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What’s happening to my £10m to charity?

Financial education is a must

"One of my passions is financial education"

Last June I pledged, as part of the announcement MSE is joining the MSM group, that charities would receive £10m. The transaction completed at the end of September (it’s like exchange and completion on a house). So now, for transparency’s sake, I want to knock out a quick blog explaining what’s happening with this donation.

More on the reasons behind the donation is in this Philanthropy UK magazine article.

How much will go to charity?

At the time of the announcement, I said I wanted charities to get £10m – a mix of cash and shares from the deal proceeds. My plan was for them to get £4.5m cash and £5.5m in MoneySupermarket shares (which, as they were worth £1.16 at signing, meant giving 4.75m shares).

By the time the deal completed in September and I received the proceeds, the MoneySupermarket share price had increased to around £1.40 and it’s now around £1.65.

This share price rise gave me the option of giving fewer shares and still hitting the £10m mark, but I decided it was right to stick with the number I would’ve donated based on the share price at announcement.

So on the day of completion, the value of the money the charities would get was around £11.1m (£4.5m cash and £6.6m in shares) and at current value, it is £12.3m (£4.5m cash and £7.8m in shares).

Of course share values can drop, and it’s only what they’re worth at the point they are sold that really counts (so there is always the risk the price could move the other way) yet all dividends that are paid out meanwhile also go to charities.

Where is the money going?

On the day of announcement, I pledged £1m direct to the Citizens Advice Bureau (CAB). I did this as I wanted the donation to have an immediate impact – and the CAB is an outstanding organisation that I’ve long supported and believe in – so there was no place better.

Yet I also wanted to take the opportunity to ensure while I had the media focus, I got to say two key things:

1. It’s a disgrace that this brilliant organisation has had its debt counselling funding cut by the Government at such a crucial time. It should not be for private individuals to make up this gap – and it’s a tragedy as it’s needed.

2. Few people realise the CAB is a charity, even those who avail of its services. So many who’ve been helped don’t consider giving back when things are better. This needs to change as the organisation is really struggling.

Thankfully, I did manage to get some of this message out on the airwaves when discussing the deal.

What’s happening to the CAB money?

As the UK Citizens Advice is split, I divided the cash roughly by proportion to the population – though with a set minimum so that the amounts would all be meaningful. This has now gone across (except where for processing reasons they’ve asked us to hold)…

As shares need managing, it made sense to keep it in one tranche.

Update August 2013: Find out what the CAB spent the money on.

Where is the rest of the donation?

That, of course, leaves a very large amount.

I am naturally cautious to get this right and didn’t want to make a knee jerk donation – I want to ensure these funds have real impact.

Therefore I have donated the money into a Charities Aid Foundation (CAF) account. There is currently £3,750,000 and 4.52m shares (value at today’s share price £7.45m) there – which, will of course, grow due to interest and dividends until it’s used.

For those unfamiliar with the CAF, while a charity itself, it is effectively a charity bank account, as once donated the money is no longer mine – I can never personally get it back – though I retain the ability to direct its use towards any registered charitable organisations.

If you give to charity regularly, with £100 initially or £10/month you can open a CAF account. The donation is made with Gift Aid and you then get a cheque book you can use for any charity. See the Charity Giving guide for more.

I should note, before anyone says it, for this volume of cash it may have been a tiny bit cheaper to set up my own charitable trust. I didn’t do that, as I support the CAF and therefore wanted to put my money with it for a time and help the work it does.

It was also important to ensure that the money is at an arm’s length from me, so there is real clarity that the cash has been donated and can only be used on genuine charities. And doing it via, the CAF, a well-known body for doing that, says this loudly.

What’s the rest of the donation to be used on?

This money is a legacy from the success of MoneySavingExpert.com so it seems right to me that a good chunk of the proceeds are to be used for consumer and financial empowerment and education.

At the moment my aim is to focus the two biggest chunks on supporting two of my big passions. These are to get quality financial education in schools and to try to come up with ways to deal with the marriage made in hell which is mental health and debt problems (see the Mental Health & Debt Guide).

Yet with such a sizeable fund, I’d like the money to work on bespoke projects (done with charities), rather than just donate cash to go in a charity’s pot.

This is a long-term aim – not something I want to rush. I hope to work on it and come up with ideas of how to do so over the next few years. Especially as I want the money to actually have a hardcore impact, not just on admin costs.

As a side note, unsurprisingly, I’ve had many charities approach me since the donation was announced, a few rather aggressively – frankly it’s overwhelming and a little counter-productive. I would ask for some patience and to allow me to work through the priorities.

There will be some, still substantial, money available from within the CAF funds to be donated to specific charity projects outside of the two areas above, but ensuring much of the money makes an impact and ‘does good’, rather than go into a generalised charity pot, is important to me.

PS. Just to clarify, the donations above are separate to the MSE Charity Fund and the MSE Charity.

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