SPEAKER_01 0:12

You're listening to the Philanthropisms Podcast with Rodri Davis. This is the podcast where we try to put philanthropy in context. I'm your host, as ever, Rod Davis. And this week we are taking a look at the cost of living crisis, which is obviously very much in everybody's front of mind here in the UK, but also I think the effects of rising inflation and interest rates are being felt elsewhere in Europe and around the world. And to discuss the impact of this cost of living crisis on the charity sector, on people giving to the charity sector, and on the wider world of sort of funding for civil society. I'm joined by Angela Cale, who is Director of Consulting at MPC or New Philanthropy Capital, which is a think tank and consultancy that focuses on the charity sector and civil society here in the UK. Regular listeners to the podcast may remember that I had Dan Corrie, the chief executive of MPC, on as a guest on an earlier episode last year. And the idea behind this really was to do something a little bit different to the sort of straightforward interview episodes that we do where I get somebody on who's written a book and ask them about their book, all that kind of thing. Instead, I kind of wanted Angela to come on because I know MPC have been doing work around the cost of living crisis. I've also something I've been thinking about and I'm kind of doing some work on for a few things coming a little bit further down the line. So I thought it'd be good to have her on almost as a kind of co-host or pundit to discuss some of this stuff where we could both kind of offer some thoughts based on our work and the conversations we've been having. And as you'll hear, that's what we did. So I won't spend too much time before we go into it because it's a reasonably long conversation, there's a lot to cover. But basically, as you'll hear, I mean what we did was talk about the impact of the cost of living crisis and try to split that into the impact on charities, both in terms of increased demand but also rising costs, the impact on donors at a kind of everyday or average level, whether people would end up giving less or whether even though they were giving the same, it would be worthless because of the impact of inflation. Um, the particular questions around people who have larger amounts of wealth, sort of high net worths, and whether philanthropy from those sorts of people could play a role in addressing this crisis. We also talked about grant makers and foundations and some of the particular issues around those. Uh, and then we talked about what some of the potential actions that these various different actors could take might be. So without further ado, let's get into the conversation. Uh, I'll be back at the end for the usual bit of housekeeping and tidying up. Okay, great. Well, I'm here with Angela Cale. Hi, Angela. Hi, Rodri. Great to have you on the show. Um, and as I said in the intro, so Angela is Director of Consulting at NPC or New Philanthropy Capital. Um, and the idea behind this episode really is rather than a kind of straightforward interview of the kind we've done um a lot in the past on philanthropisms, uh, to have Angela on almost as a sort of uh as a pundit to for me to talk through some of the issues around what's currently going on here in the UK, certainly, and I guess more broadly elsewhere, around the cost of living crisis that we're already into, and it's certainly looming as we move into the winter, and what the impact's going to be on charities, on how people give to charities, and on the kind of the wider world of funding for charities. Um, I guess the starting point, Angela, maybe is just, you know, this is obviously something that's front of mind for a lot of people in the sector and a lot of donors and funders. Um, what do you think, you know, the the kind of biggest impacts we'll see over the short term of the cost of living crisis will be? Maybe, maybe taking charities as a starting point.

SPEAKER_00 4:30

So I think we need to split these impacts into two. One is around rising demand for charities. So any charity that is dealing with, say, people in poverty, so your food banks, your advice centres, your baby banks, those sorts of things immediately come to mind as charities that are going to see a rise in demand. But I think people shouldn't forget the sort of secondary effects. So your mental health charities, you know, cancer charities are seeing because they deal with a lot of uh advice around benefits, um, they're also seeing a rise in demand. So, so um it's not always the most obvious people. So, but I think that rise in demand is uh a first one, and then the second one is around the costs for charities themselves. Charities are not immune to inflation, and so they are seeing changes in their own cost base, and that will vary quite heavily depending on the sort of charity uh they are, and we'll probably talk a bit more about this. But say um, if you're a hospice, so I was talking to a hospice recently, um they're seeing huge increases in their energy bills. Um, whereas a charity that is reliant on volunteers going out and driving around uh visiting people are seeing problems because volunt the sort of cost of the fuel is no, uh they can't volunteers can't claim back enough to make that uh sort of a neutral proposition for them anymore. So they're seeing a real drop in volunteers. So those are the two sort of headline uh effects that we're seeing. Um, and they're quite different across the charity sector.

SPEAKER_01 6:19

And I guess taking that that second one about the the increase in costs first, I suppose that then is the inflation side of things. And I suppose there's another side of things that we're seeing at the moment, which is you know part of the solution to that being rising interest rates. And it'd be interesting to think about whether that has any sort of longer-term knock-on effects as well. But but sticking with with that inflation side of things, I mean you mentioned a few things there around energy costs and and petrol uh impacting people. Energy is obviously the one I think that's been sort of highest profile because the the scale and the pace of the changes there has just been astronomical. And that that's partly, I guess, normal inflation, but there are sort of additional issues in in the energy markets. For for you know, organizations that have seen their energy bills go up six, seven, tenfold almost overnight, you know, does that present a kind of existential challenge, do you think, if they're reliant on physical buildings?

