Various influential pieces of research have suggested that donors would give more if only they knew where and how to give it, and that most of the sources to whom individuals and organizations turn for advice on money matters are ill equipped to provide that information. So while philanthropy advice is undoubtedly a growing industry, it needs to grow more, reckons Martin Brookes, chief executive of New Philanthropy Capital (NPC). Caroline Hartnell talked to him about NPC’s work, about how to build up the market and about what developments are in the pipeline.

Philanthropy advice in all its forms seems to be growing exponentially at the moment. Where would you position New Philanthropy Capital in this market?

I think we can provide information. Whether it’s family offices, private client advisers or community foundations at the more retail end, I think we provide information that can help all of them.

The growth of, and interest in, philanthropy advice is something that we’re keen to promote. For us the issue is shifting from just serving the market as it is to trying to build a marketplace, and I think people are fretting – quite rightly – about how we get philanthropy advice mainstreamed. There are lots of people interested in it, but there are even more people who are not paying any attention.

In a sense, at all levels of wealth and potential levels of giving, there is a dearth of philanthropy advice at the moment; while there are signs that demand is growing, it’s not being met properly. What we want to do is to get the reality not only to catch up with the rhetoric, but also to run in front of it a bit. With a concerted push, you can mainstream philanthropy advice even when people don’t realize they need it or want it. And by getting people to talk about it more, eventually the demand will catch up.

That sounds as if you’re positioning NPC as a support to philanthropy advisers. Will you also be giving advice to donors yourselves?

We’ll do both.  Again, it’s this idea of building a marketplace rather than just servicing it. If we can both advise individual donors and, at the same time, train philanthropy advisers, then we think we’ll be having a greater impact.

Working at the meta-level – training advisers – is obviously very expensive with all the research you provide. Do you anticipate charging fees for providing training to these groups?

We already do. We’ve run two training sessions for philanthropy advisers or intermediaries and the response has been very positive, so we’ll be running more sessions in the future. It’s a very small part of our revenue stream at the moment, but it’s something we want to increase. That does not mean that we won’t carry on the free-to-market approach for our research, which gets used very widely.

NPC research is obviously something of a gold standard for research. How many researchers do you have?

We’re about 26 at the moment; we have shrunk a bit. We’ve done this for two reasons – I think we were too big and we had built ahead of the market too much. The recession magnified that, so we deliberately shrank during 2009. That was painful, inevitably, but I think it put us in a better place.

Our research is something that we’re very proud of and we put a lot of effort and resources into getting it right. There is an issue about how you pay for it, but there are lots of people who think it should be done and want to support it. So we work with partners including Bertelsmann and the Hewlett Foundation – we receive unrestricted funding from them, which has been crucial to NPC’s development. We also have on our board of trustees some committed backers who have been very generous. Over the longer term, we do need to diversify that range of core funders and to get more people to understand the importance of building a marketplace with high-quality information as an input into that.

And if you’re committed to remaining free-access, then it has to involve some sort of grant funding.

Yes, the commitment to public knowledge as a way of fuelling a better-functioning sector is reiterated at every single one of our trustee meetings. We need to get people to understand the importance of backing it financially in order to keep it accessible to all who might benefit from it.

It’s also very interesting that the research model and the content are well regarded not just in the UK, but beyond. Midot, an organization that analyses and assesses charities in Israel, are talking to us at the moment. But yes, it does create the need for ongoing grant funding.

What’s happening with Intelligent Giving?

The first thing we wanted to do with Intelligent Giving was to stop it disappearing, which was a real risk last summer. I think much of what it was doing around promoting transparency through a clear rating and assessment system was very interesting. The next thing was to see whether the methodology of Intelligent Giving could be fitted alongside NPC’s and whether it could be tweaked so that it was more about what charities tell people about what we think is most important – transparency about performance and impact – than about simply transparency. We’re now optimistic that we’ve got that – we’ll be publishing a report on that subject in the next month or so. We’re also optimistic that we can build on Intelligent Giving and give it some renewed vigour and energy, but that does require funding.

And obviously NPC, as a larger concern, might be in a better place to leverage that funding.

Exactly. We’ll be talking over the next two months to potential funders to see what we can do. Charity Navigator in the US influences up to $3 billion of donations a year, so there’s real value in Intelligent Giving if it’s designed in the right way and given a stable setting. We’re confident that this potential impact will inspire funders to support us so that we can relaunch this spring, with the new ratings system focusing more on results.

What’s happening with the Association of Non-Profit Analysts following your conference in May?

We’re going to launch the association formally this year as a distinct entity. We’re talking to Bertelsmann and other prospective founding partners, with a view to giving it a very international perspective. So this year, there will be a conference that will be the inauguration of the association itself. Last year’s conference was to pose the question: should this exist, is this a sensible idea? We were very struck by just how positively people responded. But we need to bring on board a few more founding partners – this should not be seen as a kind of Bertelsmann-NPC show.

We will also be looking for an American partner – we have a few people in mind – and we also want to take it into other countries. At last year’s conference, there were 21 or 22 countries represented, which was very pleasing.

You also mentioned that you have been doing a report on the philanthropy advice world and I understand that you might be starting up a network of advisers from different areas. Is that true?

