SI magazine Spring 2013 edition by Spectrum Outsourced Solutions

Interview Giles Ruck of Foundation Scotland tells us about their new brand

social, strategic and sustainable investment and innovation

Issue 3 // April 2013

The impact of Welfare Reform Granted

Philanthropy

Social Enterprise

we talk to the Wood Family Trustâ&#x20AC;&#x2122;s Jo Mackie

Inspiring Scotland discuss venture philanthropy

Planning Aid tell us why this model fits

Our Story! Serving Scotland through Children and Families, Adult and Older Peopleâ&#x20AC;&#x2122;s services. We have been around for over 140 years by being flexible and adapting to the social care needs of the communities we serve. Our mission is at the heart of the support we provide to some of Scotlandâ&#x20AC;&#x2122;s most vulnerable people. We ensure each individual supported by our services is given the opportunity to achieve the best their life has to offer regardless of age, ethnicity or religious beliefs. Be Part of It!

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SI magazine April 2013

IN THIS ISSUE Page 18

Page 26

www.simagazine.co.uk SI magazine is a quarterly digital publication designed to bring together original content which affects business within the third sector at a strategic level such as grant and loan funding, partnerships, social enterprise and efficiencies.

Published by Spectrum Solutions

2 SI News 6 Headline Interview Giles Ruck, Chief Executive of Foundation Scotland

Publisher Andy Crielly publisher@simagazine.co.uk

10 Lead Feature

Registered office Spectrum Outsourced Solutions Ltd, Catchpell House, Carpet Lane, Edinburgh, EH6 6SP

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Editorial support Jen Dunn jen@simagazine.co.uk Editorial steering panel Social Enterprise Scotland, Scottish Community Foundation, SCFDG, ACOSVO, Scottish Financial Enterprise, Inspiring Scotland. Advertising Lesley Fraser lesley@simagazine.co.uk Graphic design LBD Design and Print www.lbd.uk.net The views expressed in SI magazine are those of invited contributors and not necessarily those of Spectrum Solutions. Spectrum Solutions does not endorse any goods or services advertised or any claims or representations made in any advertisement in SI magagazine, and accepts no liability to any person for loss or damage suffered asa consequence of their responding to, or reliance on, any claim or representation made in advertisements appearing in SI magazine. By responding or placing reliance, readers accept that they do so at their own risk.

The Impact of Welfare Reform

We talk to the Wood Family Trust’s Jo Mackie

10 Philanthropy Inspiring Scotland discuss the impact of the venture philanthropy model

24 Social Enterprise Planning Aid for Scotland tell us why the social enterprise was the right fit for them

28 Leading by Example We explore the community led work going on in Girvan

32 Balancing the Books Interview – Paul Bannon of the SCFDG Regular columns; risk management, energy efficiency, accountancy and legal

SUPPORTING PARTNERS:

Welcome! Welcome to the spring edition of SI magazine. This month, we’ve been out and about speaking to some of the most innovative people working in the Third Sector in Scotland. Jo Mackie of the Wood Family Trust tells us about supporting tea farmers in Rwanda and Tanzania, Giles Ruck of Foundation Scotland spoke to us about regenerating small town economies in the West of Scotland, while Paul Bannon of Chest Heart and Stroke Scotland gave us the lowdown on charity shops and charity pension issues. These interviews are testament to the massive variety of work that’s going on. From Kinross to Kingali, local communities are being supported by the Scottish Third Sector. But the Third Sector faces challenges. The UK government’s welfare reform programme brings challenges for society as a whole. Our welfare reform feature covers some of the work that the Third Sector is doing to prepare for it’s implementation. If your organisation has any innovative solutions to assisting people affected by welfare reforms, or you’ve got anything else you’re bursting to tell us about, then we’d love to hear from you!

SI NEWS Resilient Scotland Makes First Investment Resilient Scotland Ltd announces its first investment packages worth £120,000 to two social enterprises thanks to the unique combination of grant and loan packages from Resilient’s Start & Grow. The innovative Stepwell, Greenock can expand its food outlet, providing a sit-in café creating employment opportunities for local people whilst encouraging healthier living. Acquiring a council swimming pool, The Himalayan Centre, Edinburgh hopes to create a purpose built events hall, meeting room and café. The investment will contribute to a commercial kitchen and restaurant facilities. Start & Grow Fund is the first community regeneration funding programme run by the Resilient Scotland’s JESSICA (Scotland) Trust, offering a combination of grant and loan packages up to £60,000 to organisations bringing economic, social and environmental benefits to the eligible communities from the 13 designated local authority areas most challenged by economic circumstance and regeneration. Ella Simpson, Resilient Scotland Ltd, Chair said “We launched Start and Grow last year to help community organisations looking for creative investment solutions. Our aim is to invest and help build the capacity of enterprising community led organisations that will have lasting impact in their areas.” Resilient Scotland comes from JESSICA (Scotland) Trust, a £15 million independent Trust Fund established by Foundation Scotland with an endowment from the BIG Lottery Fund, designed to stimulate growth in disadvantaged communities most affected by serious economic decline and market failure.

Social Enterprise Exchange, Glasgow On Thursday 21st March the Social Enterprise Exchange took place at the SECC, Glasgow. Organised by Social Enterprise Scotland, this international trade fair, policy conference, learning and networking opportunity brought together

social enterprises from across Scotland, the UK and beyond. Speakers included John Swinney MSP, Scottish Government, Mel Young , Homeless World Cup, Theresa Burton, Buzzbnk and Kirsty Burnham, Soloco. The Exchange event is Scotland’s annual social enterprise gathering, bringing together social enterprises and their supporters in one place in order to build and grow the developing sector and raise the profile of social enterprise. Social Enterprise Scotland is now gathering delegate feedback and looking forward to their latest round of local policy events across Scotland.

Upcoming Events 9th April: Governance Stories, Edinburgh. Further information at ACOSVO http://www.acosvo.org.uk/events 15th April: Social Investment 2013, Glasgow. Further information at Spectrum Events http://spectrum-events.co.uk 18th April: Strategic Leadership Series, Edinburgh. Further information at ACOSVO http://www.acosvo.org.uk/events 25th April: Scottish Leaders Dinner, Glasgow. Further information at ACOSVO http://www.acosvo.org.uk/events 25th April: A+DS: Green Jobs, Glasgow. Further information at Spectrum Events http://spectrum-events.co.uk 9th May: Corporate Partners Event, Archerfield , East Lothian. Further information at ACOSVO http://www.acosvo.org.uk/events 15th May: Equal Partners Event, Edinburgh. Further information at ACOSVO http://www.acosvo.org.uk/events 28th May: Aberdeen Regional Dinner, Aberdeen Further information at ACOSVO http://www.acosvo.org.uk/events 11th June: The Universal Credit and Housing, Edinburgh. For further information visit Spectrum Events at http://spectrum-events.co.uk 12th June: Leading Edge programme 2013. Further information at ACOSVO http://www.acosvo.org.uk/events 18th June: A+DS: Green Infrastructure, Glasgow. Further information at Spectrum Events http://spectrum-events.co.uk 20th August: The Universal Credit and Poverty, Edinburgh. Further information at Spectrum Events http://spectrum-events.co.uk

I’M HURT. I’M HUNGRY. I’M ONLY UP THE ROAD.