SPEAKER_00 7:14

It's so existential. So, and the government obviously um a couple of weeks ago announced this um this cap on energy bills. And it's probably worth reminding people, because not everyone was au fail with energy policy before, certainly a couple of months ago, that charities are subject to the business uh cap, not the personal domestic cap. So they're not subject to the sort of average uh tariff cap of 2,500 that um people are in their home. What they're subject to is the business cap, which um a few weeks ago the government announced they were capping for six months. So just going back to this hospice that I talked to you about, so they had budgeted in an increase of 60 grand in their in their um in their energy costs. Then before the government's announcement, they realized that was actually going to go up 225 grand. That's money that they don't have in the reserves, and they're a hospice. So what do they do? Do they turn down the heat and make people who are literally dying cold? Um, do they cut costs? And realistically, um, costs of that magnitude are only ever going to be staff. You know, there are there aren't loads of charities with 225 grand of incidental um fat to cut. So then you're talking about a worse uh quality of care to people. Um, and that's at the same point when like there's pressure on staff costs, so it is absolutely an existential crisis, and we are seeing charities talk about merging, talk about folding, just not knowing how they're going to sort of keep the lights on in a in a literal sense. Um, and this stay of six months is obviously very welcome, but sort of how are we getting 225 grand in six months? Like that is unclear. So, is there going to be another government intervention, which I think a lot of people are hoping for? Will the war in Ukraine be over and gas prices return, which obviously everyone is hoping for? Um but neither of those things seem certain right now.

SPEAKER_01 9:36

No, absolutely. And and I I guess it it almost links a bit to what you were saying before about increased demand as well. Because I mean the example of a hospice, obviously, it's treating people who are already there. And if if they had to, because of rising energy costs, reduce the amount of heating they were using, that impacts those those people and their you know quality of life or their end of end of life care. But that there also seems to be a group of charities who might find themselves in the position where they run a community building or some sort of space that acts as a hub for the community. And not only will their energy costs be going up so they're having to ask themselves questions about you know whether or not to put the heating on, at the same time, they'll probably have more people, individuals, coming to them wanting to use that building precisely because they can't afford to heat their own homes. So there's a kind of you know, charities will find themselves squeezed between their own costs and increased demand for their services precisely because other people are struggling with with the same challenges. So I think, I mean, it often finds as though charities get themselves caught in in these sorts of traps between increased demand and also sort of being the victims of the same pressures.

SPEAKER_00 10:44

Um yeah, and I think that you know, those sort of heat banks, which over the some other people are talking about, oh, charities can set up heat banks, and it was very unclear as to with what they would do. Yeah. And then people people talking about church halls setting up heat banks, you know, like church halls are the least energy efficient building you can get. Like that would be great, but where are they getting the money from? And I think another example that we're seeing of that is sort of donations to um things like baby banks and Little Village, which is one of the sort of um baby banks in London, said that it was seeing a decrease in donations because people were having to sell their own their old baby goods to get money.

SPEAKER_02 11:32

Yeah.

SPEAKER_00 11:33

Um, so instead of being able to give that away for free, so it's seeing rising demand as well as a decrease in in donations on ways that it can help at the same time.

SPEAKER_01 11:44

Yeah, absolutely. And that that brings, I guess that's a third part of the potential squeeze, which we'll we'll certainly come on to um in a bit. There was there's one other element actually of around the impact of inflation that's maybe sort of indirect, but you touched on a little bit there, which is around staff costs. And I guess this is another thing that people maybe outside the sector who don't necessarily think about how charities actually work wouldn't necessarily think of, which is a lot of people who work for charities are not volunteers, you know, they're voluntary organizations, but they are paid members of staff, and rightly so, because they're you know, they're highly kind of skilled workers, whether that's sort of frontline healthcare workers or people who work within the charity. And those people are themselves going to be facing all of the inflationary pressures and cost of living pressures. So there's a pretty strong argument that salaries need to go up in line with inflation as well, but then charities have to somehow figure out how at the same time as they're being forced to question how they can cut costs, they also have you know a moral or practical responsibility to increase the salaries that they're paying staff. Do you think a lot of organizations are struggling with that kind of issue as well?

SPEAKER_00 12:53

Yeah, well, so we're seeing a lot of organizations struggle with that. And it's not just a sort of moral or practical issue. You know, everyone talks about chief exec salaries, and are they overpaid? But really, here what we're what we're talking about are some of the lowest earners in the UK who work for the charity sector. So if you if you think about the um care sector, um so obviously hugely important, a lot of that is charitable um run, and one in ten roles at the moment are vacant. And we're seeing a lot of people saying, Oh, I really love my job, but uh Sainzbiz have put up their pay, um, Amazon have put up their pay, and I can't afford my heating pill, I can't afford to pay my child to feed my children, so I have to give up my job and work in the private sector. And we've seen um a few charities who've been able to dip into the reserves to give their staff an increase, um, which is obviously sort of important, and they felt they had to do it in order to have staffing. Like if you don't have staffing in a lot of the cases, you don't have a charity, but that's not a long-term sustainable solution. Um, and one of the problems here, Rodri, if I can if I can move on to a slightly technical thing, is around commission contracts.

SPEAKER_01 14:16

Yeah, of course.

SPEAKER_00 14:18

So a lot of the charity sector works on contracts that they've got from local authorities, which were perhaps tendered a year or three years ago. Um, and they made an assumption in there for inflation, um, which didn't used to be a huge assumption, right? Like you put on like 2% a year if you were if you were feeling generous. And now, you know, the London living wage has just gone up by 8%. So, where is that money coming from to pay that? And a lot of charities feel that that's really important, as you say, from a moral perspective, but just fundamentally from a having staff perspective.

SPEAKER_01 15:03

Yeah. Yeah, I'm glad you brought you brought that up because it was something I wanted to ask about. I mean, in the context of contracts and sort of commissioned services from local authorities, but I guess also in terms of the money that charities themselves already hold, um, you know, perhaps in the form of reserves, the other impact of inflation is obviously as inflation rises, that money is just worth less. Um, and you know, is that is that an issue? Um, you know, you were saying there about contracts. Is there any possibility, or have you seen examples where charities have been able to engage with local authorities to get them to revise existing contracts and kind of build in more uh more kind of recognition of inflation, or have they just sort of found themselves trapped in these one, two, three year contracts that that aren't worth as much as they should be?

