This post originally appeared on Spear’s. The original article can be found here>
The scale of Greece’s financial crisis is alarming, but tough times aren’t reserved for national governments. Struggling charities can confront philanthropists with a similar set of options. They could inject cash urgently, or do nothing as they wait and see how the situation plays out, or even threaten to withdraw support, in the hope that tough love will lead to some internal reforms.
Responsible philanthropy isn’t always easy. After all, if cash isn’t forthcoming then the vulnerable will be the first affected. When the charity BeatBullying went into voluntary liquidation last November, thousands of young people were suddenly left without support services. Lucky charities may find other sources of funding, but major funders must know that the risks are substantial if they do nothing.
This leaves the giving out more cash. Yet, as the Greeks know all too well, bailouts come with conditions. So how does a funder balance sensible conditions – say, spending on a single project – against monitoring processes which can be so heavy-handed that they make the situation worse?
European Social Fund grants, for example, were notorious for their overbearing reporting requirements. NPC looked at this some years ago: at its worst, charities spent 20 per cent of their ESF grant reporting back to the funder.
No wonder our chief exec has elsewhere called many funding systems ‘completely nuts‘. If the crisis arose because of structural issues or mismanagement, then responsible funders will want to see reform as part of their investment. But creating terms which just consume a charity’s resources is no good to anyone.
Another tough question to ask is whether the charity you are funding, for all its passion and commitment, is doing the best job it can. Perhaps there is another charity out there working in a similar way as your grantee, but making a bigger difference to its beneficiaries and with a more secure future.
The most appropriate response might be the hardest: pull your cash out of the less effective charity and use it to support the other. Or it could be an opportunity to strengthen your current charity, by making a grant conditional on more work to improve the sort of measurement and evaluation practice which will help in the long-term.
And don’t be afraid to talk. Sharing intelligence on charities with fellow philanthropists is another way to act responsibly. If an organisation is struggling, and funders know it, future support can be tailored to its new needs. Big Bang Philanthropy – a collaboration of thirteen funders – is a good example of this in action: its members collaborate by sharing their knowledge and their networks, with better funding decisions as a result.
Ordinary folk in Greece are looking on in horror as jobs vanish, pensions lose value, and national institutions struggle to find a solution. The point has even been made that a few European billionaires could, in a grand if unlikely philanthropic gesture, gang together to pay-off the debt and end the crisis, for the short term at least.
But there are lessons here for philanthropists regardless. Faced with catastrophic finances, charities can spiral out of control as quickly as anything else. Funders will need to be ready to grapple with the implications.
Rachel Wharton is a researcher at NPC