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Headline Interview

Giving enterprise: the business of philanthropy SI magazine met with Giles Ruck, the Chief Executive of Foundation Scotland, on a rainy Glasgow afternoon. Over coffee in the Royal Concert Hall, he told Jennifer Dunn more about enterprise in the Third Sector and community regeneration.

ounded in 1996, Foundation Scotland were originally known as the Scottish Community Foundation. As Giles explains, their primary goal is to help donors, “We provide services to donors and philanthropists. The people we call clients are the people that provide funding. We have another audience; the beneficiaries of the funds. So our role is to provide services to donors and, if possible, to increase the funds that go to beneficiaries.” “The more that we can provide clients with feedback and engage them, the more likely that they are to maintain

and increase funding. That doesn’t always happen, and they still can give large amounts while being detached. However, we want to source exceptional projects for our clients and get them hooked.” Are there particular types of projects that clients are interested in? And how do you go about getting them engaged? There are different answers for different clients. Our main client group is high net worth families and individuals. We help them on a philanthropic journey. For those clients, the initial driver for determining funding

is often geography; an area they’re from or concerned about. Sometimes, we’re literally sitting around the kitchen table working out that ‘if they fund ‘x’, the outcome will be ‘y’’. We also work with companies, and it can be important to them to gain media presence. The nature of engagement can be different and can sometimes be based in internal public relations, like establishing an employee panel to determine local funding decisions. Individuals and families tend to be more discreet. They might hesitate

SI magazine April 2013

People are reserved about money; British people don’t talk about giving as they don’t want to boast. Giles Ruck Chief Executive of Foundation Scotland

over visiting schemes they fund or are thinking about funding. So we provide structured day visits where they see two or three projects. For example, if they’re interested in early intervention, they might see somewhere that provides holistic family support, then a project which works with young parents. Engagement is important, and clients tend to renew or increase their funding as a result. Are families more interested in specific case studies, and more personal information? People need to hear the story that relates to the head, the heart, and the wallet. Until you meet the project leader and the beneficiaries, it might not pluck on the heartstrings or a meeting might appeal to the head, as people see why their funding is important. Sometimes funders realise the state doesn’t provide things they thought it might. They’re interested in how funding can get the best leverage; hearing from individuals can make a big difference. Philanthropists sometimes need help making those connections to individuals. They are often successful in business, and see things in business terms, but need advice on philanthropy. People are reserved about money; British people don’t talk about giving as they don’t want to boast. Another example of support we give is the Philanthropy Fellowship, where philanthropists can meet.

We do have a handful of ultra-high net worth individuals who have publically stated that they give away wealth. However, they are so wealthy that, even for most millionaires, they’re out of their league. We need people who are easier to connect to, to go on record. How have the economic changes affected philanthropy? Although the individuals we work with are affected, it’s not in the same way as most of us. Across the sector, fundraising has fallen – but people giving from wealth can still do so. Another point is whether philanthropists give more because of a perceived increase in demand. There may not be a direct link, but the nuance is that we’re in a position to tell them more about where we see impacts. Rather than saying it’s about increased funding to meet increased demand, it might be that some philanthropists will fund in a businesslike context. They may wonder why

there are so many charities and community enterprises out there. So in tough times, a client might think about funding to assist organisations to come together; reducing overheads, yet allowing projects to maintain or increase their services. We also have a handful of clients solely interested in community enterprise. For this funding to be legally acceptable there has to be social benefits, and the private benefit must be a sideeffect. But that’s how these clients are focused, and how they believe they’ll change communities. There is a perception that business and the third sector operate differently. Do some charities find it challenging to adopt a business-like approach? There’s such a diverse mix that you can’t generalise – there are some phenomenally enterprising leaders out there. And there are some projects which won’t ever be able to trade in an entrepreneurial way; some will always need a small stream of grant income. 5

April 2013 SI magazine

Headline Interview

However, there are bodies which could show returns from trading with local authorities and government, but which currently limit themselves to grants and three year funding cycles. Breaking away from that thinking is a huge challenge. A question for the Foundation is how we play our part in that. We deliver Resilient Scotland’s Jessica Fund, a £15 million independent endowment fund provided by the Big Lottery. It is designed to stimulate growth in economically challenged communities, helping them to become stronger through their own efforts. Start and Grow is its first community regeneration programme. This provides grant and loan packages of up to £60,000 to develop both new and existing organisations in thirteen local authorities which have been targeted on the basis of need. 6

We also find, as funders become more engaged, they may offer time as well as funding. For the Third Sector, this means that leaders need to be open minded. Donors might ask difficult questions. The payback isn’t just funding, but drive and skillset. For example, the Moidart Trust arranges an annual seminar with around thirty business leaders, which is mainly about leadership and growth. Is there demand for philanthropists to fund particular types of projects? The demand for funding from Foundation Scotland is wide-ranging, covering every type of community and theme – the only exclusions are projects that solely benefit of flora and fauna. Some clients will respond to a broad range of requests. Some are very focused. The clients who are easiest to work with have a tight geography but a broad theme, like improving the lives of young people.

How would a charitable organisation get onto your radar? All the programmes are on our recently updated website. Soon we’ll have an online search function. Some human input will always be needed to match funders to projects, but we’d like to enable project leaders to search terms around geography and theme, and then receive a number of possibilities. When we have similar programmes, we look for projects that fit their criteria. When promoting a fund, we receive more applications than we can provide for. There might be projects that almost fit, and we nurture them towards future opportunities. It would be wrong to say that we don’t receive applications but, if we’re looking for more applications for a particular fund, we often use our homepage to publicise it.

SI magazine April 2013

Growth is good, but comes with increased responsibility on policymaking. That’s challenging as we have so many themes and funders; there’s no one, single voice. Giles Ruck Chief Executive of Foundation Scotland

Xxxxxx

Do you have any projects you’re particularly proud of? We think we pick winners; we’re proud of them all. However, I love projects where communities are taking control and are either buying or creating assets, and using them sustainably. That community will, over time, rely less on grant funding – grant funding then becomes about further development. Sometimes those assets might be a shop or post office, and sometimes they may be human; a part time position, filled by a local person. It’s a cliché, but there can be many spin-offs from that. Also, the Kilfinan Fund is a great project. Its aim is to improve opportunities for young people in the north-west of Scotland and to encourage young families to stay in the area. Our client’s objective is reducing the trend for young people to move away from those communities.

Before Kilfinan funded a centre for apprenticeships in Lochgilphead, people had to go to Greenock or Glasgow to learn a trade. The new centre that the fund has contributed to provides a real opportunity for young people, and is a clever mixture of European and private funding. The Kilfinan Fund is about young people but has the community at its heart. We were aware that a minibus could make a massive difference to the community’s aging population. I’m proud of my team’s client engagement on this issue, which resulted in the Kilfinan Fund going down a match funding route to help; the community are currently raising funds for their contribution. We’ll see more of this entrepreneurial philanthropy, rather than funding for straightened times.

What do you see as future challenges for Foundation Scotland? Growth is good, but comes with increased responsibility on policymaking. That’s challenging as we have so many themes and funders; there’s no one, single voice. It’s likely that we may develop policy on, for example, food banks. If we’re asked about them now, then the answer would belong to a range of different clients. As we grow, we may develop thematic funds. We have various funds which stem the flow of young people from rural communities, so may consider a thematic fund on that. We also may introduce regional funds – although tied to our national identity. Another challenge is that much of our funding goes to outwith the Central Belt, where our team is generally located. We are taking tentative steps towards basing staff elsewhere. 7

April 2013 SI magazine

Lead Feature

From resistance to adaptation:

How welfare reform will impact Third Sector in Scotland Welfare reform is, to most people in Scotland, big and ugly. The legislation being put in place by Westminster has been vehemently opposed by most Scottish politicians, third sector organisations, local authorities and the Scottish Government itself.

he initial changes to housing benefit come into force in April of this year. The second phase of change will occur with the introduction of the Universal Credit, which replaces a number of other benefits and tax credits, and will be introduced from October onwards. The unpopularity of welfare reform stems mainly from well-founded fears that welfare reform will make low-income families more susceptible from a range of social ills, including 8

debt, homelessness, mental health problems, fuel poverty, and many other problems. However, the government in Westminster is determined to press ahead – which means that Scotland needs to prepare to cope with changes. Bob Doris MSP, whose Glasgow constituency includes some of the most deprived areas of the country outlines the steps taken by the Government to enable the voluntary sector to assist their clients; “To help

cope with the fallout, the Scottish Government is putting an additional £5.4 million into frontline advice services and has made up the shortfall from the UK Governments cut to Council Tax Benefit. “However, there is a growing realisation that, whilst any assistance is welcomed, any action taken by the Scottish Government can only mitigate a small part of the most damaging welfare cuts. Three quarters of welfare charities say they

SI magazine April 2013

area of concern, both because of the bedroom tax, and because the tax credit system is being replaced by the new universal benefit. Finally, organisations that provide general anti-poverty advocacy and services are likely to see a marked demand in services. One particular group of people who will be particularly affected, within all these policy areas, are people with disabilities. Although the UK government recently announced a review of how the bedroom tax would affect households where a family remember has a disability – and may, for example, need extra space to store medical equipment, or be unable to share a room – this does not mean that charities who assist clients with disabilities will not need to review the ways in which they provide services. Whatever the results of this review, the disabled will be affected by other welfare reform measures.