SPEAKER_00 15:52

No, I don't have any examples to hand of charities who've successfully negotiated, but I but um I was hearing a lot of charities sort of a month ago saying we might have to hand back the contract, like we just can't.

SPEAKER_01 16:05

Yeah.

SPEAKER_00 16:06

It's it's and most contracts from from local authorities were unfortunately already running at a loss for charities anyway. Yeah, they were already being subsidized. So um if you then have to pay the staff a bit more, and a lot of charities were sort of, you know, previously you'd hope that your contract would be rolled over. So instead of going out for a big uh contract, you just get the nod in March, say that you'd that you get it for another year. Lots of charities are saying, no, no, no, we want to go through the tendering process again because we can't work on the abase on the assumption of the cost that we that we were previously working on. Um so I think as we move through the sort of most contracts from local authorities come up at the beginning of the year ahead of the sort of local authority financial year. Um and I think as we move through December, January, February, we'll see a lot more of those contracts sort of being handed back.

SPEAKER_01 17:05

And and I guess it's you know, we should be careful not to paint local authorities necessarily as the villains here, because I mean some of them, you know, obviously they're very variable in terms of the way in which they do things and their performance, and some of them are actively bad, but but they many of them are also just finding themselves in an almost impossible situation when it comes to to rising inflation and rising costs and not really having the resources that they require. So they probably do you know these things very reluctantly. They're not they're not deliberately seeking to take advantage of charities.

SPEAKER_00 17:37

Oh, absolutely. Um you know this inflation was unexpected for so many uh organizations, um, through to local authorities, and uh I'm sure you were sort of watching the Edinburgh Festival um and seeing the the bin strike in Edinburgh that was going on at the same time, which and and and people sort of saying, Oh, you know, really should be paying the the bin memoir, but where is the money coming for that? Like you can't um so it's it's a really difficult balance at the moment. Um there isn't anyone going around really with lots of money in their in their pocket that is the obvious person to be paying for for all of these rising costs.

SPEAKER_01 18:24

No, absolutely. Um I want to to move on in a minute just to think about the the impact on how people give to charities and and how the sort of fun uh the funding and grant making world works. But but just before we do, we we talked right at the beginning about the the increased demand for services um that charities were going to face. Um and I think it's sort of relatively clear to people that that might come in the form of services directly addressing the needs of those people who find themselves um in poverty. So we talked about food banks, um, you know, warm banks, um uh baby banks, and those sorts of things, and and also advice services to help people to navigate some of these challenges and access help elsewhere. But I wondered if also there are some more sort of hidden impacts that we might see over the medium term in terms of the impact that all of this has on things like mental health and kind of longer-term physical health and and knock-on effects like you know, increased rates of domestic violence, which are obviously strongly correlated with with increased levels of poverty. And again, those being things where charities are the ones that eventually get looked to to pick up the pieces. Do you think that is something that we need to kind of bear in mind as well?

SPEAKER_00 19:37

Yeah, so I I think we are, I mean, we're already seeing the impact on mental health. Most of the mental health charities are already talking about that. Um so you'll expect to see that play through in increased demand. We are, and that knocks on fairly easy fairly quickly to things like domestic violence. I think things like physical health, I'd also put in um sort of loneliness, well-being in this category as well, will come in in a different way because people will be able to go to things less. So they'll be less able to take part in their sort of local cricket club or their kids' local cricket club, even if the sort of membership is only sort of £10 a month, you know, fairly minimal levels, they still can't afford that. Like that like people are cutting back. So you'll be able to see that decline on physical health, things like obesity, where one of the sort of you know, horrific things that the that the that the sector have been trying to tackle for a while, is that it can be cheaper to cook a unnutritious food food that will make you obese than it will be to cook nutritious food. So you can sort of start to see that as a long-term impact. And then things like loneliness, because I think people will be less uh able to take part in sort of group activities, they'll be less able to see their friends, they'll be less able to go to the sort of theatre. So that will sort of affect people. And I know the question was about the impact on people, but it's worth bearing in mind that those are also services that that charities charge for, you know, minimal amounts. But you go to a even if you go to a free museum, you then have a cup of coffee in the in the cafe, and that cup of coffee is part of the is part of the money that helps keep that museum open. So I think we'll start to see loads of those impacts because people are having to just cut back in lots of different ways and are incredibly stressed about how they're going to afford to pay their bills. We're already seeing organizations that that work in housing saying, you know, it's all very well telling people not to put the heating on, but that That causes real problems in terms of physical conditions. So it it causes asthma. It can cause things like pneumonia because people are just so cold.

SPEAKER_02 22:13

Yeah.

SPEAKER_00 22:14

As well as, you know, that that tracks through into a longer-term problem with educational attainment. So because young people are less able to concentrate because they're cold, because they're hungry, that tracks through into a longer-term educational attainment. So I've been trying to work out for a while what is the charity that I think is unaffected by the cost of living crisis. And I just can't found one yet.

SPEAKER_01 22:42

No, I think that that's right. And it's once you track these things through, as you say, I think your point there about, you know, for the kids who find who find themselves in the situation of not being able to have enough heating at home or schools having to reduce the amount of heating that they're having in classrooms, and those kids haven't been able to eat properly. It's you, you know, it's almost impossible in that circumstance to learn properly because you're just not being provided with the sort of starting point that can allow you to do that. So um, and then as you say, the the longer-term knock-on effects of that on that child and on their needs and on their family, those are the sorts of things then that inevitably result in increased demand for for the services of charities, because that's kind of what many of them exist to do and to help with.

