  23. 23. suppliers. In addition, the Institute of Fundraising has recently issued new guidance, Successful Partnerships for Sustainable Fundraising: a practical guide for charities, aimed at improving the way in which the two sectors work together. Outlining the “fundamental building blocks and key considerations that charities and agencies should be thinking about when agreeing and undertaking fundraising with the public”, it covers everything from planning and preparation through to monitoring and evaluation. Importantly, it acknowledges how both agencies and charities are susceptible to changes in the fundraising and wider political and media environment, and advises that agreements should include provision for unexpected issues, such as needing to suspend or withdraw a campaign. “Be mindful of the impact for both the charity and the agency (in some cases redundancy, or even closure),” it states. “It is really, really important for charities to have strong relationships with their agencies,” emphasises Lewis. “The current level of scrutiny is not going to go away. We want a high standard of fundraising delivered at all times. Close relationships should help deliver those high standards,” he says, adding: “Agencies need to be clear that if they can’t deliver the required standards and they don’t like what the charity is offering [in terms of fees and targets] then they shouldn’t take on the contract.” It could not be said that fundraisers have not worked hard to address the issues raised by the media last year. But their work is far from over. The launch of the Fundraising Preference Service is looming on the horizon, as too are new EU regulations around unambiguous consent. Meanwhile, fundraisers are still waiting to learn more about the new commissioner at the Information Commissioner’s Office and any changes that this individual may be keen to see. Likewise, there is a general consensus that the pressure and scrutiny placed on fundraisers is unlikely to go away, and that continual learning and improvement will be essential. “As long as charities continue to improve and keep focus they will do well,” says CRUK’s Aspel, a view that is reiterated by RSPCA’s Holmes-Taylor: “It is so easy to give regularly without having a proper relationship with a charity. I think this may be the next change in the sector whereby charities will focus more on the inspiration of why people give.” Just as the final stage in the grief process focuses on acceptance and hope, Lewis believes that it is vital the charity sector takes a more positive attitude to its fundraising. “To their credit fundraisers have done an amazing job over the last 18 months continuing to bring vital money to make the world a better place. But many people still feel bruised, so building morale is important. “My message to fundraisers is simple. Keep caring about the cause you are fundraising for, do it in accordance with your organisation’s values and keep enjoying the changes you are making to the world.” ■ Fundraising Standards 23www.charitytimes.comwww.charitytimes.com
  24. 24. I magine there were a partnership between, let’s say, a large supermarket and a mental health charity. The deal is that in exchange for staff and customer fundraising, the charity would help the retailer develop an effective internal mental health policy and would deliver fun but educational sessions on maintaining a healthy mind for staff and customers. The charity raises money while meeting its mission; the supermarket has a stronger team and enhances its offering for customers; shoppers are healthier and happier. It’s a win-win-win. This could be the future of charity/ corporate relationships. Indeed, in some quarters it already is. These days corporate fundraising is not just about getting a business to hand over a cheque. Instead the focus is on high-value strategic partnerships. Strategic partnerships As the 2015 Corporate NGO Partnerships Barometer from the consultancy C & E Advisory shows, over the last six years there has been a “significant overall shift towards strategic partnerships” – 55 per cent of cross-sector partnerships are identified as “strategic” as opposed to transactional or tactical. “The days of pure philanthropy are long gone”, explains chief executive, Manny Amadi. “The perfect partnership is one that is mission-led on the charity side, and purpose-led on the corporate side. It is strategic, long-term and both partners are focused on solving a problem”. Oxfam’s head of corporate partnerships, Alex Lankester, agrees: “We only really want to work with companies that take seriously the issues we are working on,” she says. However, while many charities understand the value of these strategic partners, it would appear others need to catch up. While 71 per cent of corporate respondents to C&E Advisory’s Barometer classify their partnerships as “strategic”, only 40 per cent of NGO respondents do the same. “The findings seem to indicate that the corporate sector remains ahead of NGOs in understanding the strategic importance and overall position of partnerships in yielding value for stakeholders,” says the report. Currently, just 2 per cent of the sector’s total income comes from business, according to 2015 research by the Institute of Fundraising and the consultancy Good Values. With more than 3.5 million active registered companies in the UK, and only 7 per cent of respondents to the Good Values report believing their corporate fundraising to be “fully developed”, there is a lot of potential for growth. Corporate Partnerships 24 www.charitytimes.com The perfect match f u n d r a i s i n g Corporate partnerships can offer a wealth of benefits but how do you make sure you find the right company for your organisation? WRITTEN BY BECKY SLACK, A FREELANCE JOURNALIST
