Does philanthropy enhance or replace government spending?

Good news over the weekend about John Sainsbury’s £25 million gift to the British museum. That is a seriously large donation by UK standards, from a man who has already committed many millions to good causes over the years.

Perhaps unsurprisingly, given the climate of cuts, a common media angle has been to ask whether this type of philanthropy is about replacing or enhancing government spending. Today’s Guardian coverage quotes culture secretary Jeremy Hunt making a rather contradictory statement about the proper role of philanthropic donations. On the one hand Hunt, “insisted the government was not relying on private generosity to fill the gap left by cuts of more than 25% to the culture budget”. Yet in the same breath, “he said he wanted more philanthropists like John Sainsbury, 82, to bankroll institutions.”

No one can blame ministers – and indeed charity chief executives – for hoping that private donors will step up to plug the gaps created by the massive cuts to public spending that are soon to be announced. But the trouble with this hope is that it doesn’t square with how donors view the purpose of their donations. Donors have no interest in plugging gaps. They want their contribution to make something extra happen, something special that wouldn’t otherwise have been possible without their generosity. To end up millions of pounds worse off, only for the thing you fund to be maintained rather than enhanced, is not exactly a tempting offer for potential donors.

This point is further proved by the fact that John Sainsbury hasn’t given £25m to help with running costs. He is funding a new and exciting facility at the British Museum: an exhibition space and conservation centre designed by Lord Rogers. Fundraisers know that donors like to fund innovative and high profile projects that they can feel proud of being associated with. If government has even the vaguest hope that philanthropy is the answer to their prayers then they need to think again about who will pay the utility bills, the staff salaries and all the other expensive annual ‘core costs’ required to keep these organisations going.

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