SPEAKER_00 23:29

Exactly.

SPEAKER_01 23:30

And I just I just wanted to to move on a little bit just to think about some of the impact on how people are able, you know, to support charities. Because many people I think will find themselves, as I do, in the situation of thinking, well, I'm concerned about the cost of living crisis personally, but I also recognise that I'm you know very, very far from being the sort of person who is most affected by it. And you know, in in acknowledging that, I want to do what I can to help. But I find myself caught in this situation of being, you know, relatively anxious about rising interest rates and inflation, yet at the same time wanting to try and keep supporting charities or even support charities more. And I suspect there's a lot of people out there who feel similarly. Maybe if we sort of break it into kind of everyday donors, of which I would very much count myself as one, and then sort of think in a in a second about people who might be in the position to have sort of larger amounts of money to give. What do you think is is most likely to happen? I mean, do you think that the impact of this cost of living crisis is going to see people actually just giving less, either fewer people giving overall or people giving but giving smaller amounts? Or do you think there's actually a challenge in that people will keep giving, but because of inflationary pressures, their giving won't be worth as much. So actually, you know, it will result in kind of this the same thing in terms of the value of that going down.

SPEAKER_00 24:51

I think both will happen. And I think both are already happening. And apologies if you heard my uh phone alarm go off.

SPEAKER_02 24:58

That's quite right.

SPEAKER_00 25:00

Um so we're already seeing a decrease in the number of people giving.

SPEAKER_02 25:06

Yeah.

SPEAKER_00 25:06

And I think this is quite closely related to the pandemic. So I think one of the things that we all have to bear in mind is that this cost of living crisis comes just after we were out of the pandemic crisis, if we are out, which I think is sort of debatable. But over the pandemic, charities didn't have that opportunity to build up the relationship with donors that they normally have. Um so there weren't the events, you know, your your sort of coffee mornings, there weren't the uh running events, etc., where people got into that habit of giving. Um, and it's an important bonding element in giving that that sort of that people do it regularly, and for coffee mornings, they talk to people who are working at the charity like that. That's really important. And so they're already at a level coming into this cost of living crisis where their sort of relationship with the with the charity is pretty weak. And then they're being bombarded by news, which is oh my god, your mortgage costs are going up, oh my god, your your heating costs are going up, even your food costs are going up. And even if you are like me, you know, relatively well off, you sort of start to get, as you say, that anxiety about what's happening. And the last thing from a charity perspective, you ever want anyone doing is going through their list of standing orders. Because, you know, um lots of charities just rely on people giving by default. So the last thing you ever want is that. And that is, of course, the advice that we're being given by everyone is to go through that list of standing orders and cancel anything you're not using. So I think it's really important that charities very strongly make the case that that money is needed now more than ever, that it's not a Netflix or an Amazon Prime. It's not something that you can cancel because you are in inverted commas not using it. It's sort of something that's vital to keeping this country going. And that's quite a hard case for them to make because I say the relationship with people is is sort of weaker than than at any other time. Um and linked to that, what normally happens is you know, you you give £20 a month and then they ask you for £30 a month, and a decent number of people say yes to that. Um and what we're seeing is that people are not saying yes to that. So even if you haven't cancelled, you're not increasing. And over time, you know, the longer-term picture, just take a step back here, is that sort of regular giving is primarily done by older people and charities sort of always need to be sort of running to keep up with um people who are sadly no longer with us, just dropping off their sort of donors list. So that regular giving, I think, is is sort of in such a fragile place right now. And we're not seeing, sorry, just we're not seeing the urgency that we saw when with the pandemic giving.

SPEAKER_02 28:03

Yeah.

SPEAKER_00 28:04

So we're we're not seeing that like, you know, you now need to give to these organizations. You know, back at the start of the pandemic, my WhatsApp, my road WhatsApp group was full of people doing like I'm doing a donation to the food bank. You know, what do you what what do you have to give? Type out. And I'm not getting those messages anymore, not getting that sort of community impulse to give anymore.

SPEAKER_01 28:27

And and do you think that's just a, I mean, as you were saying before, like a legacy of the fact that we are finding ourselves in this situation off the back of a pandemic, and there's a certain element of just, you know, fatigue or people almost being at the point where they they kind of they can keep giving, but they don't have the the energy to kind of drum up that sense of urgency anymore.

SPEAKER_00 28:47

I'm not sure I call it fatigue. I I think this is more of more of a sort of boiled frog type situation. So because the temperature on inflation has been rising sort of very slowly, I think the media talks about cost of living crisis, but certainly I'm not seeing charities react in the way that we saw during the pandemic, with you know, emergency board meetings and emergency appeals in that way. So I think it's just a slightly different sort of crisis which is affecting us differently. I'm not sure I describe it as fatigue, but I think one of the difficulties is just around how people's sort of world has narrowed during the pandemic. You know, we were only allowed to see, you know, five other people at any one time for a for a long period of time. And so some of those sort of weaker ties that you have to sort of different members of your community just aren't there anymore. And I and I I think there's been that that sort of weakening in in how people sort of see their community.