t on the

expect workload to increase as a result of the cuts and the pressure on charities is inevitably going to be considerable.” The effects of welfare reform will be wide ranging, and touch most, if not all, of the Third Sector in Scotland. However, there are three interconnected key sectors for reform. Housing is one of them – the “bedroom tax” is the most widely trailed of the changes. Families with young children are another important

Paul Moore, the Chief Executive of Quarriers, explains: “The reforms will impact on the disabled people we support as a result in changes to Disability Living Allowance and Personal Independence Payment. These will affect thousands of people in Scotland who will lose all or part of their disability benefit.” As well as the financial changes, there will also be changes to the way in which applications are handled. Rather than fill in a form, applicants will be expected to undertake claims online. This will be an additional challenge to voluntary agencies

whose clients are unused to computers. Demand will be driven at a grassroots level, and agencies providing services at the sharp end will need to develop projects and methods to cope with the swelling numbers of people who need assistance. Funders, and those who work with social enterprises and charities to help them to help others, will also need to carefully consider any new grant schemes. These decisions may not necessarily all need to be of the “fire fighting” kind – some funders are offering the Third Sector the chance to make some strategic, long term decisions: “We are working with SCVO to provide £50m over five years to third sector organisations who want to buy their own property,” says Peter Kelly, the Business Development and Marketing Director of Unity Trust. “This will bring a number of benefits, both directly and indirectly related to welfare reform - we hope it will help to provide some stability to organisations in challenging times.” There is, then, a mountain of work to be undertaken in Scotland to prepare for welfare reform – decisions will need to be taken in many different organisations, at many different levels. However much disagreement there is with the proposals, practical steps must be taken by the third sector to protect its service users, and to adapt to meet the needs created by the legislation. The campaigning is almost over, and another round of hard work is just beginning.

To help cope with the fallout, the Scottish Government is putting an additional £5.4 million into frontline advice services and has made up the shortfall from the UK Governments cut to Council Tax Benefit Bob Doris MSP

SpONSOrEd by

Social Investment 2013 Sustainable, Innovative and Accountable Investment for the Future 15 April 2013 THE EliM CENTrE, GlASGOW

With on-going austerity measures and Westminster budget cuts affecting budgets for Scottish Government, Scotland’s local authorities and public bodies there has been an inevitable reduction in both spending on services and preventative spend to tackle Scotland’s social problems. With these challenges however there comes the potential for a variety of opportunities for the sector to adapt, evolve and deliver a wealth of social impact and outcomes through innovative and accountable social investment. This event will examine these issues, developments and opportunities. SpeakerS Include: Jackie Killeen, The Big Lottery • Kenneth Ferguson, The Robertson Trust • Jane Newman, Social Finance Paul Bannon, The Scottish Charity Finance Director’s Group • Chic Brodie MSP

We are delighted to offer Si magazine readers a discounted delegate rate of just £65+VAT for this event. Simply use the promotional code ‘dCSpEC’ when booking your place.

For further information, and to reserve your place, please visit www.spectrum-events.co.uk

SI magazine April 2013

WELFARE REFORM

Focus on housing The housing sector is in the front line of the welfare reform. The Scottish Federation of Housing Associations estimates that 58% of tenants in the social rented housing sector receive full or partial housing benefit. 93% of housing associations surveyed by the SFHA expected their rent arrears to increase.

ousing associations are acting to help tenants, in that many are providing information on the new rules, as well as providing advice on budgeting and money management to tenants. They are also attempting to help tenants who want to move to smaller properties, as tenants have already begun to make requests to move out of their family homes. Alan Benson, the Director of Milnbank Housing Association, which has 1640 properties in the East End of Glasgow, says “As soon as we found out about the changes to legislation, we bought in finance and benefits advice from outside the housing association; we thought that to provide this ourselves would be a conflict of interest. We began a campaign to raise awareness of this service and encourage people to use it, by using the local media and by surveying tenants. ” This service operates three days a week and has been very popular with tenants. It has also had an effect that was probably unintended by the UK government, as Alan explains, “Our financial advice service has found that tenants were not claiming for a large amount of benefit monies that they were entitled to – in the four months that the service has been running, this total has come to over £200,000.” The housing sector’s pivotal role in the implementation of the welfare

tax means that it is on the front line of continued effort to resist the bedroom tax. There’s an ongoing debate about whether or not the Scottish Government should act to prevent any evictions as a result of debt accrued through the bedroom tax. A petition calling for the amendment of the Housing (Scotland) Act of 2001 has been lodged at the Scottish Parliament. However, housing associations are wary of moves to change the current legislation. Most, if not all housing associations, will only begin eviction proceedings in extreme circumstances, and some within the housing association movement are

concerned that implementing the petition could act as a green light for people to withhold rent, which would then impact on the housing association’s contributions towards the wider community.

The housing sector’s pivotal role in the implementation of the welfare tax means that it is on the front line of continued effort to resist the bedroom tax.

April 2013 SI magazine

WELFARE REFORM

Focus on anti-poverty The austere financial climate of the last few years has led to a growing demand for general anti-poverty programmes. The welfare reform legislation is likely to increase this demand.

here are two key areas where demand will lie. The first is with programmes that directly help people who are struggling with poverty.

to keep up their monthly payments even after their debt is cleared, building a buffer of savings against the next unexpected expense.

Food banks, once virtually unheard of in Scotland, are now required, even by some who had previously thought themselves financially secure. One estimate suggested that two thousand children in Scotland were likely to need assistance from food banks over Christmas 2012.

Another crucial area of demand is in knowledge. The welfare changes are expected to drive a need for advocacy, welfare advice, financial advice, and for projects which equip clients with the ability to make better financial decision.

As well as access to food, services that provide access to cash are crucial – both in themselves, and to steer vulnerable clients away from the siren call of the payday loan companies. Glasgow’s Scotcash scheme is intended to complete in the same marketplace as payday loans, and also lends to those who want to buy basic household goods. Scotcash also encourages lenders

The good news is that some big funders are reacting to the conditions faced by financially vulnerable people, and the organisations that served them. Jackie Killeen, Big Lottery Fund Scotland Director said: “On March 21, 2013 we opened our Support and Connect programme. This is a £10million fund which has at its heart the aim to fund organisations delivering hardship support across Scotland.

Support and Connect will run for up to two years, and organisations can apply for between £10,000 and £350,000. Projects utilising Support and Connect must cease by the end of March 2015. Jackie continues, “There is clear evidence this that there is a growing demand for these services. Through Support and Connect we hope to join up local support services to provide more effective support and give organisations the chance to develop and strengthen their provision and connect with others who are delivering services locally.” These are undoubtedly hard times for many, many people. The Third Sector has a crucial role to play in softening the blow of welfare reform, and antipoverty initiatives are a key area for both funders and providers.

SI magazine April 2013

WELFARE REFORM

Focus on families One of the main groups of welfare beneficiaries who will be adversely affected by the UK government’s reforms are people with children, who stay in socially rented housing. For example, around 150,000 households, or a quarter of those affected by the bedroom tax, are headed by single parents. Some parents have already been affected by legislative changes on employment policy, so the cumulative effect is that this is a crucial growth area for Third Sector support.

he new rules expect children of either gender aged ten years or under to share a bedroom, and young people of the same gender to share a room until they are 16. The reforms also mean that a non-resident parent will not be eligible to receive benefits for a room that is occupied by a child or children on overnight access visits.

Apart from the initial financial impacts of welfare reform on families, there could be a myriad of other effects. For example, older people living in a two bedroom property may have to move away from their local community to be re-housed – which could have implications for family support networks, and particularly childcare.

There is also anecdotal evidence to suggest that some families may be planning another child, in order to keep their current accommodation. The effects of welfare reform on parents and families are multifaceted, requiring an equally complex response from the Third Sector in Scotland.

