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Philanthropy goes local

dreamstime_m_5034910As public funds diminish, philanthropy is returning to its roots and focusing on local issues. But can the UK follow the US and embrace mission-related local investment, asks David Boyle.

It only took a couple of decades for Islington to change its image in the public mind – from being a byword for poverty and local government incompetence to the ground zero of the trendy and comfortable middle classes.

By 1994, it had risen in the world enough to provide the backdrop for the famous concordat between Tony Blair and Gordon Brown at Granita restaurant, not because Islington was symbolic of Labour heartlands but because it was where Blair lived.

Two statistics about the London borough today serve to explain why it has become the crucible of a new kind of philanthropy: Islington is one of the spots in the UK most divided by extremes of wealth and poverty.  It is also the top spot in England for male suicide.

Maybe those two facts are in some way related – I don’t know – but they explain both the need and the potential.

Because there is huge isolation and need amidst those expensive wine bars.  And where there is wealth next to poverty, there is also the possibility that they could be brought together for mutual benefit.

That is the idea behind the innovative, and possibly revolutionary, approach to philanthropy being pioneered by the 500-year-old Cripplegate Foundation, which combines a renewed focus on local issues, a partnership between local and regional foundations, and a new approach to fund-raising – asking local people and businesses to give money and time to tackle three local issues (see box).

Reversing recent trends in philanthropy

The combination is called Islington Giving and it is raising considerable interest in local government and funder circles. Lambeth Giving is on its way, and other councils like Hammersmith & Fulham, Kensington & Chelsea, Hackney and Margate have all been looking at the idea too.

Alongside this, Cripplegate has also linked up with the cash-strapped local council to launch their new resident support scheme, which has taken over the council’s discretionary housing payments scheme and payments previously made through the social fund by the department of work and pensions.

None of these things are exactly new – quite the reverse – but, taken together, they are a bold way of addressing local needs in an era of austerity, where elected local authorities have lost up to a third of their revenue and badly need a bit of local help.

Not only is this not new for philanthropists, in some ways it goes back to the idea of philanthropy that began in the late medieval period where local magnates endowed local institutions.

What makes this particularly interesting now is that it flies in the face of two of the key trends for charities and philanthropists over the past decade or so.

On the one hand, charities have increasingly formed partnerships with local authorities, or other branches of government, to deliver services under contract.

On the other hand, philanthropists have taken their lead from Bill Gates and others in a bid to think globally about issues and causes, and to shun local needs as somehow the responsibility of someone else.

Giving locally – and seeing the difference

A critique has emerged of both of these approaches.  The problem with delivering services is that the unique voice of charities tends to get muted, as they are transformed into quangos, responsible for delivering target numbers and – because of the huge sums going through their books – they sometimes find themselves unable to speak out against the whittling away of budgets.

The problem with thinking globally is that, in practice, it can involve funnelling money at people like governing an empire – without agreement and sometimes without even their knowledge.

All the preparation and searching involved in global philanthropy, endlessly analysing causes and stripping away the particulars, is time-consuming and expensive.  Local philanthropy can be more immediate.  It often means waiting no longer than somebody asking for money or identifying a nearby need and acting on it.

There is also one overwhelming advantage in working locally – you can see the difference you make.

That was what motivated Marcelle Speller, who sold her holiday rentals business in 2005 and was inspired by local charities at an event organised by the Institute of Philanthropy.  She went on TV in Secret Millionaire in Plymouth and ended up founding localgiving.com with UK Community Foundations, which helps small charities raise money more easily.

Another philanthropist committed to the local approach is Ian Gregg, a former chairman of the bakery company that bears his name, who set up the Greggs Foundation in 1987 and eventually linked up with the Tyne & Wear Foundation – now part of the same community foundation network – to focus attention on local needs.

Letting councils off the hook?

But there are questions about this approach. By stepping into areas like social fund payments, as Cripplegate has done, are they not letting the state agencies off the hook?  And who takes the decisions when they slip out of the hands of elected councillors?

It is true that the government’s giving strategy aims to encourage more local philanthropists to share the load.  They are now offering to put in an extra 50% for endowed giving from private individuals in a scheme run through the Cabinet Office.

Cathy Pharoah is professor of charity funding and co-director of the Research Centre for Charitable Giving and Philanthropy Research at Cass Business School, and points out that the combined resources of foundations are probably only around 1% of government funding in each area.

‘Foundations can’t step into the government’s shoes, so it is an unreal issue,’ she says.  ‘Also they don’t always work in the same areas of government – and donors don’t give in the same areas either.  Their two passions are very different.’

Islington Giving’s campaigns officer Jacqui Broadhead says that issues about letting the council off the hook – or about governance – rarely come up, but she agrees with Cathy Pharoah.