SPEAKER_01 29:58

Yeah, it's really interesting. And and on the, I mean, the other side of that, I guess, as well is you know, you were saying there about one of the challenges being that we find ourselves in this situation where the ties between people and charities or charities and their supporters might be weaker than they they have been at times in the past or than they otherwise would be because they weren't able to fundraise and hold kind of events for to keep in touch with donors. Uh, does that present a challenge sort of going forward from here as well? I mean, do you think one of the other problems for charities is that those those links are already weaker, but actually it's difficult to contemplate putting more resources into fundraising or into to kind of engaging with supporters when you're having to audit your own costs? Or do you think actually that that is a kind of worthwhile investment? I mean, if you were a charity sitting there now, would you sort of think actually the best thing we could do is put a bit more money into our fundraising because that would bring more money in the door, or do you have to kind of think, well, we need to cut costs somewhere and maybe fundraising is it?

SPEAKER_00 30:59

That's always going to be an individual decision for charities, depending on sort of how strong their fundraising is at the moment. But in general, like fundraising raises money. And I um at the moment I'm I'm currently staying with my mother-in-law, who is one of those old people in the nicest possible way, who gets lots of letters from charities, and she's always saying, Why do I get this letter from a charity? And I'm saying, because they need your money, and the only way to get it is to ask. Um, so sort of like fundamentally asking for money is the only way that you get money in the charity sector. So there needs to be always an investment in fundraising, or at least if there's not an investment, it's not the place to cut costs. I would I would worry if I if I saw a sort of decrease in that generally. And as I say, I think actually what we need is a sort of argument for how important the charity sector is right now. Um, and you know, I said that we um aren't seeing the same messaging that we saw around the pandemic, but some of the things around sort of group appeals for funding, you know, the the sort of the version of the Disasters Emergency Committee that was set up for for sort of UK-based charity, I think that's the sort of thing that we need again.

SPEAKER_01 32:27

And just to move it on a bit, the other bit of giving that we parked for a bit, but I think is kind of interesting and relevant because maybe there are different questions to be asked is about people who are on you know significantly higher incomes or or just have significantly uh higher levels of wealth, sort of, you know, often what gets called high net worth people who are giving. And maybe their giving gets termed more as philanthropy rather than charity, although I don't necessarily like drawing the distinction in that way myself. But do you think the impact of the cost of living crisis is is going to be sort of quite different for those people? And therefore, do we need to ask different questions about what their response could be in terms of using their giving? I mean, do you think there's a case that actually wealthier people who are insulated more from this have a responsibility or at least should sort of recognise that if they have the capacity, then they should think about stepping into the breach and increasing their giving.

SPEAKER_00 33:24

I believe very strongly that that wealthy people should be um thinking about stepping into the breach here and increasing their giving. But you know, I'm a philanthropy advisor, so it's okay. And I think, you know, we're recording this on Monday. They've just announced that they're going to reverse the 45p tax cut. And I think there was a there was talk about charities using that tax cut as a way of saying, well, instead of keeping that money, give that money.

SPEAKER_02 33:51

Yeah.

SPEAKER_00 33:51

That's now been reversed. But I think we need um a very concerted effort by by charities and by donors around this. And just to you know, labour the point a bit, I'm a philanthropy advisor. At the start of the pandemic, my phone was slightly ringing constantly about people trying to like asking me, where do I give? Where do I give? Um, I'm not getting that now. The response has been much more measured. And I think there's a sense in which, you know, back at the beginning of the pandemic, you know, foolishly it turned out, we thought this was a short-term thing. You know, let's give some money to this uh health organization for a very short period of time. Whereas I think the cost of living crisis, as I say, is a bit more bold frog here, because that heat is going to be on for a much longer period of time. And I think a lot of philanthropists are thinking, well, am I going, this isn't a one-off donation. So am I giving it a higher rate for a longer period of time, or am I giving, or am I basically saying, charities, you need to cut your cloth? Now, my argument is you should be giving it a higher rate for for a longer period of time, because as I say, this is this is existential for organizations, this is existential for people. You know, people will die because they can't afford to have the heating on, people will die in quite horrible ways, that would there'll be an increase in mental health issues, there will be people who for whom the impact of not eating enough will be there for a really long time. And, you know, I talk to so many of these high net worth people all of the time, and none of them want this.

SPEAKER_01 35:42

Yeah, absolutely. And I and I guess again, maybe uh when you have potentially that increased level of agency where you have more to be able to give, and and you feel you genuinely feel that responsibility, perhaps that sense of responsibility on you feels that much heavier because you can do that much more. Although I guess the thing is you can't do all of it as well. And and I suppose there is there is also that element of looking to philanthropy as a solution, where I would totally agree, I think there's room for an enormous amount more giving from wealthier individuals who have either uh been, you know, will be insulated from the impacts of of this cost of living crisis or have actively done quite well over the last few years and will continue to because of the way in which their wealth accumulates through to the stock market um and and other kind of um uh methods that that aren't kind of dependent on the same sort of pressures that that you know the more average people are facing. But um, but I guess um there is also a danger in in looking to philanthropy as a solution, uh, or if it's proposed as a solution, which is partly, you know, if you're a policymaker and you sort of see this, you know, philanthropy could step into the breach. It's very tempting to sort of see it as a silver bullet that can solve all of the problems that that otherwise might require quite significant policy change. And also, I guess uh an interesting question to me is whether there's a there's a slight challenge in terms of uh charities thinking about philanthropy or kind of high net worth giving too much as a solution, because the reality is a lot of them aren't necessarily in a position to do it that well because they're not really geared up to fundraise from these people and it often requires quite sort of specific skills. Do you think there is something kind of at a sector level we need to be doing to think about how we make sure that if there is wealth that can be unlocked from you know in the form of philanthropy, it gets through to organizations that may not themselves be the ones that are best at kind of doing that kind of fundraising traditionally?