Families with older children will also be affected by benefit changes. A son or daughter in the armed forces, including the Territorial Army, will not qualify for a bedroom allowance while they are on deployment. Students who are learning at institutions away from home will initially qualify for a bedroom if they stay at home for at least two weeks a year; in October, the rules change again, and they must be at home for at least six months of the year to avoid the family benefits being decreased. Jude Currie of Crossreach says, “There will be a greater and crucial need for information and advice on Welfare Reform, with clear communication about the person’s rights and protected benefits. Access to clear and timely information in what could become a very complex change for some people will be essential to ensuring a person is receiving what they are entitled to. They also must have support to fill out any paperwork correctly.”

April 2013 SI magazine

Granted

A different kind of ener How the Wood Family Trust supports community enterprise across the globe.

he Wood family have a long and proud tradition of business development in Scotland; the Wood Group began as a relatively local enterprise and, by the time Sir Ian Wood retired, was a multinational business with operations in around fifty countries. Jo Mackie, the Chief Executive of the Wood Family Trust, talks to Jennifer Dunn about their equally ambitious plans as a funder… “The Wood Family Trust was set up by Sir Ian Wood nearly six years ago,” explains Jo. “We were set up with a dual focus – for sustainable poverty 14

reduction in sub-Saharan Africa, and to support the development of young people in Scotland.” How has the Wood Family Trust changed since it was founded? Initially, in Scotland, we focused on citizenship, enterprise and the NEET agenda, and looked towards the Third Sector to deliver against objectives on our behalf, taking a venture philanthropic approach. Since then, we have kept our original values, but changed the way that we operate. We are now very involved in the delivery and management of our projects.

In the UK, we are focusing on citizenship and education projects which we manage, fund and deliver within secondary schools. The Youth and Philanthropy Initiative (YPI) is our main project in this sector. Currently, eighty-three secondary schools are taking part in the programme, and we are looking to grow this number to over one hundred and fifty schools over the next couple of years. YPI is delivered with other funding partners, and has been recognised by HMIE as a flagship citizenship programme.

SI magazine April 2013

We examined various interventions that were available to us, including microfinance, social enterprise, and the missing middle investment finance, and then adopted the unique “making markets work for the poor” approach. Jo Mackie Chief Executive, Wood Family Trust

investment finance, and then adopted the unique “making markets work for the poor” approach. This identifies and analyses constraints within growth industries, and then attempts to provide a toolbox to minimise those constraints. The eventual aim is that the smallholders at the bottom of the chain will achieve high value for their raw produce.

In Tanzania, we supported the Tanzanian Government to reform the tea pricing mechanism. Previously, the Tea Board set the price at which factories would buy; now, the Board uses a market based mechanism which ensures the smallholder farmers get a percentage of the price of the tea sold at market. Thirty two thousand farmers in Tanzania raised their share of the made tea price from 26% to 34%. More recently, WFT and Gatsby have set up a charitable company called Rwanda Tea Investment (RTI) which has, on the behalf of the smallholder farmers in Rwanda, purchased two tea factories. RTI is now the majority shareholder in both factories, with over 12,000 smallholders being the minority. Both WFT and the Gatsby Foundation have, to date, jointly committed an additional $12.5 million to this project.

For example, we established a partnership with the Gatsby Foundation in the tea sector in East Africa. We currently have two $9 million projects in this portfolio; one in Tanzania and one in Rwanda. In both cases, we looked at the sequencing of the market, from the small farmer to the supermarket shelf, to find where those market constraints were.

After running the Sub-Saharan programmes for three years, we are starting to see a small impact. We already have specialist teams in those countries to build relationships with companies, farmers, factories and governments. But we are only at the start of our journey. In five years, I hope we will be able to say we’ve made a difference.

rgy We also recently piloted a global eachers’ project, where nine teachers were sent to Uganda over the summer. After returning, they have been sharing their experience in their schools, and within their local authorities. We hope that this will embed the idea of global teaching and citizenship within those communities. How does the WFT operate abroad? When we first launched, trustees wanted to fund sustainable ways of reducing poverty in Sub-Saharan Africa. We quickly recognised that the most effective way for us to deliver this would be through supporting wealth creation. We examined various interventions that were available to us, including microfinance, social enterprise, and the missing middle

Granted We are very hands on and engaged, even with third party delivery partners; we don’t operate by signing a cheque and waiting for a report. Jo Mackie Chief Executive, Wood Family Trust

How has the Wood Family Trust helped young people to cope with the challenging job market? We recently commissioned an external evaluation of YPI, and found that it performed very strongly in providing young people with the soft skills for the workplace –such as creativity and teamwork – and is great for CVs. How does the Wood Family Trust differ from other funders, and what aspects of your organisation are you most proud of? We’re different because of our active management and delivery, and we operate many of our own projects. We are very hands on and engaged, even with third party delivery partners; we don’t operate by signing a cheque and waiting for a report. We have an interactive management style and a strong, innovative staff team, who spend the majority of their time managing our projects.

projects, we don’t often advertise grant streams. The main exception to this is our programme to assist young people from the North-East to volunteer overseas.

I’m also pleased with the innovative nature of our work in East Africa. It is challenging, but has great potential to improve the lives of many people. In Scotland, YPI has demonstrated its success by its growth and also by the recognition we are starting to have within educational circles and government.

As you have explained, the Wood Family Trust fund manage projects overseas, as well as in Scotland. Are there any lessons that the developing world can learn from Scotland, and vice versa? They are very different areas, as in East Africa we’re engaged with the private sector, while much of our work in Scotland is delivered through schools. However, the principles of good project management and assessment are the same.

How can charities best engage with the Wood Family Trust? Because we’re a proactive organisation, and deliver many of our 16

However, the best way for the Third Sector in Scotland to engage with us is through YPI. One of the outcomes of this scheme is that the winning team in each class will decide which local organisation to award a £3,000 grant. £615,000 will have been granted through this programme by the end of the academic year.

We also fund the Princes’ Trust ‘Get Into’ project, which assists young people who are not in education, employment or training into work or college. The results are impressive; over the course of our involvement, over 2000 young people will have been supported across Scotland. Looking ahead, what are the challenges for the Wood Family Trust, and the Scottish Third Sector as a whole? For both the WFT and the Third Sector, we need to make sure that what we’re doing is relevant. Activity is only meaningful if it is beneficial to those it intends to help. A key issue for the Third Sector generally, as for all sectors, is in recruiting quality staff. I have noticed an increasing trend for voluntary sector organisations to employ people with a business background. This crossover can be very beneficial. It also demonstrates how the growing professionalism of the Third Sector makes it an attractive place to work.

SI magazine April 2013

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Philanthropy

Inspiring Scotland Learning through robust evaluation is at the heart of Inspiring Scotland’s model and the result of its recent independent evaluation is helping it build on its success and do even more. The study, undertaken by Arrivo Consulting, explored Inspiring Scotland’s unique outcome focused venture philanthropy model and considered the added value it delivers for investors, charities and ultimately for the beneficiaries of the charities. The study found • For investors, the Inspiring Scotland model has increased the efficiency of and maximised the social impact of their investment • For ventures, the Inspiring Scotland model has built the capacity of entire organisations; making them stronger, more robust and more sustainable • For beneficiaries, the Inspiring Scotland model has improved the capacity of ventures to deliver outcomes which can change lives. 18

Andrew Muirhead, Chief Executive of Inspiring Scotland said: “We are delighted the results of the study are positive and demonstrate our model is effective in helping the charities we support tackle some of the county’s most challenging issues in parallel with helping them become stronger and more robust. “Now in our fifth year, we are very proud of what we have already achieved at Inspiring Scotland, however, we are ambitious to do even more and the results of the study help us to understand the critical factors in our model so we can go on to do this.” The study highlights the application of business techniques which

resonate with the business principles of venture capital as being a key differential to the Inspiring Scotland model. This approach includes a much higher level of engagement with the charities it supports than most traditional funders and applies a process of performance management and access to non-financial support in additional to financial support. The study found the role of the Inspiring Scotland Performance Advisor as being critical to driving improvements in charities performance and supporting charities to succeed. The power of the extended support from pro bono private sector supporters is also recognised as being vital to the model.

