Opportunities and issues of becoming a charity

Transcription

1 BOARD-P Opportunities and issues of becoming a charity This paper outlines the opportunities and issues for LowCVP to become a charity. Annexed is a report received by Firetail, commissioned by the LowCVP, providing independent expert advice for consideration by the Board. Following discussion at the Board meeting, Trustees will be invited to indicate which of 3 identified options is preferred. In March 2009, LowCVP was incorporated as a not-for-profit company limited by guarantee and owned by its members. The company was formed in a manner suitable for a charity and the Board indicated its intention to apply for full charitable status, subject to a detailed examination of the merits and issues. The annexed report, commissioned by LowCVP from Firetail consultants provides an evidence base for the Board to consider. Firetail is a commercial strategy consultancy specializing in the non-profit and social responsibility sectors. The principal reason for obtaining charitable status is the potential to access funding from charitable trusts. To secure this funding LowCVP will need to design projects that fit both the needs of its members and the potential funders. However, the study finds that funders appear to be ambivalent about the need for charitable status and LowCVP need not be disadvantaged by its present not-for-profit status. The study also finds the case to form a charity from a tax or reputational point of view is weak although the additional administrative burdens are also small. There do not appear to be any significant governance or practical issues. The Board are asked to consider which of 3 options is preferred: 1. That LowCVP commences the process of becoming a charity? 2. That LowCVP engages with potential charitable trusts to identify and design possible projects for funding and explores further with potential funders the need to form a charity? 3. That LowCVP continues as a not-for-profit company until such time as there is clear evidence that charitable status offers material benefits?

2 Does charitable status make sense for the Low Carbon Vehicle Partnership? Prepared by: QA: Dan Lewer, Firetail Ltd Andy Martin, Firetail Ltd Date: 28 June 2010 Version: 1.1: DRAFT Disclaimer This report does not constitute formal tax or legal advice and should not be relied upon as such. It constitutes market research. Appropriate chartered professionals should be consulted for a full understanding of the tax, legal and governance impacts of charitable status and similar management decisions. Page 1 of 15

3 Contents 1. Executive summary Methodology and terms of reference Background Objectives of this research Inputs to this research The right structure Charity (potentially with trading subsidiary) Community Interest Company Charitable Incorporated Organisation Fundraising Current situation and forecast Opportunities from charitable grant-makers Government grant Impact on tax and administrative costs Tax Administrative costs Governance Decision-making Restrictions on activities Reputation Practical steps to become a charity Appendix: case studies of charitable grant makers Page 2 of 15

4 1. Executive summary The Low Carbon Vehicle Partnership (LowCVP) is a Company Limited by Guarantee that combines the characteristics of a trade body, think-tank and campaigning organisation. Guidance from the Charities Commission and precedents in the charity sector suggest that LowCVP could operate in the same way under a charity structure. The key considerations in the decision relate to the ability of the organisation to raise funds from charitable sources, and to the administrative and financial costs of a charity. These factors will be driven primarily by LowCVP s view of its strategic priorities. The primary advantage of charitable status will be to access new funds. This research suggests that there is no reason why LowCVP cannot begin an application for charitable status right away. However, our recommendation is to begin dialogue with charitable funders in the sector to see if projects can be designed that fit their needs, and begin the transition to charitable status if interested grant makers suggest that it would be a requirement. The case to be a charity from a tax or reputational point of view is weak. The table below summarises the impacts of charitable status on eight areas that were examined in this research. Area Answer / impact 1. Legal structure Charity without trading subsidiary 2. Income generation LowCVP could aim to receive 100k in project funding from charitable sources 3. Administrative and governance costs Small increase While smaller grant makers may be concerned that grantees should be charities, many charitable grants are made to other types of non-profit organisation 4. Tax impacts Low impact on business rates / income tax / membership fees 5. Governance arrangements Low impact 6. Reputation Low impact Potential negative impact on VAT costs 7. Practical changes Few practical changes required 8. Future activities Low impact Potential requirement to establish a trading subsidiary for regular trading activities Page 3 of 15