SPEAKER_00 37:44

Yeah, and I think you know, organisations like the community foundations are a brilliant example of how that works, and I think they're really good on a uh job geographic level. Um, that that's how they're set up in sort of in in taking money from incredibly rich people and giving them to organizations which like no one has ever heard of, they're that small. Um, so I think that's that's a great model. We don't see that so much on sort of some of the sector levels, but I think there are ways of giving that came in during the pandemic that are that are really useful in this sense. Um and the sort of the model of of basing things on the on the disasters emergency committee, I think is a is a sort of really good one that that worked quite well in the pandemic and and should be continued from here on in.

SPEAKER_01 38:41

Yeah, absolutely. I agree. I think there's definitely more scope for, as you say, doing that not just at a geographic level, but at a national or a kind of cause specific level or thematic level. Um the the other thing I just wanted to move on to ask about. Before you do, sorry, Roger.

SPEAKER_00 38:54

Oh, yeah, no, go on, go on and go back to your point about whether relying on philanthropy is taking the pressure away from policymakers.

SPEAKER_01 39:03

Yeah, absolutely.

SPEAKER_00 39:04

Because I think that's like that's a really important debate that comes up in philanthropy all the time. Um and so many people giving worry about that. And you know, you like much more than me understand the history of philanthropy, but it's not like there is a line set in the sand of like this is charitable, this is a state-paid thing. And I was I was 100% like furious for most of last week because I went to Wormwood Scrubs on a really interesting prison visit, but heard about philanthropy being used to pay for what I consider very much state responsibilities, such as film on windows so that prisoners don't overheat in a heat wave, or watertight containers so you can store baby uh buggies in a mother and baby's unit without them getting covered in mould. I I sort of 100% think those are our state responsibilities. But that line has been changing sort of over the years, you know, go back 100 years, and most of these things weren't state responsibilities. Go back before the creation of the NHS, and most of these things weren't state responsibilities. But even thinking about things like, you know, domestic violence refugees, refuges were set up because that was not a thing that the state was paying for. Hospices, weirdly, have remained a thing that's that is primarily a sort of um philanthropic initiative rather than being paid for by the state. So I think one, that line is very often not where you think it is, and two, it changes a lot. But fundamentally, if you are going to maintain the line that these things are state responsibilities, so for instance, I won't give to food banks, it's really important to hold the fact that you're playing with people's lives here. You're playing chicken with politicians who, for the past 10, uh, 12 years, where we've had a sort of Tory-led administration, haven't seemed to care. They haven't seemed to give in on some of these things. And so, really, what you need to be thinking about, I think, is what helps people's lives be better. Now, if you if you think that some things should be paid for by the state, then make sure you're giving money to campaigning charities who are campaigning for that. But that doesn't, I think, mean that you shouldn't also be giving to some of the frontline charities.

SPEAKER_01 41:29

Absolutely. I mean, I think my head's in danger of falling off from nodding quite so vigorously. But uh no, I mean, absolutely. I I I think on both sides, you know, people who want to excuse the state from pulling back from certain areas of provision and sort of use the example of philanthropy supporting services as an excuse for that, that's entirely wrong. But then similarly, people whose, you know, perfectly fair ideological belief that something should be provided for by the state becomes an excuse not to give when there is very clear immediate need. That's that's equally bad. I think it has to be possible to use philanthropy and charitable giving to address you know, at a symptomatic level, the immediate challenges of people whose lives are you know going to be hugely affected over the short term, and at the same time recognize that there are fundamental structural issues, but but you should be able to give to help those people and at the same time, as you say, speak out yourself or support organizations that are speaking out and campaigning to say we need things to be fundamentally different. I I just don't see why it's not possible to hold those two things in in your head at the same time. So I think you know it's very, very important that people do that. Um the the thing I wanted to just move move on to, because I mean we're in danger of taking up far too much of your time, apart from anything else, um, is you know, we talk there about wealthier people giving and the kind of impacts on them, and you know, the fact that there's a very strong, I think, case for for them thinking about the possibility of giving more. Some of those individuals where they're giving at a particularly significant level will be using vehicles to do so. And I'm thinking here about kind of trusts and foundations. And there are also many trusts and foundations that aren't the vehicles of kind of individual philanthropists, but but that world of funders that are endowed in some way, so they kind of hold assets and invest them and then and then give out grants from that, that is also an important part of the the sort of the environment and ecosystem for the charity sector, although you know, not one necessarily that people outside the sector are aware of or understand. Um, what what impact do you think the cost of living crisis will have on grant makers, both in terms of presenting challenges for them and also in terms of you know, is there a case for them doing things differently as a result?

