Developing a strategy

Having set your objectives, a giving strategy outlines how you will achieve those goals—your focus areas (cause and geography), how engaged you want to be as a donor, the types of organisations you want to support, and what kind of funding you can offer. Your preferences for each may change throughout your giving journey—for example, donors often choose to seek a low profile and remain hands-off at the start of their giving, but take on more risk, raise their profile and become more engaged as they build their experience. It is also important at this stage to consider whether you need a structure like a charitable account or trust to manage your giving.

Defining a focus

You may already know specifically where you want to direct your donations. But many people find it hard to prioritise the range of pressing social and environmental needs – should I support children’s hospices, save a dying species or provide scholarships for rural Africans? There is no right or wrong answer, and many people choose to spread their giving across multiple issues. But if you are able to define a clear focus for your giving, it will allow you to move from giving on an ad-hoc reactive basis to planned, strategic giving which aims to tackle specific issues close to your heart. Focused giving provides you with opportunities to learn more about the causes you care about, and over time refine your giving to achieve maximum impact.

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Assessing needs

Assessing needs means understanding the key problems that need to be addressed and where funding gaps exist.  It can be tempting to fund high profile causes and organisations, but these are often already well served by other donors and/or statutory provision, and you may make a greater difference in under-funded areas.

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Giving locally

There are a range of challenges facing every local community, providing abundant opportunities for donors of all types to make a difference to their local residents or neighbourhoods.

Donors choose to give locally for a range of reasons; their desire to improve their local area or tackle inequality, a personal experience (for example supporting their local hospital), a wish for hands-on involvement in the community, or a belief that supporting small local organisations can have great impact. It is one of the easiest ways to really see what difference your money or time is making and can therefore be incredibly rewarding, and often a good place to start for donors daunted by the range of charities to support.

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Giving internationally

In deciding where you want to focus your support, you may choose to give internationally. Although this can be defined as any type of cross-border giving, in this context we mean giving to developing countries. In 2010/11, the estimated1 amount given to charity by individuals in the UK was around £11bn, of which 10% was given to ‘overseas’ causes.

Many see giving internationally as a way of reaching areas of greatest need and achieving maximum impact with their resources. And we are all much more connected with communities around the world, either through live news coverage of disasters as they unfold, or through our own personal travelling experiences, giving us first-hand experience of the desperate need in other countries. These issues are even more personal for the growing diaspora—the huge numbers of people who have sought, or been forced to seek, a life in another country and have prospered in their adopted home. They understand better than anyone the importance of giving to help develop educational or health services in the country they left behind.

1 UK Giving 2011, Charities Aid Foundation / NCVO

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Venture philanthropy

Venture philanthropy blends financial support with hands-on management advice in order to build stronger organisations delivering a greater social impact. It adapts some principles of venture capital, such as long-term investment and hands-on management support, to charities and social enterprises in order to achieve a social, rather than financial, return.

There are a variety of ways to get involved in venture philanthropy, including investing in an existing venture philanthropy fund, or becoming more engaged in a charity you already support.

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Social enterprise

Social enterprises are organisations which combine revenue generating activity (i.e. trading) with a social purpose. This requires them to continually balance their social purposes with the commercial need to survive, and focus on the double or triple bottom line (financial, social and environmental).

A social entrepreneur is someone who applies their business skills and expertise for social benefit, usually starting up an organisation (whether that be a social enterprise, charity, public sector initiative or for-profit business) with the aim of making a significant difference to social problems.

Philanthropists can play an important role in supporting social enterprises and social entrepreneurs through funding, mentoring and brokering contacts and networks.

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Supporting individuals

Some people like to include the support of individuals in the portfolio of their charitable giving. Making a difference to individual lives is one of the most rewarding aspects of philanthropy, and the specific support of individuals among the most satisfying donations.