5 2. Methodology and terms of reference 2.1. Background LowCVP was established in It was hosted by the Energy Saving Trust, an independent non-profit organisation funded largely by the government. LowCVP became a separate entity in 2009, and was set up as a Company Limited by Guarantee. It receives most of its funding from the Department for Transport and the Department for Business. This financial assistance is made under a modification to the Environment Protection Act The work programme is agreed between members, the LowCVP board and funders. There is some flexibility on how resources are allocated to projects. LowCVP also receives a smaller amount of income from membership fees and conferences. The organisation plays a hybrid role, including projects that would be familiar to a think-tank, trade body and campaigning organisation. Peers are those working at the interface of business, government and civil society. In the low carbon sector these peers include Green Alliance and The Climate Group (both of which are registered charities). There are no immediately identifiable peers working exclusively on transport issues. Since LowCVP was established as an independent entity, its board has intended to seek charitable status. As such, its governance arrangements have been designed to facilitate a transition to charitable status. LowCVP is now looking for a review of the costs and benefits of becoming a charity before the process begins Objectives of this research The objectives of this project are to understand the financial, operational and strategic tradeoffs behind transition to charitable status. Specifically, the project aims to address the following questions: 1. What is the right legal structure for LowCVP? 2. How will charitable status affect LowCVP s prospects for income generation? 3. What impact will charitable status have on administrative and governance costs? 4. What are the tax benefits of charitable status? How will LowCVP benefit from business rates/national Non-Domestic Rates (NNDR) relief or VAT exclusion, for example? 5. Do the governance arrangements of a charity suit LowCVP? 6. What will be the impact on reputation? 7. What practical changes will be required? 8. Will charitable status create any restrictions for LowCVP s current or future activities? 2.3. Inputs to this research This research is based on the following inputs. 1 The statutory instrument is number 2009 No Page 4 of 15

6 LowCVP internal documentation: Strategy ; Work Programme ; Achievements and Principle Activities; 4 th Quarter Programme ; 1 st Quarter Programme ; Grant offer to the Low Carbon Vehicle Partnership (from DfT); LowCVP Memorandum & Articles of Association. Guidance review: Charity Commission CC22 Choosing and Preparing a Governing Document 2, Charity Commission C35 Trustees, trading and tax 3 ; other relevant pages from the Charity Commission website; guidance from the Community Interest Companies Regulator 4. Interviews with grant-making bodies: Esmee Fairbairn, Waterloo Foundation, Ashden Trust, European Climate Foundation. Internal perspectives, collected from members at the Members Council of 22 June 2010 and a briefing with Greg Archer, LowCVP Managing Director. Consultation with other charities: Green Alliance and The Climate Group. Further input is being sought from LowCVP s chair, vice-chairs and departmental funders. 3. The right structure 3.1. Charity (potentially with trading subsidiary) The main option under consideration is a Company Limited by Guarantee that is also registered as a charity. To achieve this, the existing entity would seek charitable status and regulation from the Charity Commission. A wholly owned subsidiary company may need to be set up, to carry out trading activity. This would impact the administrative costs of running the charity. The direct accounting costs of a trading company would be in the range of 2,000-4,000 per year, with additional time required from LowCVP s finance staff. Charities are allowed to undertake trading on their own behalf (i.e. not through a subsidiary) in three cases: 1. primary purpose trading, where the trading contributes directly to the charity s objects; 2. ancillary trading, where the trading contributes indirectly to the charity s objects (typically this is small scale trading carried out in the course of the charity s activities, such as museum cafes, crèches, etc.); and 3. other types of trading where there is no significant risk to charity (i.e. there is no reason to believe that trade creditors would have any right to recourse on the charities assets). Note, however, that this type of trading is subject to tax on its profits. LowCVP s main trading is related to conferences. This is likely to constitute primary purpose trading, in which case the charity would be able to conduct the trading itself without corporation tax on the profits Page 5 of 15