SPEAKER_00 43:47

I think it presents pretty huge challenges for them in that it's another, it should be another sort of change to their strategy. And I think lots of organisation, lots of grant makers are thinking about that sort of dichotomy or those sort of two impacts that I presented at the start of this chat around the increased demand and then the increased costs. And should there's if their stress sheet is around say supporting people in prison, we're actually, I can't really see any increased demand element there. It's not like more people are going to be going to prison, although they might do because it will be warm. You could there's loads of increased costs coming through primarily in sort of staffing costs. And so if you're a grantmaker, do you sort of think, okay, I'll I'll give all of those a little bit extra so they can pay their increased costs, but I'll ignore, in a sense, the increased demand brought up by the cost of living crisis, or will I sort of create a new sort of portfolio that's just about dealing with that increased demand? So I think there was huge sort of strategic questions there. I think there are lots of questions around how to do more with less and how they can support charities to do that. So we've sort of been seeing lots of this sort of technology being used differently because of the pandemic and then there was this question about you know how are we going to move back to a face-to-face world? But actually it feels like technology is one of the ways in which you can reduce some costs and maybe we should stick with that. I know I know a lot about sort of charities working in the legal sector and that's one of the things that they're thinking about. But the problem is there's quite a lot of people who think it doesn't get as good results. So what's your sort of cost benefit of we can see more people so even if we don't get as good results is that still better because because we get a sort of the decrease in results isn't as much as the sort of decrease in seeing as many people. So those sorts of things are really playing through with grantmakers. But one of the things and if I can just get back on my soapbox again Roger. So before I worked in for a charity I worked in investment management. And so I feel like I'm one of the people who understand sort of what both people are saying. And one of the sort of strange things that we saw over the summer was grantmaking us that they couldn't make any decisions about the cost of living crisis because they were waiting to hear from their from their investment managers about how much money they had. And I was just like jaw dropped because I was like hold on I remember sort of 15 years ago on a day of big market moves all you're doing is standing around watching how much the portfolio has gone up or down. Like how do they not know this information? It's updated second by second. And what I suspect is the fact that investment managers live in their world which is a very nice world to live in they don't see necessarily the pressures that people who really understand the charity perspective see. That they they're not seeing you know organizations having to turn people away in like staff in tears because there is no more help to give them. And so one of the things that I've been talking about for years is a sort of exchange program in some ways of like your investment sides and your and your sort of grant sides just needing to talk to each other a bit more so that decisions about how much money you give are not made based on investments. They should be made according to what the need is to what the mission is and I've just heard slightly too much about like oh we need to see where our investments come out. It's like no and you know at the beginning of the pandemic just to go back to that when the FTSE was you know just about at 500 people were like we're going to give we're going to give more we're going to give more the FTSE's taking a battering recently but it's nowhere near as low as as it was back then when you were willing to give more.

SPEAKER_01 47:55

So I'm a bit like why are we not seeing those announcements that reassurance that speed that we saw in the pandemic yeah it's really it's really interesting that and I I guess because there's quite often people who I suppose are aware of this world and aware of the the the existence and reality of endowed organizations that then make grants out of them you know one of the things they will often say is you should just spend more out of your endowment or up the rate at which you're kind of taking money out of that. And particularly as you say if actually the value of of the the underlying investments is at the very least not going down. But but I guess that separation as you're saying between the investment side of things and the grant making side of things in practical terms can be a big challenge because actually if you're on the investment side particularly if you're a sort of third party investment manager and you're thinking about these things as sort of long-term assets you maybe aren't aware that they have a real tangible knock-on effect on decisions about short-term spending and how much money is available to get out of the door to to organizations that are in acute need now but that that seems like a surmountable problem to me and one and one that kind of if if grantmakers are finding themselves in that position, they need to make sure that they join the dots between their investment committee and their grantmaking committee or their trustees far more so that they can kind of make those informed decisions much more quickly.

SPEAKER_00 49:19

And I think the the sort the the stats on this come like they're like a decade old but the number of permanently endowed foundations is actually pretty low, right? So about a third of our foundations are permanently endowed and have to sort of make sure that they keep that but so many of them behave like they're permanently endowed. And that's a decision that they've made and they can unmake if they wanted to and I and I think you know what do we owe the future and what do we owe now is a really important debate that needs to be regularly had at the sort of investment committee grant committee position of these foundations.

SPEAKER_01 50:01

Yeah absolutely and and just I mean in terms just sticking on grant makers for a moment because I think I mean there are all sorts of things we could talk about and probably get quite thick into the weeds on it but but a couple of other things in in terms of you know not just having the mindset of giving more where they are giving is is there any would there be any benefit to thinking about changing the processes that they use? For instance simplifying grant applications because I know one of the costs for a lot of charities that in part rely on on grants from uh from trusts and foundations is that it costs quite a lot of money to go around and make these grants and reapply for them. And often that's because the processes are hugely complicated no two organizations have the same you know grant application process there's no consistency and all that sort of stuff. So actually is there a certain amount of sorting things out on the administrative side that could actually have a tangible knock-on benefit for for the organizations doing the work on the front line.

SPEAKER_00 50:59

Yes um yes 100% I think so it's like some of these things are ridiculous. Because MPC is a grant seeking organization ourselves and I've had to do these applications. There was one week where I had to ask for the number of staff in three different ways because you know one organization just wanted permanent members of staff one organization wanted full-time equivalent and one organization wanted it broken down by full-time and part-time just like oh just decide how we count staff like that's not important but so I think there's a lot there and and again just to go back to this a lot that that was that was done in the pandemic you know yeah they had centralized applications and lots of funders looked at them and decided um to fund things and I think that sort of model again would be sort of hugely helpful and there's no real reason why that is you know a once in a million crisis type intervention that could why isn't that sort of standard practice? Simplifying simplifying grant applications is really important being clear about timetables is really important speeding things up in the process you know we saw some really rapid grant making in the pandemic and that's the sort of thing that um we'd like to see again.

SPEAKER_01 52:14

Yeah absolutely and and one other thing as well actually I guess is maybe in terms of grant makers thinking about whether they need to revise their own strategies. I mean going back to what you were saying earlier about whether that that question of whether you just kind of give more to the organisations you're already giving to or whether you need to sort of think about targeting more according to you know the severity of need at this particular moment in time are there opportunities do you think for funders to kind of use data more effectively? Because I know you you guys at MPC are doing quite a lot of work around this there's also people like 360 giving who are trying to make the foundation and grant making sector more data informed. And is there a potential there to sort of use some of what's already out there to think right where can we target the resources we have most effectively?