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Philanthropy Commenting on similarities of the model with venture capital principles, Paul Munn, Partner at Par Equity LLP and one of Inspiring Scotland’s private sector supporters said:

investment opportunities that have the potential for significant returns. The only difference is Inspiring Scotland’s approach supports charities that have the potential to deliver a social return.

“The venture philanthropy model Inspiring Scotland has developed practically mirrors the model we use at Par Equity. We bring a pragmatic, hands on investment approach and extensive business experience to

“It is because of the business approach being applied that I have provided pro bono support to some of the charities Inspiring Scotland supports and am delighted this report shows the difference this extended support from

In many cases, the non-financial support has transformed ventures (and their capacity to deliver outcomes) in a way that financial investment alone could not have achieved Arrivo Consulting Exploring the Added Value Inspiring Scotland

Case study Inspiring Scotland 14:19 Fund venture, Street League, reflects on the rewards gained by working with a venture philanthropy organisation.

the business community makes.”

For Dougie Stevenson, Chief Operating Officer of Street League, the transformational change has been clear:

Achievement to-date

“Prior to becoming involved with Inspiring Scotland, Street League could have been summed up as being under developed. We had a killer service which we knew was incredibly effective in supporting young people, but lacked the investment and development support to bring about real change at scale.” Four years in, 14:19 Fund investment has supported Street League to re-develop its financial and business models and invest in a core staffing structure. This has enabled it to expand into five new local authority areas, increase the number of young people being supported annually with 74% successfully moving into a positive destination. Behind the success and expansion has been Inspiring Scotland’s continued focus on performance management, monitoring, evaluation and establishing key performance indicators, all of which Street League has embraced. As a result it has been able to create a far more robust and sustainable funding model, and has successfully increased the levels of commissioned and public sector contracts to create the perfect funding mix. Prior to 14:19 Fund investment, all of Street League’s activities were funded through trusts and foundation grants. While Street League wholeheartedly embraced the Inspiring Scotland model, Dougie can pinpoint Performance Advisors and the additional access to pro bono network as being the key catalysts for change. “The in-depth knowledge that our Performance Advisor has enriches and accelerates what is possible. This is then further enhanced by the expertise and knowledge available from the pro bono network.” As Dougie looks to the future: “Being supported by Inspiring Scotland, is so much more than just receiving money, the impact of its legacy will never leave Street League and lives of young people to be supported.”

Since being established and officially launched as an independent charity in January 2009, Inspiring Scotland has brought over £40million of investment to the Scottish Voluntary sector to tackle youth unemployment; lack of free play opportunities for children; more support in children’s early years; and support for disadvantaged communities to harness their own assets. It’s first and longest running fund, the 14:19 Fund will publish its performance report in April which will report its most successful year in supporting even more young people into positive destinations of employment, education or training than ever before and also leveraged record levels of matched funding.

FURTHER INFORMATION David Hardie, Head of Venture Philanthropy at Inspiring Scotland will be speaking at the Social Investment Conference in April discussing the key trends in venture philanthropy.

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April 2013 SI magazine

Social Enterprise

Leaping into Enterprise One charity’s journey towards social enterprise

n April 2011, Planning Aid for Scotland took the leap to become not just a charity but also a social enterprise. Now, two years later, Chief Executive Petra Biberbach reflects on the challenges and opportunities this transition has brought – and why social enterprise is a mindset more than anything. Can you tell us about Planning Aid for Scotland and the organisation’s history? Planning Aid for Scotland (PAS) is an organisation that helps people to get involved in shaping their villages, towns and cities by engaging more easily with the planning system, which many people regard as challenging and complex. Impartiality is key to our ability to deliver trusted advice to members of the public. We do not advocate for or against plans or proposals, rather we focus on enabling people to get involved in for their local community from an early stage.

This year marks PAS’ 20th anniversary as a formal company – but the organisation’s roots go back to the 1970s when four groups of volunteers began to operate in Aberdeen, Dundee, Edinburgh and Glasgow – and the whole operation survived on a grant of only £50! The organisation has come a long way since then, particularly in the last two years as a social enterprise. What does PAS offer and how has the organisation traditionally delivered these services as a charity? Our original and core service is the Planning Advice Service, a free telephone (and web) based helpline, free at point of use for members of the public, community groups and business start-ups. We also provide a wide range of other services – from tailored training and facilitated events for members of the public,

built environment professionals, local authorities, elected members, community councils, young people, Gypsy/Travellers and more. Our services are delivered by a volunteer network of more than 330 planning professionals. We also work with legal experts, architects, communications specialists, community artists and others. They offer their professional skills in order to enable people to engage proactively with the planning system. Working with our vast network of volunteers does not give us a cheap way of delivering services – on the contrary, we make considerable investment in our volunteers, but in return they add a unique value to our services, something widely appreciated by our clients and partners.

SI magazine April 2013

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Social Enterprise

What prompted the decision to become a social enterprise? How did the organisation make that initial leap? One of the key reasons behind the transition to a social enterprise model was to enable us to leave behind the operational constraints of the traditional charity structure, whilst still retaining our core charitable aims, the profit from new activities feeding back into the core charitable functions of the organisation. The board set up a Strategic Review Group with the twin aims of examining the status quo and considering the implications of becoming a social enterprise. After due process, the board was convinced of the additional opportunities that the social enterprise route could offer the organisation. Not only were we conscious of the new opportunities that social enterprise could open up, but importantly it was considered a key factor in diversifying income streams and thus reducing risk. With the board and staff behind the new model, it was the right time to make the shift to social enterprise in order to open up a new chapter for 24

the organisation and to expand our market reach. We made the change to the new model at the start of the financial year in April 2011 and are now entering our third year of operation as a social enterprise. How did the organisation approach the initial change to a social enterprise model? As the organisation retained its legal structure as a registered charity – only now operating on social enterprise principles – the greatest change was one of mindset rather than procedure. One of the first actions was to cultivate a clearer sense of social enterprise amongst staff, shifting mindsets away from traditional grant funded service provision to a more entrepreneurial approach. This is most evident in the subsequent re-structuring of staff roles and portfolios, enabling each member of the team to take greater control of their particular portfolio. By reflecting the shift to a social enterprise model in the organisational structure, members of the team have become adept at

identifying new opportunities in their portfolio areas – embracing a more entrepreneurial approach. This is matched by an increasingly experienced board of directors, who collectively bring with them years of experience in public, private and third sectors, both within and beyond our particular field of work. With these changes in mind, how did that change the services you provide? The social enterprise model enabled us to break away from the traditional way we provided training and other services to community groups, local authorities and key agencies. Wearing the social entrepreneur hat, we began tailoring our services more closely to market demand – but importantly, taking calculated risks to develop new offerings and solutions that we believe are missing from the market at present. As a social enterprise, one of the key areas in which we have grown has been in developing a suite of interactive programmes for primary and secondary school pupils. Having identified what we consider to be a significant gap – the involvement of

SI magazine April 2013

young people in land-use planning and decision-making in their local environment – we set out to develop and deliver services to remedy this. One of the key education programmes – IMBY (In my back yard) – has been highlighted by Education Scotland as an example of ‘inspiring practice’. We’ve now successfully delivered IMBY projects for several local authorities and have secured funding for a new pilot to further develop the programme to engage young people in renewable energy issues. Without the social enterprise mindset, it is unlikely we would have explored these opportunities to the same extent or and taken the calculated risk to invest in the development of new services – that makes both good business sense and contributes towards the core charitable and educational objectives of the organisation. What’s next on the horizon for PAS as a social enterprise? With a social enterprise mindset, we no longer need to wait for events to take place and then respond; we can innovate and instigate change in a

One of the key education programmes – IMBY (In my back yard) – has been highlighted by Education Scotland as an example of ‘inspiring practice’. Petra Biberbach Chief Executive Planning Aid for Scotland

way we never could previously. On the horizon, the Scottish Government is progressing with its Community Empowerment and Renewal Bill, which aims to support communities to achieve their own goals and aspirations through taking independent action. We believe there are great opportunities in this Bill to more closely align land-use planning and community planning to achieve better and more efficient outcomes in our built environment and across our public services.