7 Future trading activities If LowCVP begins substantial new trading activities, such as consultancy services or accreditation schemes, a trading subsidiary would be required. As per the funding section of the Strategy, these activities are mainly considered outside LowCVP s remit, but some limited consulting services or webinars may be offered. These services may be considered taxable particularly if they are similar to other commercially available services. If they become regular and significant, LowCVP would need to establish a subsidiary to undertake them, to limit the risk of the trading activities to the charity Community Interest Company The Companies Act 2004 introduced a new legal form the Community Interest Company (CIC). CICs are designed for companies that operate for profit, but aim to use their profits and assets for public benefit. The ownership and governance of a CIC is similar to a typical company. It may have shareholders and distribute dividends, within limits. The limits are that (i) only 35% of profits can be distributed in total dividends, and (ii) the dividend per share cannot exceed 20% of the paid-up value of the share. Like charities, CICs have an asset lock, which means that assets must be sold at market value or transferred to another asset-locked organisation (typically another charity or CIC). The organisations that can become CICs are: (i) companies limited by guarantee; (ii) companies limited by shares and (iii) public companies limited by shares (PLCs). Charities may become CICs with consent of the Charities Commission. An organisation seeking to become a CIC must satisfy the CIC regulator that their activities are in the community interest. CICs cannot be registered charities and do not benefit from the tax advantages of charities. The key benefits of CICs are reputational. They allow an organisation to demonstrate that they are set up for community interest. The CIC structure does not fit LowCVP s requirements for four reasons: No benefit for funding: Funders rarely distinguish between CICs and companies limited by guarantee in terms an indication of non-profit or charitable status; No tax benefit: The CIC structure would not confer tax advantages that a charity structure would (however, as per section 5.1, these benefits are unlikely to be significant for LowCVP unless there is an increase in trading activity); No governance advantage: CICs are designed to be governed like privately owned companies, while LowCVP is governed in a way more appropriate to a charity; and Additional administration: The structure carries an administrative burden of reporting on the contribution to the community interest, with little payback Charitable Incorporated Organisation The Charities Act 2006 introduced a new legal form the Charitable Incorporated Organisation (CIO). Before CIOs, incorporated charities had to be both registered companies and registered charities, so have the administrative burden of dual regulation from Companies House and the Charities Commission. The structure is likely to become available to charities in early CIOs will be similar to charities in that they have financial restrictions including an asset lock and are not allowed to distribute profits. They must serve also serve charitable objectives. Page 6 of 15

8 They will also benefit from the same tax advantages as traditional charities. Members will have limited liability in the same way as members of a company. As charities, CIOs are likely to follow the same trading rules as companies registered as charities, so a trading subsidiary would be necessary under the conditions outlined in section 3.1. However, detailed guidance on this is not currently available. The three types of organisation that can become CIOs are: (i) unincorporated charities, (ii) companies that are registered as charities, and (iii) CICs. The costs and benefits of a CIO for LowCVP are very similar to those of a charity. However, this form does not suit LowCVP s current requirements for three reasons: Transitional costs: As a Company Limited by Guarantee, LowCVP would need to either register as a charity and then convert to a CIO, or wind up the company and transfer its assets to a new CIO. The extra transitional costs of this process would be in return for only modest efficiency gains of not being regulated by Companies House. Member ownership: The members of LowCVP would no longer own the organisation, because the original company would not exist in the same form. 4. Fundraising 4.1. Current situation and forecast Most of LowCVP s income consists of grants from DfT and BIS. The following chart shows LowCVP s income projections for the next three years. LowCVP projected income 2009/ /13 Income (000's) 1, Members' fees Other from members Government project funding Government core grant To reserves (200) 2009/ / / /13 Source: LowCVP Strategy , p.12 (with potential revision necessary to other from members in 2011/12) Members fees are anticipated to grow by 138% over the three years, driven by an increase in the number of members rather than the size of fees. Although this is a large proportional increase, members fees are not expected to become a core part of LowCVP s income. Income from conferences (largely representing the other from members category in the chart above) is expected to stay broadly constant over the next three years. Page 7 of 15