  25. 25. Perfect partners Jeremy Gould is chair of the Institute of Fundraising’s corporate fundraising special interest group and interim head of fundraising at World Child Cancer. He suggests that rather than think primarily about income, fundraisers should take a step back and think about which corporate would be the perfect partner to help achieve the organisation’s mission. “For example, here at World Child Cancer, our key challenge is a lack of awareness in the UK so for us our perfect partner would be someone that could help us reach a mass market.” He refers to how a previous appeal with the Financial Times not only raised a lot of money at the time but gave the charity access to high-net-worth individuals with whom they have been able to develop on-going relationships. Joe Saxton, driver of ideas at nfpSynergy, also believes there is a wealth of opportunities out there for the taking – particularly if fundraisers apply a little creative thought to the way in which they work. In his report, In good company – Taking corporate partnerships into new dimensions, he identifies a number of models for corporate partnerships, ranging from those which focus on corporate customers through to ones which involve paying to volunteer. His favourite, however, is “New products for new audiences”. Saxton writes: “There are huge opportunities in the financial services marketplace for new products that benefit charities and provide differentiation amid a crowded range of hard to distinguish products… Given the level of pensions, life insurance, mortgages, savings, ISAs, and other products that middle class baby boomers buy, the potential is huge.” Saxton identifies that there are formidable obstacles to developing these products – conforming to regulation chief among them. Indeed, given that Age UK found itself at the centre of some very negative coverage about its partnership with EON which offered a fixed energy tariff to its supporters and beneficiaries, Charity Times readers would do well to question whether this is a sensible kind of partnership to pursue. Offer The answer to that depends very much on the deal on offer. Oxfam, for example, has a charity credit card deal with the Co-Op, which sees 25p being donated for every £100 that is spent on the card or transferred to it. “You need to be totally transparent about the agreement to supporters. We make a real point of being very explicit about the commercial offerings we have available to supporters,” says Oxfam’s Lankester. Whether a charity is looking to develop a new financial product or simply looking for a charity-of-the- year partnership, scrutinising the offering is of paramount importance. Corporate Partnerships 25www.charitytimes.com
  26. 26. There are a number of factors that should be considered before any deal is signed, including ethics; regulatory requirements; and expectations on both sides. Let’s take ethics first. Sensible charities will have guidelines in place that outline the types of corporates they will and won’t work with. Any company whose business activities are detrimental to the charity’s cause should be ruled out immediately. “More often than not these decisions are easy to make,” says James Hails, head of corporate partnerships at the British Heart Foundation. “Naturally, you are not going to see us raising funds through the tobacco industry, through the sale of alcohol or the promotion of unhealthy foods. But food and soft drinks do remain a focus. We have a stringent process in place for assessing the suitability of partners, including a BHF nutritionist carefully looking at the ingredients of every product.” The Charity Commission stipulates that a process of due diligence must be carried out before engaging in any partnership, something BHF’s Hails agrees with the value of. Investing time and energy into due diligence “mitigates any potential risk later in the relationship”, he says. This risk could come from outside (would the partnership pass the Daily Mail test, for example?) or even internally – many charity workers abhor the idea of working with corporates no matter what value they may offer. Having a defined set of guidelines from the beginning, ideally ones that are made publicly available, can help soothe the concerns of fellow workers and supporters, and quash the interest of journalists who are trying to sniff out a story. Tax is another area for consideration. Sponsorship deals that involve the use of a corporate’s logo or which involve the provision of entertainment and hospitality, could mean that VAT is payable. Care should be taken to ensure VAT and other tax consequences are taken into account otherwise the charity could find itself out of pocket. The Charity Commission offers more advice on this area, along with details of the all the rules and regulations that must be followed in relation to corporate fundraising. Delivery Assuming all legal and tax matters are complied with, success