John Studzinski’s address to the third sector, 8th October 2008

It is great to be in this hall, where we celebrated Anita Roddick’s memorial service on the theme ‘I am an activist’. This morning I was speaking to someone at a bank and he said today’s theme is very appropriate since life is now all about philanthropy to the banking sector.

I‘m reminded of the Chinese proverb ‘may you live in interesting times’. Which means, may you face a curse to test your mettle and how you can survive at the extremes of human nature. What we are now watching is a new steroid version of ‘Death of a Salesman’. The real recession is just around the corner. It is important to embrace this. The world, as Shakespeare would put it, is all at sixes and sevens. We are in a state of flux and things are volatile.

In these tough times we can gain a lot. We have had an extraordinary ten years in which lots of new philanthropists appeared, and systems to support them. Great companies like New Philanthropy Capital. We have old money and old foundations who are used to giving, and now lot of new money.

New money is very flaky, very insecure. New money is very nervous, not used to giving, not sure its money will be used effectively. You will get to see some interesting behaviour. Here are five predictions:

First, Foundations will cut back on grant giving since they will have lower incomes. They will be more careful about making multi-year grants. I like the Garfield Weston foundation. They give you a one-year commitment; money up front and then you get on with it.

Second, Donors will be more aggressive with you in ensuring their money doesn’t go into overheads.

Third, Corporate giving will fall. It is self interested and short term. Firms like Barclays and M&S are in there for the long haul, but they are the outriders, the exceptions. Others, if they have to decide between laying people off and cutting back on arts sponsorship, will they lay people off? Doubtful.

Fourth, Individuals are going to panic and cut donations as unemployment and economic insecurity increases. Your loyal people will become more loyal, more generous and more committed. So make sure you know who has known you longest, who is most loyal. We had a charity that was faced with laying two or three people off, but I went around a few people and asked them for £20,000 each and they sorted it. People will help if they know the score.

And fifth, Governments will cut back on spending on health and social care, as tax receipts fall.

So what does it mean for the sector? Some years ago I said there are 38 homelessness charities in London and there should only be 12. People said he’s insensitive, innumerate. Cancer isn’t one of my fields of specialist knowledge but someone should perhaps ask whether we need 3,000 cancer charities in the UK? It is likely that we will see an increase in charities merging their services.

In these tough times, your donors will ask increasingly about Governance. Are board members there for a purpose? Do you choose your trustees for their specialist skills?

You also need to look at new marriages. There is a lot of M&A potential and people will want you to look at how you can combine resources, structures, property and balance sheets. If the recession does happen it will enable you to be increasingly honest about your purpose.

My foundation, Genesis, is very focused. You need to be too. I often challenge boards to say "what is the original mantra of this charity". What is our core business as a charity? Donors will want to see that you are sticking to your core business.

Government also needs to be very open minded about including charities in any plan for spending our way out of the recession. The 1930s was the time when the biggest number of schools and college were formed, from periods of great austerity comes great inspiration and people focus on what is really important in society.

I want to be positive. You will rise like a phoenix, but things will be different. Fundraising will be less about glamorous dinners and more about targeted outreach.

Fundraising has three legs. First, what I would call conventional fundraising, seminars, asking donors for money and the like. Second, outreach. By this I mean use this period to build your networks and get more ambassadors. Third, advocacy. You have to stand for something. If charities can be seen to be playing active roles championing their beneficiaries, fundraising will come, more discretely, more elegantly, from real donors, not people you have just met at a dinner.

Rockefeller said that in his 93 years, he had lived through several recessions and one great depression. Prosperity, he noted, always returned but each time charity had to reinvent itself. Use this time well, and you will come through this, stronger and even better equipped for the challenges ahead.

to read more articles from this briefing click on the links below..
Kerry Rock   Robin Thomas   Virginia Fisher   John Studzinski   Michael Hintze