SPEAKER_00 53:02

Yeah absolutely and I think we're seeing a sort of a pattern of changing need and where it's really important that that duplication um isn't happening. So so sort of resources like the MPC data bank or 360 givings resource where you can you we where you can look at sort of who else is giving in that area are really sort of important things that can help grant maker strategy hugely. And it would be great to see sort of more take up of some of these initiatives.

SPEAKER_01 53:31

Yeah absolutely I mean there's you know it feels like relatively low-hanging fruit at the moment in terms of data. I mean I think there's all kinds of things we can do in the future but for now just having a very basic sense of who's giving what where um I think would would probably help quite a lot. I just before I I let you go because I'm aware that we're in danger of running far too long, I just wanted to kind of give a bit of thought I mean I think we've talked quite a bit in the course of the conversation about what different organizations or different players in in um in the the kind of charity world can do in response to some of these challenges but maybe just to kind of crystallise a little bit in your mind for for charities for kind of everyday donors giving to them for philanthropists for fundraisers what are the most important things for each of them you think that they can do right now to address you know the concerns that they might have about this cost of living crisis that's facing us?

SPEAKER_00 54:24

I think charities this seems a horrible thing to say but I think need to go back into that mode of thinking quite continually about sort of adaptive strategy and really making sure that they're focusing their efforts on where they're most needed and and sort of fundamentally no one's going to agree on that because I think there isn't enough there isn't enough to be able to help everyone. So I think here you need to really be listening to their users and so sort of making sure that users are involved in some of the tough decisions that charities will be having to make you know we're talking about food banks having to change their policies from being able to access it as many times as you want to sort of limits on it. And those sorts of things I think involve your users make sure that they're they understand the sort of trade-offs that you that you're trying to deal with for the sort of charity fundraising community I think we need to really get across the message of of how dangerous this is to charities that this is I you know I think we're seeing demand as high as during the pandemic we're we're not seeing the giving response that we saw during the pandemic so I so I think this is sort of as bad if not worse than than what we were what we were seeing then. And that message needs to be really clearly made to donors partly because they're so worried about their own income and their own costs that they're perhaps not thinking about how they should be giving to others and then I think for foundations they need to be like thinking really clearly about their strategy. What will the current crisis mean in terms of long-term expenditure you know I we were talking about the effect that a cold home has on a child's education and therefore employment throughout life would that therefore mean that increasing the sort of payout ratio to use the jargon is the right thing to do now because you're sort of forestalling costs later down the line and sort of and making that that decision really carefully and clearly I think is really important there.

SPEAKER_01 56:32

Yeah I mean that all sounds you know absolutely right to me and as you say it's difficult I mean particularly on that final one around foundations it is difficult because I think it I found this a little bit at the start of the pandemic it's easy also to rush to the mindset of just spend all the money now. And I think there is a valid argument for foundations particularly that you know their particular value is to to fund things and to think about things over longer term time horizons, particularly when sort of political cycles and market cycles have become shorter and shorter but but equally that can't become an excuse for not doing what is required now both both from a moral point of view but also as you say there's a just a practical argument that if you think about interventions and longer term outcomes there you actually by by upping the amount of money you put into to intervening at crite you know at points now you can potentially save large amounts of money in the future in terms of problems that that you would end up having to address. But I think it does as you say it requires real sort of clarity of thought and sitting down and taking stock of strategy and and sort of thinking over those longer term time horizons to to make that case but it but it is important that that that they do so um listen andrew it's been um great to have a chance to chat you on the podcast thanks ever so much for for finding time it's not the the cheeriest subject it has to be said but it you know it is really important and I know something that's very much front of mind for for everyone uh at the moment um just before I let you go is there anything um you know that you particularly want to kind of point people's attention to either in terms of work that you're doing at NPC on this or you know sources of information you think that might be useful for for people who are who are kind of thinking about these issues?

SPEAKER_00 58:19

Yeah well we we already mentioned the NPC's data bank and um and obviously 360 giving's work on data as well but the the thing that MPC's been sort of working on is a cost of living guide which we published at the start of the summer and since then we're sort of regularly updating this with blogs from sort of charities about how they're adapting, blogs from foundations about how they're adapting blogs from philanthropists about what they're doing, just trying to sort of help people learn from each other. And we've also got a few events coming up on this topic as well.

SPEAKER_01 58:54

Okay great. Well I'll definitely put some links in the show notes to where people can find information uh on on all of that and to to the events if they they want to attend those. Just uh Romaine to say thanks ever so much for finding the time to come on and you know hopefully I can get you back on at some point in the future when we can either catch up on what's going on on this issue or hopefully talk about something that's slightly slightly more cheerful grim. Yeah.

SPEAKER_00 59:15

Brilliant Roger lovely to talk to you too.

SPEAKER_01 59:17

Thank you well my thanks again to Angela for coming on the podcast. Uh great to have somebody there to kind of share some of these thoughts with and think through some of these issues. I'll put links in the show notes to various things we discussed and where you can find a bit more information and potential sort of sources of information on what charities can be doing, what donors can be doing and what funders can be doing. If you want more thoughts and writing on philanthropy and civil society issues do check out my website at ww dot whyphilants dot com. Follow me on Twitter at Rodri underscore H underscore Davis or at philiteracy or there is a philanthropisms podcast Twitter as well which I'm sure you're capable of finding yourselves. If you've got thoughts on things that we could discuss on this podcast in the future or people that might be good to come on as guests do drop me a line via the website. Other than that just like subscribe tell all your friends about it share it as widely as possible so it gets to people who might be interested in it and I will see you next time. Bye, I'm not sure what I'm saying.