is then determined by the way in which the partnership is delivered. Challenges should be expected, no matter how well the two partners “fit”. “These might be operational challenges where one party isn’t delivering, to issues with the power dynamic,” says Amadi. He believes that being clear about the rules of engagement, and setting out values and principles at the beginning can help avoid issues, but advises: “Even the best partnerships in the world can experience problems. It is how you address these together that is important.” Another key challenge is around delivering precisely what the corporate expects in terms of KPIs. “They need to see a return on their investment so want top-line numbers that will fit their reporting requirements, such as number of beneficiaries reached and difference made,” says Lankester. “However, it is not always possible to fit a programme that is addressing complicated issues into a simplistic KPI framework. To overcome this, you need a lot of trust and understanding. Taking the corporate to visit the work in action can also be transformative as it helps them understand the complexity of what you are trying to do.” All that said and done, while charities should be realistic about what they can achieve, they shouldn’t limit their aims or creativity. “Be bold,” says Gould. “Corporates can offer some of the most exciting and impactful partnerships, and bring great value in terms of both income raised and mission achieved.” ■ Corporate Partnerships 26 www.charitytimes.com
  27. 27. VIEW THE SHORTLIST 28 September 2016 Park Plaza Westminster Bridge, London Celebrating best practice in the UK charity and not-for-profit sector In association with Charity Partner www.charitytimes.com/awards
  28. 28. The 17th Annual Charity Times Awards Follow us @CharityTAwards #CharityTimesAwards Over six hundred guests are attending the highly anticipated Charity Times Awards 2016 where the winners will be announced! Hosted by Mark Watson, this year’s event will be bigger and better than ever, with new surprises in store for guests. Consisting of a champagne reception, fantastic three course dinner, glamorous awards ceremony and lively after show party, the Charity Times Awards 2016 will be a night to remember. SHORTLIST ANNOUNCED Congratulations to the finalists Charity of the Year: with an income of less than £1 million • The ClementJames Centre • Create • The Encephalitis Society • Maria Cristina Foundation • Shared Interest Foundation • Tyne Gateway Trust Charity of the Year: with an income of £1 million - £10 million • Bowel Cancer UK • Family Lives • Greenhouse Sports • Jamie’s Farm • Money Advice Trust • Nordoff Robbins • SignHealth • The Silver Line Charity of the Year: with an income of more than £10 million • Battersea Dogs and Cats Home • The Brain Tumour Charity • The Challenge Network • Langley House Trust • Refuge • YHA (England & Wales) Best New Charity • GO! Great Opportunities Together • Safe Families for Children • South East London Vision SELVis • Spark Inside • Tempus Novo • Tinder Foundation • The Tutor Trust Change Project of the Year • Barts Charity • Breast Cancer Now • Brook • National Animal Welfare Trust • Parkinson’s UK • The Prince’s Trust • Trinity Hospice Blackpool Rising CEO Star • Sophie Andrews, The Silver Line • Emma Atkins, Dame Kelly Holmes Trust • Paul Bott, Vista • Alex Feis-Bryce, National Ugly Mugs • Doug Harper, Engineers Without Borders UK • Ruth Hunt, Stonewall • Anna Smee, UK Youth Fundraising Team of the Year: with an income under £5 million • Ashgate Hospicecare • Community Foundation for Calderdale • Everton in the Community • Penny Brohn UK • RedR UK Fundraising Team of the Year: with an income over £5 million • Cancer Research UK • Disasters Emergency Committee • The Grand Appeal • Great Ormond Street Hospital Children’s Charity • London’s Air Ambulance • Refuge • War Child Charity Principal of the Year • Jeanette Allen, The Horse Trust • Sue Farrington Smith, Brain Tumour Research • Hilda Hayo, Dementia UK • Dr Beverley Jacobson, Kisharon • Sue Threader, The Rochester Bridge Trust
  29. 29. 28 September 2016, London Find out more: www.charitytimes.com/awards Campaigning Team of the Year • Bowel Cancer UK • Breast Cancer Now • Diabetes UK • Shelter • Sustain: the Alliance for Better Food and Farming • World Animal Protection UK Best Use of the Web • Career Ready • Citizens Advice • Royal Air Force Benevolent Fund • Shelter PR Team of the Year: with an income under £10 million • Alcohol Concern • Asthma UK • Elephant Family & Quintessentially Foundation • LIving Streets • Muscular Dystrophy UK • Naomi House & Jacksplace PR Team of the Year: with an income over £10 million • Battersea Dogs and Cats Home • British Red Cross • Dogs Trust • The National Autistic Society • Royal Academy of Dance • St Joseph’s Hospice Financial Management Award • British Council • Career Connect • Engineers Without Borders • YHA (England & Wales) International Charity • BRAC • Hospices of Hope • Send a Cow • Shivia • United World Schools • Vision for a Nation Foundation • Y Care International HR Management Award • Engineers Without Borders UK • Royal Town Planning Institute • St Cuthbert’s Hospice Social Investment Initiative • Bridges Ventures and Ways to Wellness • Social Business Trust • The Social Investment Business Foundation Community Award • FoodCycle • For Jimmy • GO! Great Opportunities Together • Newham All Star Sports Academy • The Scout Associaton • Volunteering Matters Excellence in Internal Communications • Anchor • MRC Technology • Quarriers • Royal Hospital for Neuro- Disability • Twycross Zoo East Midland Zoological Society • YHA (England & Wales) Corporate Community Local Involvement • AMAR International Charitable Foundation & Rumaila Operating Organisation • Cargill & Henshaws • The Challenge & Starbucks • The Clare Foundation, Buckinghamshire New University & John Lewis High Wycombe • Community Links & BNY Mellon • East End Community Foundation & 20 Fenchurch Street Limited Partnership • Tower Hamlets Education Business Partnership & Barclays Corporate National Partnership Champion • Action Against Hunger & Carluccio’s • Comic Relief & British Airways • Missing People & Outsmart • Scope & Virgin Media • Shelter & CBRE • SHINE, Capita SIMS & TES • The Stroke Association & Royal Mail Group Corporate National Partnership of the Year with a Retailer • Cancer Research UK Kids & Teens & TK Maxx • CHECT & Vision Express • CLIC Sargent & Lidl • Macmillan Cancer Support & Marks & Spencer • Oxfam & Waterstones • Rays of Sunshine Children’s Charity & The Fragrance Shop • Refuge & Benefit • Save the Children, HarperCollins & Sainsburys
  30. 30. Congratulations to the finalists Corporate National Partnership of the Year with a Financial Institution • BBC Children in Need & Lloyds Banking Group • Cancer Research UK, BNY Mellon & Newton Investment Management • Earthwatch & HSBC • Place2Be & Bank of America Merrill Lynch • The Prince’s Trust & Natwest • RedR UK & Lloyd’s Charities Trust • Refuge & Co-operative Bank • Sparks, World Child Cancer and Deutsche Bank Cross-sector Partnership of the Year • Brathay Apprentice Challenge - The Brathay Trust, National Apprenticeship Service & Campaign Collective • Children & Young People’s Mental Health Coalition & Zurich Community Trust • Coram & Club Peloton • Dame Kelly Holmes Trust & AQA • Epilepsy Scotland, NHS Dumfries and Galloway, UCB Pharma, GlaxoSmithKline & Eisai • National Literacy Trust Hub in Middlesbrough, Middlesbrough Council’s Public Health Department & Bliss • The Scout Association, Canal & River Trust, Alzheimer’s Society, Leonard Cheshire Disability, Guide Dogs, Mind & Water Aid • UK Youth & Global Goodness Corporate Social Responsibility Project of the Year • Berkeley Foundation & The Berkeley Group • One Foundation & British Airways • Plan International & CBRE • Samaritans, Network Rail, British Transport Police & Rail Industry Suicide Stakeholder Group • Small Charities Coalition & IBM Best Use of Technology • ActionAid • Autism East Midlands • In Kind Direct • Reason Digital and Gone for Good • Royal Mail Group Investment Management • Cazenove Charities • Investec Wealth & Investment • Newton Investment Management • Quilter Cheviot Investment Management • Rathbone Investment Management Boutique Investment Management • Church House Investment Management • Davy • James Hambro & Partners LLP • Mayfair Capital Investment Management • Rothschild Wealth Management • Savills Investment Management • Standard Life Wealth • Waverton Investment Management Advisory Provider of the Year • Alterline • Bates Wells Braithwaite • IFC • Price Bailey • Sayer Vincent LLP Fundraising Technology Award • Cancer Research UK • Givergy • Gone for Good & Reason Digital • The Grand Appeal • JustGiving Outstanding Individual Achievement Awarded on the night, to a person who has demonstrated an outstanding commitment to the sector. Book your table: www.charitytimes.com/awards
  31. 31. O n August 12th 2016 the Insurance Act 2015 came into effect: a major piece of legislation affecting all non- consumer insurance contracts. Previously, insurance law was based largely on the 1906 Marine Insurance Act, which gave insurers a lot of leeway to refuse claims. The primary purpose of the new Act is to create a fairer balance between insurers and non-consumer policyholders, through imposing new obligations on both parties. The Act introduces a ‘duty of fair presentation’ of risks for policyholders. They must disclose every relevant material circumstance of which they have knowledge, or ought to have knowledge, in a manner “which would be reasonably clear and accessible to a prudent underwriter” – that is, not hidden in a mass of irrelevant information. All of the information provided to the insurer before the point at which a contract is entered into is seen as part of this presentation. There is an assumption that the information will be provided by senior managers, who may need to consult colleagues in order to disclose all the relevant information. “[The Act] recognises that the financial director or whoever purchases the policy will not have all the answers and expects them to consult with those that do before sending information to the insurer,” says David Britton, niche director, charity, at Ecclesiastical Insurance. “For example they might need to consult their IT manager about the purchase of cyber insurance, or their fundraising manager about events they may be running.” Refusing claims The Act also introduces Taking cover f i n a n c e The new Insurance Act seeks to create a fairer balance between insurers and policyholders. Charity Times covers the changes WRITTEN BY DAVID ADAMS, A FREELANCE JOURNALIST 31www.charitytimes.com Insurance Law