9 Funding from government is also forecast to stay broadly constant. However, given the current funding environment, LowCVP has identified that this area of funding is at risk. If slices are taken out of the government grant, LowCVP could struggle to maintain its activities and staff base. Therefore LowCVP is seeking to diversify its income Opportunities from charitable grant-makers In the future, LowCVP may be able to raise funds from charitable grant-makers. This section reviews the availability of funding, the impact of charitable status on the likelihood of receiving funding and some comments on how grant-makers should be approached. Availability of funding There are several foundations in the UK that explicitly fund LowCVP s work areas. They range from small trusts that make grants of a few thousand pounds each to Esmee Fairbairn, the largest environmental grant maker in the UK, which last year made 41 grants with a total value of 2.4m from its main environment fund. Six case studies of grant makers that are active in this area are included in the appendix. Funding is available through these organisations, and potentially through other foundations that work outside their stated remit and through corporate trusts. Our discussions with these funders and an evaluation of the availability of funding in the sector indicate that LowCVP could realistically aim to fund one or two projects totaling around 100,000 per year from charitable trusts. A few trusts are prepared to fund core costs or make larger grants, but these are unusual cases, especially given current economic conditions. Impact of charitable status Charitable status is not likely to make a large impact on LowCVP s ability to raise grant funding from charitable foundations that specifically fund this area. Larger grant makers recognise that organisations that are not registered as charities can operate as non-profits, and all four grant makers that Firetail spoke to in researching this report had funded organisations that were not registered charities. Smaller grant makers are more likely to prefer registered charities because they have fewer resources for conducting due diligence on potential grantees. While some grant makers particularly small ones may only fund charities, grant makers are increasingly prepared to fund non charities. LowCVP would be able to engage with grant makers without registering with the Charity Commission, and in many cases apply for funding now. Resources required for fundraising If LowCVP decides to pursue charitable funding, it will need to dedicate resources to the process. A typical salary for a charity fundraiser is 25,000-28,000 and they would be expected to generate 150, ,000 per year in grants. An effective grant making process requires some experience at the level of the fundraising officer and involvement from the management team and board. LowCVP could begin this process with a part-time fundraising officer, who could also have responsibilities in developing a fundraising strategy. This would cost 12,500-14,000 per year not including on-costs and employment taxes, which represents a risk if the officer fails to secure funding. We would recommend preliminary conversations with potential funders before taking on additional resources. Page 8 of 15

10 Comments on the grant making sector Grant makers each have their own preferred ways of operating and priorities for making grants. However, there are a number of common strands in the grant making sector are worth being aware of before considering charitable grants: LowCVP would need to make the case for charitable intervention to any grant maker. Why is existing government and industry action insufficient, and why should a charity address this? Most funders prefer to support projects. LowCVP should design potential projects with a specific funder s aims in mind, and tailor each application to the funder. The chances of success are significantly higher if LowCVP can build a relationship with a grantmaker before applying for funding. Many grantmakers have subtle priorities that are not easily expressed in published literature. They are also more likely to fund organisations with which they have ongoing relationships. Funders in the environment sector tend to favour projects that have direct connections with easily understood aspects of environmental protection, such as endangered species, forestry and conserving landscapes. Some larger grant makers, such as the European Climate Foundation and Esmee Fairbairn, are more likely to make grants based on objective environmental assessments, but in general projects that feel good have most success. As well as its core offerings, LowCVP could explore projects such the impact of vehicle fuels on the ecosystems where they are sourced Government grant Discussions are scheduled with government departmental funders to discuss any technical or strategic impacts that charitable status may have on LowCVP s funding. 5. Impact on tax and administrative costs 5.1. Tax The impact of charitable status on relevant tax areas for LowCVP has been examined in four areas: business rates (NNDR), VAT, membership fees and tax on trading profits. Business rates - charities are eligible to relief on business rates usually a reduction of 80%. However, LowCVP rents serviced offices and would not be able to benefit from this. If LowCVP moves to an office on which it pays business rates directly, this relief would benefit it. VAT (1) With regard to VAT on goods and services bought with the government grant. Currently, LowCVP is unable to reclaim VAT on rated good and services bought with money from its government grant. Charities are subject to the similar VAT rules as companies, and there is no general reason why LowCVP would be able to reclaim this VAT if it registered as a charity. (2) With regard to VAT paid on goods and services with other income. Charities cannot reclaim VAT on purchases that relate to non-business activities. 5 For VAT purposes, charity trading is called business activity (note that primary purpose 5 See HMRC Notice 701/1 (May 2004) Page 9 of 15

