Whether it’s through donations or one-off grantmaking or by establishing a more structured approach like a Donor Advised Fund (DAF) or even a charitable trust or foundation, philanthropy gives us the flexibility to support areas where a financial return isn’t the primary goal, but where the potential for positive impact is immense. It’s about recognising that some of the most important work in creating a better future needs this kind of dedicated, impact-first approach. Often, the financial vehicles in philanthropy focus on tax efficiency for high-net-worth individuals, but increasingly, more services and opportunities are available to those of some-net-worth by thinking more strategically about your giving and better understanding the terminology.

Different types of organisations of varying sizes and activities form the rich tapestry of the third or voluntary sector. In addition, umbrella or intermediary organisations exist to support and strengthen charities themselves or to support donors, and these are referred to as charity or philanthropy’ infrastructure organisations’. When funding environmental causes as an individual, you may come across these different actors who can play various roles in your purposeful journey. There are four main legal structures of charities in the UK, defined by the Charity Commission (or Scotland’s Scottish Charity Regulator): Charitable Incorporated Organisations (CIO); Charitable Company or Community Interest Companies (CIC); Unincorporated Associations; and Trusts.* It’s helpful to recognise the differences because the different structures can potentially play a role in how you decide to fund. For example, we often look to maximise our donation with an additional 25% boost of Gift Aid. If Gift Aid does not apply, then we can factor that information into our investment. *Charity Commission. (n.d.). Charity types: how to choose a structure. GOV.UK. Retrieved from https://www.gov.uk/guidance/charity-types-how-to-choose-a-structure#types-of-charity-structure

Choosing the right charity and mechanism for giving can seem difficult, especially when you are short on time and can’t do a deep dive into every cause you care about. Giving often becomes ‘ad hoc’ and separated from an investment strategy. However, there are a few strategies we use to integrate giving into our overall spectrum of capital strategy. * Basic due diligence: this need not be onerous - you can look up the charity free of charge on the Charity Commission website, or on Giving is Great, you can look for the charity’s own annual report to understand its recent activities and impact, and you can look for a Theory of Change or programme evaluation reports. * Look for opportunities to give more: This can either be through employer matching schemes or matched-funding campaigns, like the Big Give’s Raise: Earth Fund. * Join others: Whether it’s adding your donation to a larger fund or participating as a member of a funding community, you can stretch your impact further with confidence that others are supporting the same issues. * Consider the Core: It’s important to know that charities do operate like businesses in that they have the same operating expenses and require revenue to cover those expenses in order to deliver their impact. Charities can really benefit from funding they can use as they see fit, rather than money with lots of strings attached. This is often referred to as unrestricted or core funding. * Make long-term commitments: similar to our relationship with our financial advisers, we value getting to know an organisation, which takes time and effort from both parties. When we, as donors, commit to 3 or 5 years of funding, it demonstrates our interest in their work. If we liken grants to community shares, where we don’t expect to see a return for 5-7 years, then we can help the charity think more strategically about its future as well.

Globally, philanthropic giving is on the rise, with an estimated US$885 billion being given to all causes by individuals and foundations worldwide in 2023 - a 10% increase on 2022. For the first time since 2020, Climate Works Foundation identified a growth in climate-related giving, which outpaced overall growth in philanthropic funding in 2023 with a 20% increase from the previous year. A similar trend was identified in the giving of UK-based foundations, with giving towards environmental causes almost trebling between 2021 and 2022. Emerging stories of action collated by the Environmental Funders Network demonstrate that all philanthropic donations - no matter how big or small - have the potential to make a substantial difference. As well as an increase in the volume of philanthropic giving towards environmental causes*, there has also been a transformation in recent years in regards to the way that we give, in part driven by the rise in the global youth movement which has placed scrutiny over where philanthropic funds are coming from, as well as how they are being redistributed, and to whom. As such, philanthropists (both at an individual and foundation level) are being called on to take a justice-centered approach towards their giving, addressing historic power imbalances between funders and grantees, and supporting initiatives and organisations that help shift decision-making power and trust towards the frontline communities who are facing the worst impacts of the climate crisis, and who are therefore best-placed to address them. This includes a trend towards the provision of ‘unrestricted funding’ (which enables the grantee to determine how funds are spent), ‘core funding’ (which support operations, including staff salaries), and longer-term, multi-year grants, in recognition of how long it takes to deliver sustained and sustainable change. *For the first time since 2020, Climate Works Foundation identified a growth in climate-related giving, which outpaced overall growth in philanthropic funding in 2023 with a 20% increase on the previous year. A similar trend was identified in the giving of UK-based Foundations, with giving towards environmental causes almost trebling between 2021 and 2022.