  32. 32. if the duty of fair presentation has been breached, making it harder for insurers to void contracts and refuse claims on unreasonable grounds. Insurers can still void a contract, refuse claims and refuse to return a premium, but only if a breach can be shown to have been deliberate or reckless. In cases where the breach is deemed to be the result of an innocent mistake, the following proportionate remedies are now available. First, if the insurer can say it would not have entered into the contract if it had known all the facts, it can void the contract but must return the premium. Second, if the insurer would have entered into the contract, but only under different terms, the contract can be treated as if those terms had been applied, even if the policyholder would not have bought the policy under those terms. And finally, if an insurer would have entered into the contract but only after charging a higher premium, it can reduce proportionately the amount paid to settle a claim. The Act also stipulates that any fraud means the policyholder forfeits the entire claim, but that this would not apply to all policyholders of a group insurance policy if one policyholder commits fraud. Warranties The new legislation also introduces changes in relation to warranties – conditions for cover – applied within policies. Under the previous law, a breach of a warranty meant the insurer would be freed from liability for a claim, even if the breach was unrelated to the type of loss suffered by the policyholder. Under the new Act, in the event of a warranty breach cover is suspended only up to the point at which the breach is remedied by the policyholder. “Prior to the [2015] Act insurers may have added warranties to a policy to require that a customer must do or must not do a certain thing,” says Britton. “For example, if you had a warranty applying in relation to removal of waste from a building at regular intervals, non- compliance could have affected any claim, whether the breach is relevant or not. “These conditions are now being replaced with conditions precedent. While charities need to ensure that any such conditions on their policies are complied with, the insurer can only apply them if the breach of the condition is relevant to the loss. For example, if the policy specifies that sprinklers must be installed and operational and the charity fails to do this, it may affect any claim for fire. However, lack of sprinklers could not be used to invalidate a claim for theft or flood.” Insurers are also now no longer allowed to use ‘basis of contract’ clauses, as these were regarded as turning information provided by policyholders into warranties. “The Act has been brought in to make policy wordings fairer and clearer – not to catch customers out,” insists Britton. “It is designed to help customers understand the information they need to provide when purchasing insurance. An insurer should be asking more specific questions to ensure that the Insurance Law 32 www.charitytimes.com
  33. 33. correct information is presented by the insured.” Insurers specialising in providing cover to charities and voluntary organisations argue this is why sector-specific knowledge is crucial. “Charities are incredibly diverse,” says Mark Ingram, director and not for profit/social enterprise general insurance and risk management specialist at CaSE Insurance. “It’s about understanding that risk.” Britton agrees. “Charities are complex and varied organisations and some general insurers may have been treating them like small businesses and applying a standard policy and conditions,” he suggests. “Specialist insurers have deep knowledge and experience of the risks associated with insuring charities. Some providers may decide that they don’t have enough knowledge about the sector to ask the right questions and may adjust their risk appetite to reflect this.” Implementation Amy Brettell, head of the charity segment at Zurich Insurance, says Zurich is fully committed to all the reforms outlined in the Act, but will apply an ‘additional premium’ approach in cases where an unintentional breach of fair presentation reveals facts that would have meant a higher premium if known. Under the Act, the insurer has the right to reduce proportionately the amount to be paid on any claim against the premium that would have been charged. “Zurich has opted out of this right and is taking a different approach which we believe will be a real benefit to all our customers including charitable bodies,” says Brettell. “We have instead decided to charge the additional premium that we would have charged if we had known the relevant material facts and to pay any claims in full. This should give our charity customers real confidence that claims will be paid in full. “Zurich recognises that for many voluntary sector organisations, the individual responsible for arranging insurance may do this as an adjunct to their day job ... [and that] charities can be disparate entities. These factors can make collating information challenging.” Cost Ingram does not expect the Act to have any direct impact on the cost of insurance for organisations in this sector, or in the level of cover available. However, he continues, it is impossible to be sure of the effects of new legislation until it has been tested in court. Britton thinks prices could