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Charitable Foundations Reject Call for Mandatory Pay Out Rate

Charitable trusts in the UK have rejected a call for them to be required to pay out at least 5% of their assets each year in grants.

British foundations have said they would not support the introduction of a mandatory pay-out, arguing that current charity sector regulation is sufficient.

Advisory firm the Good Ancestor Movement, meanwhile, supported the introduction of a minimum pay-out but said it should be raised to 10%.

Carol Mack, chief executive of the Association of Charitable Foundations (ACF), said a mandatory pay-out ratio should not be introduced in the UK.

“Unlike the US, Canada and Australia, we already have regulation in place that does not allow charities – including foundations – to accumulate resources without a good reason for doing so,” she said.

“This encourages foundations to focus on what is the most effective use of their funds, rather than meeting an arbitrary financial target in any one year.

Paul Ramsbottom, chief executive of the Wolfson Foundation, similarly argued that current UK regulation of foundations was sufficient and negated the need for a mandatory pay out requirement.

“The Charity Commission ensures that all charitable funds are being used appropriately for charitable purposes and, unlike some jurisdictions, there is no tax advantage to maintaining an endowment, as opposed to spending it,” he said.

Angela Kail, director of consulting at NPC, also did not support the introduction of a mandatory pay-out requirement.

“There is definitely room for many foundations to give out more money than they currently do. That said, a legal requirement may be too blunt, given that circumstances may mean foundations aren’t always able to meet it.”

Stephanie Brobbey, chief executive of the Good Ancestor Movement, called for trusts and donor-advised funds (DAFs) to be compelled to donate 10% of their assets each year.

“Both foundations and DAFs should be required to pay out a minimum of 10% of their assets each year, in line with what advocacy groups across the pond are currently campaigning for. At a time in which we face ecological collapse, extreme wealth inequality, and multiple other crises, the idea that the ‘British tradition to preserve the endowment’ is one ‘which has served us very well’ is deeply problematic and outdated.” She said.

Unrestricted Funding 'Should be the Starting Point’, Foundations Told.

All funding offered to charities should be unrestricted unless there is a particular reason for it not to be,  researchers have argued.

Institute for Voluntary Action (IVAR)’s briefing says that grant makers tend to prefer offering restricted funding through “familiarity, not evidence” and urges their boards to consider making the case for unrestricted funding. 

It reads: “The evidence is clear and compelling: the preference for restricted funding rests on familiarity, not evidence.

“While restricted funding can be the right choice, it has not earned its place as the dominant model. Perceived barriers should not deter a change that presents value to both charities and funders.”

The briefing adds: “We believe that unrestricted should be the starting point of every fund – with each restriction having to justify its place.”

The report notes it has proved difficult to persuade the majority of funders to move away from restricted project funding, but Covid-19 offered momentum for change.

“There is increasing recognition of the damage that the dominance of restricted funding is doing to the charity sector’s collective contribution both to meeting immediate needs and to delivering longer-term solutions,” it says.

The briefing states that both funded organisations and funders have reported that unrestricted funding helps to level the power dynamic between the two.

Charities have also reported that unrestricted funding enables them to make better use of their resources, to be more forward-looking and to achieve better outcomes in a complex and changing environment, it says. 

“Restricted funding can slow down and even prevent charities from adapting as circumstances change,” reads the briefing.

Food Bank Charities Fear Having to Cut Support Amid Increasing Need

Food bank charities in England, Scotland and Wales have reported increasing need for their services this year and have said they will have to reduce the support they provide if demand rises further.

An Independent Food Aid Network (IFAN) survey of its members found that nine-tenths of charities had seen an increase in need for their help from January to March 2023.

Respondents said they had needed to reduce the size of parcels they offered to beneficiaries this year as a result of the increasing need.

Some also said that they would need to reduce the level of support they provide if demand continued to increase, with a quarter saying they may have to turn people away.

Most food bank charities reported an increased need for long-term provision of their services, and they expressed concern over the number of employed people seeking support, suggesting inadequate wages had driven an increase in need.

Sanctions, rent increases, housing problems and Universal Credit waiting times were also listed as the reasons people needed their help.

‘Deeply concerning’ – Charities Respond as New Protesting Laws Enforced

Charities have expressed concern over the police’s swift enforcement of new laws introduced to prevent public disruption from protests.

The Public Order Act 2023 received royal assent earlier this month, with police officers also given powers to “intervene against highly disruptive slow marching tactics” used by protestors.

Since the laws were introduced, the Metropolitan Police has faced criticism for some of its enforcement actions against protestors, including its arrests of six members of the Republic pressure group on the day of King Charles III’s coronation.

In a letter to Sadiq Khan, commissioner Mark Rowley wrote that the police had arrested six people after suspecting they had committed the new offence introduced in the act of “being equipped to lock on”.

However, the Met took no further action after judging that it would not be able to “prove criminal intent beyond reasonable doubt”.

Charity sector figures criticised the new laws when they were first proposed in last year’s Queen’s speech.

They have now renewed their criticism as the laws have been enforced alongside the additional clampdown on slow marching introduced as a statutory instrument.

Roberta Fusco, head of influencing at ACEVO, said: “The swift implementation of the Public Order Act and the almost immediate use of its powers seen during the coronation events, with arrests taking place in advance of any peaceful protest taking place, is deeply concerning and evidence of the severe curb on civic space that is being introduced through this draconian legislation.

“Peaceful protest is a key component of democratic participation and an important element of campaigning.

“ACEVO strongly defends the right and lawful ability of charity leaders to campaign with freedom and confidence in furtherance of their charitable objectives and for the strength of civil society in holding those in power to account.”

Charity Sector Sick Leave Days up by 56% Since 2019, Report Finds

The charity sector has seen a 56% rise in days lost to short and long-term illness since 2019, according to a new report. 

The research found that the charity sector reported an average of 166 days lost to sick leave in 2022, a rise of 30% on 2021 which saw an average of 128.

The sick leave report by Access People HR analysed the sickness rates of 2,055 businesses from 2019 to 2022. Some 116 were charities. 

In 2019, the total amount of days lost to sick leave across the 116 charities was 12,345. This increased slightly to 13,224 in 2020. It then jumped from 14,823 in 2021 to 19,294 in 2022. 

Most sectors analysed also saw a rise in sick leave rates. Of the 18 sectors studied in the report, the charity sector was the sixth highest for the most sickness absences in 2022.  

The sector with the most sickness absences was agriculture, forestry and fishing with 250 average sick days. Recruitment was the sector with the fewest absences with only 13 days on average.  

Charles Butterworth, managing director of Access People HR, said: “This report into the status of sick leave in the UK highlights the importance of businesses in the charity industry adopting a robust HR strategy as a first point of call when it comes to reducing sick leave.

“This includes a strong HR system, having clear policies and procedures, and being able to offer tangible support to those that appear to be struggling to taking an excessive number of sick days.

“This growth of sick leave in the charity industry could be due to a number of factors, such as experiencing more exhaustion and long-term sickness following the pandemic, resulting in new highs of sickness rates. No matter what, it’s crucial that businesses act swiftly to identify the reasons for sick leave, and if they need to act.”

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