Supporting individuals might include subsidising doctors from developing countries to train for a year in the UK, or funding young sportspeople—usually those involved in activities in which the donor also has an interest. The provision of scholarships at schools and universities is traditional area of funding, and support of the arts is a frequent focus.

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Social investment

Social investment is the provision of repayable finance to charities and other social organisations to generate a social return. It is a relatively new form of finance, as charities have traditionally relied on grants, donations and their own reserves to survive. Social investment requires a reliable income stream that can repay the investment.

Donors traditionally have not expected any kind of financial return from their donations, and solely look to the social return a charity can deliver (for example, increasing the literacy rate within a specific area or helping older people become less isolated). Social investors, however, expect both a financial return and a social return, although the level of financial return they require can vary substantially.

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Microfinance institutions (MFIs) provide financial services to people on low incomes who were traditionally excluded from the banking sector because of lack of income or collateral. Microfinance allows these people to borrow to meet their credit needs; typically small loans (of around £50) for short periods of time.

Not being able to access credit can mean not being able to buy inputs at wholesale price or not being able to invest in even the smallest assets such as buying a goat or a stall at the market. Without microfinance, these needs either go unmet or are met at the exorbitant terms set by moneylenders or loan sharks.

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Trustees are the people who are ultimately responsible for a charity’s actions and its direction and strategy. They have a duty to ensure that charities are well run, solvent, legally compliant, and working towards the charitable purpose for which they were established.

Estimates suggest that there are between 820,000 and one million trustee positions in the UK, but almost half (48%) of charities have at least one vacancy on their board1. Trusteeship is an important and a highly rewarding way to support an organisation.

1 The benefits of trusteeship, New Philanthropy Capital (2012)

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Charity events

Many charities raise money by running special events. The charity benefits from the difference between the cost of putting on the event and the ticket receipts, plus any money gathered during the event itself.

The type of event a charity may engage with has grown immensely in the past few years and now covers fundraising auctions and dinners, walks, runs, team activities, overseas volunteering and hikes, bike rides and even sky dives. The list is as vast as a charity fundraisers’ imagination. Attending or participating in charity events can be a tax efficient and fun way of supporting organisations.

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Charitable trusts

A charitable trust or foundation is a legal organisation which can be set up by anyone who has decided to set aside some of their assets or income for charitable causes. They are registered charities.

A charitable trust may be suitable if you want to give regularly to a number of causes, if you want to give a reasonable amount as a one-off gift from time to time, or if you want to ask others to contribute to the trust’s funds. Setting up your own trust provides a framework for planning your charitable giving in a systematic and thoughtful way.

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Community foundations

Community foundations are independent charities which exist to empower local people to bring about change for themselves, connecting those that have financial resources with those that have the local knowledge, contacts and motivation to make a difference.

Community foundations provide professional and personalised philanthropy advice and grant-making services to clients (including individuals, families, businesses, charitable trusts and statutory bodies) who are interested in addressing issues of any scale at a local level. Each community foundation is unique and develops information on priority local needs.

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Donor advised funds

Donor advised funds are vehicles for an individual, family or business’ charitable giving, administered by a third party, and designed as an alternative to direct giving or setting up a charitable foundation. Donor advised funds are easy to set-up and use, and there are a variety of schemes available which suit most donors’ needs. They can be funded through cash donations, through payroll giving or by gifts of shares.

Donor advised funds are structured in a similar way to charitable trusts, but because they are operated centrally by others, they remove the need for a donor to find his or her own trustees or deal with administrative aspects.

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Starting your own charity

An operational charity is one which carries out charitable activities directly, for example helping disadvantaged people or animals or raising money for a cause. Before setting up a new charity, it’s important to consider whether this is the most effective way to use your time and money in support of a cause.

There are over 160,000 registered charities in England and Wales, with numerous working in each field. These charities compete for funds, pay separate set-up and administration costs, and each have to find dedicated trustees. It is usually more efficient to pursue your charitable aims by working with existing organisations rather than create duplication.

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