11 trading can be a business activity), and constitutes regular activity that is usually provided by entities seeking to make a profit. Currently LowCVP can reclaim VAT on purchases made with income other than the government grant. Charitable status may therefore have a negative impact on LowCVP s VAT costs. In 2010/11, LowCVP anticipates 66,000 of income from members fees and other services to members. Assuming all of this money is spent on standard rated supplies (at 20%), LowCVP as a registered charity may need to reserve 11,000 for unreclaimable VAT. If these supplies relate to business activities provided by LowCVP (which may include conferences), this amount may be smaller. The diagram below illustrates this. LowCVP is currently able to recover VAT from expenditure in boxes C and D. As a registered charity, LowCVP would not be able to recover VAT from expenditure in box C. income Government grant Other income expenditure A B C D Related to non-business activities Related to business activities Non-recoverable VAT under a charity structure Note: the diagram is illustrative and the relative sizes of the boxes do not reflect LowCVP income or expenditure. Membership fees LowCVP members contribute between 50 and 2,500 per year depending on their size and type. In return for these fees, members receive benefits including networking opportunities, events, the member database and the website members area. As outlined in section 6.2, Green Alliance has a business circle that follows a similar model. Business circle fees are treated as business transactions under VAT rules and VAT is therefore charged. The members receive services and therefore pay the fees out of marketing or other pre-tax cost areas. Green Alliance s charitable status does not have a bearing on corporation tax paid by Green Alliance members, and there is nothing to suggest that the situation would be different for LowCVP. Tax on trading profits charities are taxed if they make profits on trading activities that are not primary purpose or ancillary trading (see section 3.1). LowCVP does not expect to pay corporation tax for 2009/10 and is awaiting confirmation of this from HMRC. Assuming LowCVP does not pay corporation tax, charity status would not have any impact in this area. If LowCVP starts earning significant amount of money through primary purpose trading (although this is currently felt to be unlikely), charitable status could have valuable benefits in reducing tax on trading profits Administrative costs Registering a charity is relatively straightforward. There is paperwork involved in registering with the Charity Commission. If done with the help of an external accountant, this is likely to take two to four days with an overall cost of around 2,000. Page 10 of 15