We are about to launch a pilot project to trial bringing land-use and community planning together with the public in order to create a community led plan that everyone can buy into. All going well with the pilot, we hope to develop a wider range of services to bring together the spatial and service agendas in the future. In addition, our development as a social enterprise has attracted attention from potential partners in other European countries and beyond. In response to this growing interest in our service delivery model, we have set up Planning Aid International as a new trading arm of the social enterprise. What would your advice be to a charity unsure of the social enterprise approach? Social enterprise inevitably involves taking some calculated risks – this is part and parcel of being socially minded entrepreneurs. Communication is key to a successful transition. However I believe taking some calculated risks can ultimately create greater security for a charitable organisation such as PAS, by encouraging innovation and diversifying income streams. If anything, reliance on one or two main funders can produce greater long term risk for a charity and I believe that the social enterprise model can give an organisation the flexibility it needs to survive – and thrive. 25

Leading By Example

Don’t let the town down How community enterprises can assist with regeneration.

irvan is, for anyone that doesn’t know it, a small town in south west Scotland, located 90 minutes drive from Glasgow and 45 minutes from Stranraer. Its heyday was as a “doon the watter” resort, during the days when people from Glasgow went to Ayrshire rather than Ayia Napa on holiday. Since the 1950s and 60s, the town’s star has faded and facilities have gradually dwindled along with visitor numbers. The Beach Pavilion, once a hub for dances, sporting events and theatre, was closed and demolished over a decade ago. For many people in Girvan, the blackest point in the town’s fortunes came in January 2009 with the closure of 26

the swimming pool. After collecting money for children’s swimming lessons the previous day, the council deemed the facility to be unsafe and ordered an emergency closure, then, subsequently, for the structure to be demolished. Although the building itself was in poor condition, the local swimming club had been a source of civic pride and the local pool had been one of the few council-run leisure facilities in the town. It was a reliable option on a rainy day for both locals and holidaymakers. The pool closure angered many in the town, and the issue was raised both in the Scottish Parliament and the national media. So, can social enterprise step in to help a town that’s going through bad times?

“Social enterprise is central to the regeneration of places such as Girvan,” says Stuart Lindsay, the Development Manager at Ailsa Horizons. “The town’s relative isolation and small local markets make it unattractive to private enterprises. It is clear that public sector resources will continue to diminish in the coming years, which puts existing services and facilities at risk. With our triple bottom line – social, economic and commercial – social enterprises will go where other investors will not.” Ailsa Horizons began life as a social inclusion partnership, called Girvan Horizons, in 2002, funded by South Ayrshire Council, Scottish Enterprise and the European Regional

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Leading By Example Girvan has also demonstrated that, if a local council doesn’t engage with the people and removes valued services, then the people will take opportunities to engage with local councillors in ways that they might not greatly enjoy.

Development Fund. Its structure shifted to a social enterprise model in 2009. Ailsa Horizon’s current goals are to encourage enterprise, develop skills and to build community capacity in Girvan and across South Ayrshire. The project is itself becoming more entrepreneurial, working to secure commercial contracts in, amongst other things, project development and community engagement. This last factor is seen as essential, as Stuart explains, “Every true social enterprise you’ll ever come across is all about community engagement and empowerment. The simple fact is that if the private ad public sectors are interested in community engagement and empowerment then they must prioritise working with and supporting their local social enterprises.” In Girvan, the main focus of engagement has been around building a new facility; a replacement for the swimming pool, but offering better and more extensive facilities than those available in the old building. “South Carrick Community Leisure (SCCL), was established with the support of South Ayrshire Council following the Council’s decision to allocate match funding towards the costs of a new ‘multi-faceted’ building; this will include a swimming pool as well as other arts and leisure facilities,” says Stuart. “SCCL’s role so far has been to engage the community in deciding what facilities are required and hence in the design of the new building.” There have been several rounds of 28

consultation and engagement with the community on the issue, through surveys and community based groups. In fact, some people in Girvan might grumble that the past three years have seen too much talking and not enough action. However, with the new building being such a key issue for the town, it’s essential that, whatever is built, it’s something that will be wellused and something that locals will feel proud of. Girvan has also demonstrated that, if a local council doesn’t engage with the people and removes valued services, then the people will take opportunities to engage with local councillors in ways that they might not greatly enjoy. The swimming pool closure galvanised interest in the community council and local politics. At the 2012 local government elections, the first since the closure of the swimming pool, the first councillor elected in the three member ward that covers the town and surrounding areas was an independent. This is relatively unusual in this part of the country and could be taken as a sign that people in the town felt short-changed by a council dominated by those elected on a party ticket. Of course, consultation and local government representation are only parts of the battle to regenerate Girvan. Most of the town’s old community facilities were installed during the mid-20th century; an era of corporatist municipal government, when local authorities would build and then manage leisure centres from their own resources. But times have

changed, and 21st century funding models have changed with them. South Ayrshire’s match funding proposal has allocated £4m towards a new build leisure centre in Girvan. It’s a significant amount of money, but comes with a challenge, as Stuart outlines, “SCCL, supported by Ailsa Horizons, must raise at least £4m in order to release the Local Authority’s promised capital contribution. This is a tall order and one that only a social enterprise committed to the regeneration of its area could hope to fulfil. ” Once the building work has finished, SCCL, rather than the council, will then manage the new facility.

SI magazine April 2013

Yet, a town isn’t just comprised of a swimming pool; other communitydriven projects are also essential to regenerate Girvan and its surrounding areas. Wind farms have become dotted around the hills surrounding Girvan and have provided additional community funds. These funds provide opportunities for the Third Sector, but there are more direct ways for communities to benefit from wind power. Ailsa Horizons are also developing a scheme for a 500kW community owned turbine located just outside Girvan; small by commercial standards, but powerful enough to make a significant difference to the community’s fortunes. There are also

plans for a community-owned railhead. Other natural and local resources also offer potential to investors and visitors. Girvan may be too far from the Central Belt to attract many commuters, but it is on the main route between Glasgow and Northern Ireland. Girvan is an easy drive from Culzean Castle and Turnberry Hotel. It is also the main departure point for boat trips to Ailsa Craig, the volcanic plug that lies several miles offshore and dominates the town’s horizon and which is a site of special scientific interest and a noted bird sanctuary. The long, sandy beach that attracted

holidaymakers in their droves in bygone times remains one of Girvan’s best features. Despite all the natural resources and the hard work that’s been put in by the local community activists and groups, as well as Ailsa Horizons and SCCL, there’s still much more work to be done to regenerate the town. Identifying potential investment areas, engaging with the community and securing funding are lengthy processes. But there is a sense that a new cycle is beginning in Girvan; the town’s future looks much brighter than it did the day the doors of the swimming pool closed. 29

Balancing the Books

The bottom line For many people in the Third Sector, cash flow and finances are a bit, well, dull – a necessary evil that has to be borne in order to provide services and raise awareness. But Paul Bannon, the very helpful and pleasant Finance Director at Chest, Heart and Stroke Scotland, makes it all very interesting. Jennifer Dunn talks to him about rags, pensions and pies…

aul began working in local government, for Lothian Regional Council. After 15 years there, he moved to COSLA. He then ‘fancied a change’, and information sent to him through his membership of the Association of Chartered Accountants about opportunities working in the charitable sector led Paul on a new career path. Paul explains, “A job came up at Age Concern Scotland, and I worked

there for 6 years. They concentrated on services and the people I worked with were great, but there was a lot I did in terms of improving back office support systems. The IT and finance systems needed development, and I brought it all in-house. Once I’d been through the process of improving their systems and the adrenaline had worn off, I wanted another challenge, so moved to CHSS. I’ve now worked here for 7 years.”

If anyone out there is thinking of making a similar move from the public sector to the charitable sector, how should they go about it? I’d suggest that they volunteer. Many organisations look for people with financial and legal backgrounds to serve on boards and committees, and treasurers can be hard to come by. Although all finance positions are broadly similar, by serving on a board, you’ll become aware of the pressures facing charities.