be affected once the Act begins to impact settlement of claims, but that this “is likely to be as a result of insurers having a more detailed understanding of the risks associated with insuring charities. If you are dealing with a specialist insurer, they will already be pricing based on their knowledge and experience of the sector.” Whatever happens, says Brettell, the sector will continue to be served by a competitive insurance market. “The key aspect to remember is to be as transparent as possible when arranging insurances,” she says. So although the new legislation will help, there is still plenty that charities and voluntary organisations can do to ensure that the right insurance cover protects the organisation properly. Find the right insurer, find out the facts, get the right cover in place and don’t try to hide anything that could invalidate or reduce the value of a claim. And – even if the insurer is as reputable as they come – always read the small print. ■ Insurance Law 33www.charitytimes.com “The ACT hAs been bRoughT In To mAke polICy WoRdIngs fAIReR And CleAReR”
  34. 34. Craig Inches: Government bond markets have experienced a huge deterioration in yields in the last year due to a combination of low inflation, quantitative easing, weaker global growth and now Brexit. Richard Nelson: As rates tumble, bonds are increasingly susceptible to interest rate risk. The duration risk on 10-year gilts is now over 8 years*, meaning investors purchasing 10-year gilts could see harsh losses if yields reverse direction. This is increasing demand for shorter duration assets, which are more insulated from yield increases CI: The problem for investors holding shorter duration assets is the very low yield they pay. Traditionally, investors could protect against this duration risk and still make an attractive return by holding cash. However, with UK base rates at record lows, cash deposit returns are minimal, while tighter banking regulations have forced many lenders who provided competitive rates out of the sector, while credit ratings cuts mean that many no longer qualify for inclusion in institutional investment products. With government bonds facing a threat from duration, and fewer options for cash solutions, achieving an attractive return above Libor has become increasingly difficult for institutions with large amounts of cash. The Royal London Enhanced Cash Plus Fund aims to help with this problem. This is one of three options alongside our Short Term Money Market Fund and our Cash Plus Fund, and is designed for investors who will be holding cash for more than a year. RN: Our fund uses RLAM’s existing cash philosophy by being straightforward, transparent and highly liquid. The majority of the fund is invested in a combination of covered bonds, corporate bonds and asset-backed securities. This approach helps us achieve a yield comparable to 10-year gilts without taking on duration risk. Indeed, our duration is just 0.6 years currently***. There is also a 25% position to cash and cash instruments. Diversification is central to our approach, with more than 100 different issuers within the portfolio, compared with the small number of lenders in the cash solutions market. Protection is also paramount. Harnessing our experience in covered bonds and asset-backed securities, almost 50% of the fund’s assets have some form of asset backing, with strong covenants underpinning the securities***. This is not about achieving return by buying risky bonds – indeed over 60% of the fund is AA-rated or better in terms of credit quality***. Our safety first approach has been recognised by Fitch, with the fund awarded an AA rating and a low volatility score***. CI: The fund also benefits from our ability to actively manage the portfolio and target the most attractive opportunities. Using our bottom-up investment approach, we have been able to take advantage of several market moves so far this year. For example, we increased our credit exposure in February after global growth concerns weakened risk assets. This allowed us to lock-in yields above 10-year (and even 30-year) gilts for instruments which, at the time, were only 9 months long. We will continue to look for opportunities in markets with our goal to deliver an attractive yield versus cash and short-duration bonds at the heart of the process. It has become tougher for institutions to find attractive ‘safe havens’, but by utilising a flexible mandate which can hold not just cash or gilts, but also deposits, floating rate notes and other debt market securities, it can be achieved. ■ Asset Management 34 www.charitytimes.com Seeking bond-like returns for cash The managers of Royal London Asset Management’s Enhanced Cash Plus Fund review the portfolio’s first year WRITTEN BY CRAIG INCHES AND RICHARD NELSON i n v e s t m e n t In association with *Source: Thomson Reuters 16 June 2016. **Source: FT June 2016. ***Source: RLAM as at 31.05.2016. For professional clients only. Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. Derivatives may alter the economic exposure of a fund over time, causing it to deviate from the performance of the broader market. For more information concerning the risks of investing, please refer to the Prospectus and Key Investor Information Document (KIID). Our Ref: 867-PRO-06/2016-JW.

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