‘It is something that we are aware of,’ she says, ‘we are clear that what we are doing is quite different, but we have to be aware of the changing climate of austerity we are operating in.’

Something is also happening to make more local philanthropists active.  UK Community Foundations say that the amount of money going through their network of local community foundations has quadrupled in just six years.

‘Partly this is because of the directness of it,’ says chief executive Stephen Hammersley. ‘It isn’t about getting a glossy brochure.  If people can meet the local groups they are helping and be inspired by the optimism, vigour and entrepreneurial spirit, people find that attractive.’

He agrees that there is another reason, that – in present conditions – ‘people are acutely aware of problems on their own doorsteps’.

Philanthropists may not be motivated by the need to step in where local authorities have moved out, and somehow fund public services.  But they are often motivated by having a local impact and by their commitment to a particular place.

Local philanthropy is also developing.  Hammersley says they are seeing more local philanthropists anxious to take a more strategic approach, whether it is in youth provision in Liverpool or community planning in the east coast of Scotland.

‘The signs are that they are interested in changing places as well as just funding projects,’ he says.

Investing funds themselves in local economies 

But the real evolution will be if funders start thinking about where their funds are invested as well.  In the USA, this is known as mission related investment (MRI).

The proportion of their endowment that foundations must give every year is regulated by law in the USA.  Even so, it will rarely be more than 10%.

But imagine if foundations began to wield the power of the other 90%, and invested it in ways that could drive forward their purpose.

This is a big idea in US philanthropy now, and Rockefeller Philanthropy Advisors set up the organisation Confluence Philanthropy in 2009 to bring together foundations that wanted to try.  There are now 200 of these led by the energetic philanthropist Dana Lanza.

The big foundations involved in MRI include the Heron Foundation, which commits over 20% of its endowment to mission investment.  The Annie E. Casey Foundation, which gives money from the parcels company UPS, has allocated $100m in this way.

But many of the most enthusiastic trusts are actually very local, like New York’s North Star Fund, which has pioneered the idea of investing their endowment in social enterprises – rather than keeping it all in big banks.

You have to ask whether you can rebuild local economies relying on the old institutions, says Nathanael Berry of the Sandy River Charitable Foundation in Maine, a small local family trust but one of the leaders in MRI.

‘The answer to this seems to be increasingly “no”,’ he says. ‘The foundation sees this as a significant opportunity for investment that falls squarely in line with a mission of existing for public good. While we do not shun the national and international markets, having at least a portion of our investments entering local economies has the potential to magnify our impact beyond that of simply grants.  We certainly weren’t the first to come to this conclusion, and there seem to be a growing number of individuals and institutions that think similarly.’

Stephen Hammersley says he can see the first signs of similar thinking emerging in the UK, often investing in social impact bonds (SIBs).

In Scotland, where foundations are often sceptical about these, there are other alternatives emerging. Perth YMCA has pioneered an ‘SIB-local’ which trains 300 young people, using investments from 12 local businesses and individuals who want to be involved in other ways as well.

But if it was ever to take off in the UK, the MRI route would redouble the power of philanthropy at a local level. One estimate suggests that, of the 50 largest European foundations were to invest five per cent of their endowments in this way, it would release an extra 3.6 billion euros for social objectives.

It would also have a huge impact locally.

islingtonchange1Islington Giving – a model for local philanthropy

It has been five years now since the Cripplegate Foundation published their research report called Invisible Islington, and it revealed a completely different side to the London borough were they have been based for the last five centuries.

‘We wanted to raise the profile of the need in Islington,’ says Islington Giving’s campaigns officer Jacqui Broadhead. ‘The popular perception of Islington is of a wealthy area, but it has the second highest level of child poverty in London.’

Islington Giving is a direct result of that report.  It is a pioneering combination of local foundations, Breadsticks Foundation, City Bridge Trust, the Morris Charitable Trust, Richard Cloudesley’s Charity and Voluntary Action Islington, endorsed by the borough council and dedicated  not just to spending money on local issues – but also to raising money from local individuals and businesses.

Cripplegate had never fund-raised since its establishment in 1500, when John Sworder left an endowment for the poor to the Church of St Giles Without Cripplegate.

Since September 2010, Islington Giving has been asking local people for their money and their time to tackle three big local issues – young people, tackling poverty and confronting loneliness.

There is now an Islington Giving Week (in June) and there are even Islington Tours, taking people to see the projects and community groups they work with.

‘We have the resources here,’ says Jacqui. ‘We have found that civic pride, and being interested in local areas is a compelling reason for people to get involved.  What we need to do is get everybody in Islington involved in tackling the problems we have.’

www.islingtongiving.org.uk

David Boyle
David Boyle is a director of the New Weather Institute.

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