SI magazine April 2013

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Balancing the Books

Another route into the sector is through specific qualifications in charity finance, which are offered by various institutions. Have new financial challenges emerged over the last few years? How have you managed these at CHSS? All charities are facing increased demand for services, but with decreased funding. As the Convener of the Scottish Charity Finance Group, I know that donations are down and grants from the NHS, from central and local government, and from other funders are also down. Charities have a range of options for dealing with this; they can cut services or staff, although generally try to maintain services by retaining or increasing income. Gift Aid is essential to this. I’m involved with another small charity which has an annual budget of around £100,000. Gift Aid can make the difference between whether or not small organisations like this will fall into deficit or not. 32

At CHSS, we’re likely to deal with financial pressures by dipping into reserves and making a small loss. Reserves are there for a rainy day, after all, and sometimes we need deficit budgets. However, we can only do this for one or two years. We’ll also need to build up reserves again too, after we have depleted them. There’s been a lot of debate in the media about both the proliferation of charity shops and their pricing structures. Do you have a view on this? On proliferation, I do have some sympathy with other retailers, who feel pushed out by charity shops. In some areas, like Morningside, Edinburgh, there are a large number of them. However, if it’s a choice between an empty shop unit and a charity shop, then an area is always better off with a charity shop; people will visit them and then visit a local coffee shop. An empty unit can create a domino effect. However, we don’t believe we’re in competition with other retailers. CHSS don’t buy in any materials that

are sold in our shops; everything is donated. If people are buying in charity shops, then the items have to be good quality and good value. They’re not like some of the throwaway items that you can buy in some large mainstream outlets; they tend to be better quality items. We also have different pricing models, depending on where our shop is situated. CHSS run boutique shops in Linlithgow and Stockbridge that sell designer clothes and handbags for a fraction of the price that they’d cost new. Customers sometimes don’t realise these shops are charity shops. We also operate budget shops in different areas. Charity shops also face overheads; not all of the staff in charity shops are volunteers, and there are utility costs. Charity shops have to compete with cut-price retailers and online stores like eBay, so at the end of the day, customers can always go elsewhere. There are other competitors too. We’ve been finding that people are

SI magazine April 2013

Organised crime gangs have moved into the rags trade. Other charities give bags to people and ask them to fill those bags with clothes and leave them for collection; some are then stolen by criminals. Paul Bannon Finance Director, Chest, Heart and Stroke Scotland

hanging on to clothes for longer, or are selling items themselves online or through “cash for clothes” type outlets. I also think people don’t realise how much rags are worth. Organised crime gangs have moved into the rags trade. Other charities give bags to people and ask them to fill those bags with clothes and leave them for collection; some are then stolen by criminals. Bigger charities also make millions from selling rags. I think, for most people, they might sort their clothes into a pile for a charity shop and a pile for the bin. But really, everything should go to the charity shop. What do you enjoy about working in the Third Sector? I think you get the best of all worlds. Charities are generally good organisations doing worthwhile things, and you’re making a contribution to that. In the private sector especially, profit is the main factor and, in the banking crisis,

we’re seen what happens when profit becomes too important. In the Third Sector, customers come first, then staff. The money is there to go on services, and that’s what trustees want to spend it on. It’s a people-centric environment. I have some doubts about the theory that charities should become more like businesses. When you’re working for a charity, people around you also believe that you’re working for a worthwhile cause. What are future challenges for CHSS and the Third Sector as a whole? I think funding, in all its guises, is a challenge; whether by fundraising or finding funding through grants. Firstly, people and organisations don’t have as much money to give. Secondly, the proliferation of charities means that there are more organisations competing for a slice of a decreasing pie.

It’s essential to find new ways of generating income. For example, when someone donates items to our shop, we try to claim Gift Aid on the donated goods. However, Gift Aid can only apply to cash donations. So, when someone donates an item and that item is sold, we write to them telling them how much we’ve received, asking them to Gift Aid the item. The risk is that they can ask for the money back, although by doing this, we can receive a significant amount of money through the Gift Aid system. Other challenges arise all the time. For example, social networking can be a very useful tool, but it also means that organisations have to develop policies regarding its use. Pensions are going to be another massively challenging area, particularly for small organisations. Auto-enrolment and issues around multi-employer pension funds will be a major issue in the near future.

Balancing the Books

Don’t let your fundraising events end in tears Richard Lane takes a closer look at the costly pitfalls charities can fall into when they organise events – and how to avoid them.

Richard Lane is Managing Director of Ansvar Insurance, specialists in the third sector

Fun runs, bake sales, Himalayan treks. Holding an event can be a great way for your charity to swell its coffers, especially in these hard times when donors appreciate a little fun for their money. But before you jump on the bandwagon it pays to stop and think. If something goes wrong at your event the cost can far outweigh any income you make, both for your organisation and the people taking part. We’ve been insuring charities for decades and some of the events claims I’ve come across make for very sobering reading. One charity we insured decided to set up a water slide as part of a Fun Day fundraiser but it went disastrously wrong and a child lost her arm. Another charity held a sponsored bike ride around a lough in Ireland and one cyclist accidentally clipped the wheel of another, who died under the wheels of an oncoming car. Tragedies like these are not only heartbreaking for everyone involved, they can also be financially crippling when victims or their families sue. This is especially true for smaller charities with everything to lose. And by the way, it’s often charities with fewer resources that jump into events without realising the magnitude of what’s involved. These days, with attitudes changing and money in short supply, people are also becoming more litigious over less. We had one claim from a participant who slipped on a crisp packet at a charity football match. Whether a claim is reasonable or not, tough new health and safety legislation means charities really have to be on their toes. Risk assessments are vital otherwise you could be deemed responsible before your case even gets out of the blocks.

It’s important to remember that the price you pay for an event that goes wrong isn’t only financial. It’s distressing to know you played a part in someone getting hurt – and the damage to your charity’s good name can be considerable and long lasting. So what can you do about it? First of all, get some sound advice. Google ‘independent charity insurance brokers’ and they can steer you towards low risk events – or help you manage the high risk ones more carefully. They can also make sure you have enough insurance cover to protect your organisation in case something does go wrong. You can also protect yourself. Always have the right safeguards in place before holding an event – a good broker can point you in the right direction here too. For example, set up an incident management procedure in advance and make sure everyone knows how to implement it. Have a protection policy in place if children or vulnerable adults are taking part. Arrange medical care on site if you think it may be needed. Time saved can mean lives saved. It’s also worth paying www.institute-offundraising.org.uk a visit to have a look at their guidance on events fundraising – there are plenty of useful tips and links there to help you keep your event on the straight and narrow. Then, when you’ve crossed all the T’s and dotted all the I’s, all you have to do is sit back, enjoy your event and watch those pounds come rolling in.

SI magazine April 2013

The best drivers spend less on fuel Getting much more out of the fuel in your vehicle is a matter of making a few simple changes – and it’s a great cost saver. Our recent research showed that in Scotland, drivers are wasting £570 million on fuel every year, so it’s a good job there’s a range of support out there from Energy Saving Trust to support motorists who are weary of continuously rising fuel prices.

Ian Murdoch, Transport Manager, Energy Saving Trust, Scotland

Energy Saving Trust has ten simple tips that explain how you can change your driving style to save fuel and fifty minute one-to-one driver training to help you apply these tips. What’s to be gained from that you might ask? Well, simply put, we estimate that if you apply all ten of our tips, you could be saving around 15% off your annual fuel costs, which works out at around £250 each year. Fuel efficient driving is a must if you’re seriously looking to lower your fuel costs and reduce your trips to the pumps. A FuelGood session involves us pairing you up with an experienced approved driving instructor (ADI) for you to learn how to get the most out of your tank of fuel. The training will usually take place in the ADIs car as they have equipment set up to measure your miles per gallon (MPG) during the 2 journeys you will make over the same route. This is the ‘before and after’ – the first journey measures your MPG over the route without ADI fuel efficient tips and the second journey, during which the ADI will suggest how to improve your fuel efficiency, should make a difference to the miles per gallon you achieve. After your sessions you will receive a personalised FuelGood certificate to show how much you could save each year, based on your annual mileage and current car. But the benefits go far beyond cost saving. Fuel efficient drivers tend to be better, safer drivers in that they actively apply the common sense techniques of advance observation and smoother driving. The other great side-

But the benefits go far beyond cost saving. Fuel efficient drivers tend to be better, safer drivers in that they actively apply the common sense techniques of advance observation and smoother driving.

effect is that your journeys become less of a race from A to B and more of a pleasure again, as you become generally more aware of what is going on around you and less stressed. Funded by Transport Scotland, Energy Saving Trust currently has a limited number of FuelGood sessions available free of charge to people who work for community groups and social enterprises if you book before 31st March 2013. Contact your local Energy Saving Scotland advice centre on 0800 512 012 and ask to speak to a specialist transport advisor to ensure you benefit from this time limited offer. Our transport specialists can also provide impartial advice on other subjects such as fuel efficient driving, efficient cars and vans, electric vehicles and charging points, local car clubs, and support offered to businesses. They will be pleased to hear from you.