12 Reporting to both Companies House and the Charity Commission is not a large burden, and the reports can be largely duplicated. The Charity Commission has a lower turnover threshold than Companies House for requiring audit - 500,000 for charities, rather than 5m for companies. The direct costs of an audit for a charity of LowCVP s size are typically in the region of 3,000, and LowCVP finance staff would have to prepare an audit file. However, LowCVP already chooses to be audited and the same audit could be used for both purposes. Overall, the set-up and ongoing administrative costs of establishing a charity are not prohibitive. The largest administrative burdens for charities tend to result from the reporting needs of funders, rather than the Charity Commission. 6. Governance 6.1. Decision-making LowCVP operates in a way that would allow for a simple transition to a charitable governance model. The organisation is already led by a board company directors (called trustees ) who provide overall strategic direction and agree the workplan. This group is unpaid and could operate in a very similar way as charity trustees. The Managing Director of LowCVP is not a trustee and would therefore not need to substantially change his role under a charitable model. Work planning processes would not have to materially change, so long as the terms of delegated authority from the Board to the Executive is detailed in the articles. Given the organisation was established with this structure in mind, it is unlikely that material changes are likely, though formal legal advice should be sought to clarify this Restrictions on activities LowCVP s projects and workplan involve a range of activities, including educating consumers (through vehicle labeling, for example); working with government to enable the development of better policies and programmes; working with UK technology companies to create opportunities in the automotive industry; and providing a broad range of stakeholders from government, industry and NGOs with information to encourage the development of the market for low carbon vehicles and fuels. The activities in LowCVP s strategy and workplan indicate that all of LowCVP s work will be conducted independently and will support its charitable objects, so it is unlikely that LowCVP would need to change any of its workplan. There are a number of charities with similar activities to LowCVP. In the low carbon sector, two examples are The Climate Group and Green Alliance. As well as having a similar workplan to LowCVP, these two charities have members that are charged fees and provided with services. The following case studies show how charities can charge membership fees and provide their members with services. The Climate Group The Climate Group is a UK-based Company Limited by Guarantee and a registered charity, with operations around the world. It has corporate and government members, who make contributions. These contributions are treated as fees rather than donations because the members receive benefits, including events, advice and branding (e.g. their logo on The Climate Group s website). This means that they are subject to normal VAT treatment. The Climate Group has a trading subsidiary, but the members fees are collected by charity. Page 11 of 15

13 Green Alliance The Green Alliance is also a Company Limited by Guarantee and a registered charity. It is based only in the UK. It has a business circle, which costs 5,000 per year and includes networking opportunities, access to policy experts, publications and acknowledgement in Green Alliance literature. These fees are not treated as donations. 7. Reputation The impact of charitable status on LowCVP s reputation is likely to be small. The majority of LowCVP s work is with stakeholders who are familiar with its work, aims and non-profit status, so registration as a charity is not likely to have a large impact on reputation among these groups. The views of the members at the Members Council on 22 June 2010 are summarised in the chart below. Members were clear that they did not have strong evidence for providing these views and were giving their perceptions of the reputation of LowCVP as a charity. Number of members Impact on reputation w ith industry Impact on reputation w ith government Impact on reputation w ith other stakeholders (e.g. environmental groups, academia) Much better Better No impact Worse Much w orse Don't know There are some concerns among members regarding the impact of charitable status on reputation with industry. According to comments made at the Members Council, this is due to perceived impacts of charitable status on LowCVP s independence and its ability to serve its members interests. The Climate Group and Green Alliance both indicated that charitable status had a small positive impact on reputation for some stakeholders in the business community. Both charities reported that some stakeholders, when unfamiliar with their work, felt that a charity is better placed to work independently and in furtherance of its charitable objects. 8. Practical steps to become a charity Should LowCVP choose to seek charitable status, this section outlines the key activities that need to be undertaken. There are three key steps: 1. Advice from chartered professionals on the legal and tax impacts of becoming a charity. In particular, this advice should cover the tax issues outlined in section 5.1 and the governance issues outlined in section Communications with members. Broadly, members do not have a strong view on the appropriateness of charitable status to LowCVP, and are open to be convinced by the evidence. The discussion at the Members Council on 22 June 2010 indicated that there are some areas that may require attention, particularly regarding LowCVP s independence. Members may be concerned that LowCVP will become subservient to the demands of charitable funders. Page 12 of 15