In March, we’re going to launch a steering group or reference group that buys into the idea that the philanthropy advice market is important, that it should be developed further and, crucially for us, that there should be a collective effort to help develop it. So organizations that normally compete with each other recognize the need to work collaboratively and build a philanthropy advice market.

If you look at the way markets develop, you often see both competition and collaboration happening at the same time. The philanthropy advice market has been built in a fairly atomized way, and there’s an opportunity for a bunch of people to get round a table and say, ‘we all collectively believe in this, and we can work together to build a marketplace’. That involves supporting each other and sharing information; sometimes this will be information you wouldn’t normally share, but in the end there will be a better philanthropy advice market and those who want to serve it or be part of it will hopefully be more successful.

So you hope to bring in people from all the different areas: the family offices, the wealth advisers, and so on?

Yes that’s exactly what’s happened. There was an inaugural meeting in December and we’ll announce the membership of the group when we launch the report in March.

So it’s not a membership group for individual philanthropy advisers who want to mingle with their peers, like the Association of Non-Profit Analysts?

No, membership of the steering group is institutional. If you belong to a private bank that’s just starting up, you’ll probably be represented in some way, but maybe not by your own employer because we don’t need every private client bank to be a member.
But as a private bank or a private client banker, you certainly should have access to all the work the steering group is supporting and fostering. So private client banks’ voices will be there, as will those of private client lawyers, family offices, and specialist advisers like NPC, Geneva Global and others. Hopefully governments will also be sympathetic voices and supporters.

Has NPC’s vision changed much since it was set up in 2002?

The vision has remained very constant, in the sense of using information and advice to fuel a better marketplace, a better allocation of funding from donors, and a better use of funding by charities. But the way we work has evolved enormously, inevitably, and frankly it has also evolved in response to mistakes. I mentioned earlier that I think we grew too big for the marketplace. I think we also somewhat exaggerated how big the market for philanthropy advice was, and that was partly because we wanted to believe it was bigger. We wanted the number of private donors who were seeking advice to be higher than it actually was.

And it should be bigger!

It should be bigger. So while the vision has remained very constant – the approach we’re taking, the realization of the value and the importance of public knowledge and free research – the whole sector research programme that we began in 2003 and the way we analyse charities has changed. We’ve realized the need to help charities measure and demonstrate their performance themselves, rather than us simply assessing and then reporting on them. The number of donors who will respond to high-quality advice and information is smaller than we would like, so you need to work both sides of the street if you like, to encourage donors to care about performance, and help charities to demonstrate it.

The model’s become messier in a sense. You could say the original model was ‘we’ll analyse charities, we’ll highlight the best ones, donors will fund them, they’ll get more money and do more good work, other charities will try to emulate them’. That’s a very simple, almost kind of market-based, view of how change will be effected.

What do you see as the biggest challenges coming up in the next year or so?

For me, it is the sheer number of things that we’re doing this year and the need to do each of them properly. We’re publishing the second edition of what we call ‘The little blue book’, about how we analyse charities. The first edition, Funding Success, remains our most downloaded report, so that’s an important thing to get right, to demonstrate both how we do it and why we do it, and then to encourage others to use, learn and adapt that framework.

We’re publishing something that we think is very important on measuring children’s well-being, and a call for charities to measure their impact on adolescent children’s well-being in a way that is both academically rigorous and statistically robust and also practically useful. That’s been an enormous project.

We’re convening this steering group on the philanthropy advice market, we’re launching the Association of Non-Profit Analysts properly and we’ve got all our regular research work. Meanwhile, in the background, there’s this nagging issue of what the long-term funding model for an organization like NPC is. We’re making good progress on that: we’ve taken our founding trustees’ funding down to the smallest share of running costs ever, but I would like to take it down further, so we’ll have to work on that as well.

We need to get the whole UK foundation sector – and also the international foundation sector – to understand more clearly what it is we’re doing, to get them to buy into it and to support it. That’s a communication challenge for us.

Anything else you’d like to add?

We’re increasingly interested in our position internationally, and how we present ourselves internationally. We’ve done some work in India with Copal Partners (see Alliance, December 2009, pp 44-5) to try and apply NPC’s methods and approach to a country like India, and the general conclusion seems to be that it can be done. It remains to be seen whether you can build an organization like NPC in India, but we think in a sense the research that we published in India is almost a manifesto for someone to take on that role.

One of the founders of NPC asked me the other week whether, if we’d known what the journey was going to be like when we began, we would have followed the same path. I think in some sense ignorance is bliss: at each stage, you recommit and carry on, but it’s a difficult journey. Both the business and the advice sides – executing good analysis – are difficult, so it’s really important that we learn and adapt as we go along. I very much hope we can find someone, whether it’s Rishi Khosla and Copal Partners or someone else, who will take up the mantle in India, but I wouldn’t underestimate the challenge of doing it there, here or anywhere.

Our basic principle is if someone comes to us and says ‘how can we learn from what you’ve done in the UK and apply those lessons in our country and here’s how we’d like to work with you’, we’re open to that, whatever country it is.

Martin Brookes is Chief Executive of New Philanthropy Capital. Email MBrookes@philanthropycapital.org

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