Balancing the Books

Social investment Previous articles in this magazine have considered the different types of social impact activity and the investment implications. In this article we outline the tax implications for an individual investor in the two main different types of social investment: Venture Capital Schemes, and traditional loans. Venture Capital Schemes

Gillian Donald is a Partner at Scott Moncrieff, one of Scotland’s leading independent professional services firms

Venture Capital schemes involve government offering a range of tax incentives to investors to purchase new shares in smaller higher risk trading companies, thereby enabling the companies to raise finance which may otherwise be unavailable or unaffordable. It was designed with trading companies in mind, but with the launch of the Social Finance VCT last year, it is worth exploring the opportunity in a little more detail. Venture capital schemes include the Enterprise Investment scheme (EIS), Seed EIS (SEIS), Venture Capital Trust scheme (VCT) and Share Loss Relief (SLR). All are special types of traded investment vehicles which meet certain risk parameters as set down by HMRC. Once HMRC approval is gained, the schemes have a more favourable tax status for the individual investor. The EIS aims to attract direct investment from individuals into the trading company. The VCT scheme encourages indirect investment by individuals via a corporate vehicle – usually an investment trust. The SEIS complements these schemes by targeting small, early stage companies. There are myriad conditions attached, not surprisingly, for the companies to qualify as eligible for EIS or as a qualifying investment in a VCT. There are also conditions attached to the investment made by the individual, any conditions attached, the length of time the shares must be held etc. However once these conditions are met, the reliefs available are attractive for the investor. In summary, subject to certain conditions, the investment in new shares, attracts 30% income tax relief, dividends may be free from income tax (depending on the investment) and disposals may be free from capital gains tax.

Traditional investment is through loans, which are increasingly called bonds, although the tax implications are the same. Loans are given by an individual donor from their earnings after tax and no tax relief is given on the loan.

Traditional investment Traditional investment is through loans, which are increasingly called bonds, although the tax implications are the same. Loans are given by an individual donor from their earnings after tax and no tax relief is given on the loan. Any interest earned on the loan by the investor is subject to income tax. Similarly for a corporate entity, any interest arising will be assessed for corporation tax. The Social Impact Bond, Scope’s Bond and the recent Bond issued by a charitable housing provider all come under this banner.

Implications It is clear that there are tax incentives for an individual investing in a VC scheme rather than investing in a traditional loan or bond. This article doesn’t look at the pros and cons of particular investments, for which the investor is advised to take professional advice. However it is obvious that if you put two potential investments side by side, one of which is a VC scheme and the other is a traditional loan, an investor is more likely to pick the VC investment for all the tax incentives available.

SI magazine April 2013

Funding matters The ability to attract grant funding is one of the keys to the success or otherwise of any charity. Larger organisations are able to employ professional fundraisers to assist in this process but for the smaller organisations that is a luxury that they can ill afford. When managing a charity and seeking funding at the same time, what are the key aspects to cover and how should you go about structuring any request?

Malcolm Rust, Partner, Shepherd and Wedderburn Solicitors

1. Be clear on the basics around qualifying criteria. Too many applications are made to grant funders which do not meet the aims of the body. Not only is this a waste of the charityâ&#x20AC;&#x2122;s time and money preparing the request, it is also a waste of the funderâ&#x20AC;&#x2122;s time and money sifting through the relevant material and will do nothing to endear the charity to the funder in the future. 2. Be succinct. Brevity and clarity go hand in hand. Extraneous information will only succeed in turning funders away rather than turning them on. Give them what they need and have asked for to assess your request and if they need more, they will ask. 3. Understand what it is that you are seeking funding for and focus on that. A request for a one-off grant linked to a specific project should not be confused by a secondary request for a periodic grant. By being focused, the assessors will not be distracted by more than one request, diluting the case through lack of clarity. 4. Appreciate the impact of a business plan. Many applications must be accompanied by a charityâ&#x20AC;&#x2122;s business or forward plan, demonstrating awareness around present and future costs and identifying for funders potential risks in income sources. Realistic projections only assist to reinforce an impression of solid financial management and good governance. 5. Funding agreements. It is increasingly important for funders to measure deliverables and benchmark the impact of any investment through the use of funding agreements. Charities need to appreciate this and ensure active engagement with funders through regular reporting.

In an increasingly difficult economic backdrop for charities, it is important that funding requests get off on the right foot and the basics are followed in each case.

6. Follow up. Make sure that you monitor responses and follow up requests that have fallen silent. Funders are under increasing pressure these days from significant numbers of additional applications and often requests can be overlooked. Maintain a diary, follow up and, if the response is negative, seek clarification on the reasons for that decision. Often future applications can be improved if feedback is sought on unsuccessful requests and that is then acted upon. In an increasingly difficult economic backdrop for charities, it is important that funding requests get off on the right foot and the basics are followed in each case. Additional professional advice may be required, particularly in relation to the preparation of business plans or the assessment of financial projections. It is important that charities recognise the impact of a solid request and avoid wasting time on requests that will go no further due to a lack of connection with the purposes of the funder.

Balancing the Books

TOWIE: The Only Way Is Ethics Many of us at some time in our lives will need at least one of the following financial arrangements: • • • • • • • • Scott Murray is a Director of Virtuo Wealth Management and can be contacted via scott@ virtuowealth.com

Stakeholder & personal pension plans Additional voluntary contribution plans Company pension schemes Self invested personal pensions Life assurance Regular savings Lump sum investments Individual savings accounts

But how many of our financial arrangements are linked to a socially responsible investment fund? Generally speaking, the criteria used to select companies considered suitable for a socially responsible fund can be split into two groups. The first are those which make a positive contribution, while the second are those which are known to have a negative social or environmental effect. Positive selection results in support and encouragement of companies that are associated with: environmental protection, pollution control, conservation and recycling, safety and security, and ethical employment practices. Negative selection results, where required, in the avoidance of companies linked with: • armaments and nuclear weapons • animal exploitation • human rights abuse / oppressive regimes • environmentally damaging practices • poor employment practices • alcohol, tobacco, gambling, and pornography In recent years there has been a shift towards more positive selection instead of just screening out the negatives. These

Capitalism with a conscience with increased shareholder pressure on the practices of boards will see even more positive investment returns but more importantly will see a positive impact on the planet.

new breed of ethical investment funds are delivering strong returns by investing in companies which improve the quality of life for us while we are temporarily inhabiting the planet and provide environmental benefits for the planet while we are borrowing her resources. Capitalism with a conscience with increased shareholder pressure on the practices of boards will see even more positive investment returns but more importantly will see a positive impact on the planet. How ethical is your pension fund, and how well is it performing for you? Perhaps it’s time to take a step back and look at whether you are financing companies whose activities you are against, and whether you are actively investing in your future, of that of your children, to make a positive difference. It is your money and your choice. Please get in touch if you have any questions.

is Scotland Green Jobs ready?

Preparing for the green economy 25 April 2013 The Elim Centre, Glasgow

In a wider context the drive for a more sustainable, confident Scotland will increasingly create opportunities to take advantage of the huge potential that exists in the areas of innovation and the green jobs agenda. This event will examine key issues surrounding the development of jobs and skills for a greener economy. Content will range from renewable technologies to the use of indigenous materials in the construction sector. We will also examine the need to develop and transform skills as we move from traditional to modern methods of construction, new finance models and how the Green Deal might support new low carbon jobs. Finally we will touch on the overarching issue of funding for training, job creation and innovation. Speakers Include: • Fergus Ewing, Minister for Energy, Enterprise and Tourism • Professor Sean Smith, Edinburgh Napier University • Philip Ford, Construction Skills • Jonathan Guthrie, Scottish Government