14 3. Completion and submission of application forms. The Charity Commission claims to normally take 10 working days to approve applications, if the governing documents and charitable objects are commonly used and there are no significant benefits to trustees. Reports from recent applicants suggest that the Charity Commission tends to take 1 2 months to test objects and approve an application. Memorandum and Articles of Association Firetail s review of LowCVP s Memorandum and Articles or Association indicates that it contains the necessary elements that are required by the Charity Commission, in particular: The charitable objects (in section 3 of the Memorandum), which include an identifiable public benefit: preservation, conservation and protection of the environment by the reduction of greenhouse gas emissions from road transport ; The charity s powers (in section 4 of the Memorandum); Details of how trustee directors will run the charity and the limitations on their remuneration and expenses (in section 5 of the Memorandum); Provisions for winding up (in section 8 of the Memorandum) and amending the governing document; Internal processes for meetings and decision making (detailed in the Articles of Association). Page 13 of 15

15 9. Appendix: case studies of charitable grant makers This appendix contains five case studies of grant making charities that may be interested in supporting projects or core costs of LowCVP. Ashden Trust Short description: A grant-making charity established in One of the Sainsbury Family Charitable Trusts. Fit: The trust s aims are to reduce the speed and impact of climate change, and supported projects include energy efficiency, renewable technology, aviation and transport policy and sustainable agriculture. The Ashden Trust felt that LowCVP s workplan fell broadly into their areas of interest, and that there is no need to apply for a particular fund or area of work. The trust says that it prefers to fund registered charities, but in practice makes grants to non-profit companies, including Do The Green Thing (a company limited by guarantee). Grants: 41 grants were made in 2008/09 totaling 1.5m. Most grants are in the 10,000-30,000 range. Esmee Fairbairn Short description: A grant-making charity established in 1961 with money from the Fairbairn family. Aims: To improve the quality of life for people and communities in the UK. Within this, Esmee Fairbairn has a broad remit. Esmee Fairbairn has funded organisations that work closely with industry on climate change issues, the Carbon Disclosure Project and The Climate Group. Esmee Fairbairn does not have a preference regarding the legal structure of its grantees, and has funded non-profits including the 10:10 campaign. Size of grants: 453 grants were made in 2008/09, totaling 28.7m. Of these, 41, totaling 2.4m, were made from the environment fund. Grants are typically in the 20,000-70,000 range, with some large grants exceeding 1m. JMG Foundation Short description: the JMG Foundation is run by Jon Cracknell, and distributes funds including those left by Sir Jimmy Goldsmith. Aims: the JMG Foundation does not have clear published aims, however it is reported to have made grants to support low carbon vehicle research. The JMG reports that it only funds charitable entities. However, the foundation is likely to have flexibility in choosing the grants it makes. Size of grants: Unknown. Oak Foundation Short description: A Swiss grant maker with offices in Europe, Africa and North and Central America. It began working in its present form in Aims: The Oak Foundation has a number of programmes, including a European Climate Change programme, which LowCVP would fall into. The programme s objectives include Improvements in transportation, e.g. legislation leading to reduction in passenger car tailpipe emission and improved fuel efficiency in the aviation and shipping sectors. There are no publicly identifiable grants that have been made to organisations that are not registered charities. However, the officer that Firetail spoke to said that Oak Foundation is able to fund Page 14 of 15

16 organisations that are not registered charities and is happy to do so. Note that the Oak Foundation has an office in the UK, but the climate change grants are managed from its office in Switzerland. Size of grants: In 2009, the Oak Foundation made US$ 112m in grants, of which US$ 26m was made to environment projects. Grants are in the range of US$ 50,000 to US$ 5m. European Climate Foundation Short description: ECF is a collaboration of six funding partners, including the Oak Foundation, who are concerned about a low carbon future in Europe, and have created a multi-million euro philanthropic entity. Aims: ECF aims to promote climate and energy policies that greatly reduce Europe s greenhouse gas emissions and help Europe play an even stronger international leadership role in mitigating climate change. It has a transportation programme that is interested in car emission standards, reducing emissions of road-freight traffic and lower carbon fuels (including biofuels). It has made grants to organisations that are not registered charities, including Climate Strategies (a company limited by guarantee) and Third Generation Environmentalism (a company limited by guarantee). Size of grants: Unknown. Page 15 of 15