Category Archives: Philanthropy in the News

Charity Shops: Between a rock and a kind face

This post is written by Dr Triona Fitton, Pears Philanthropy Fellow at the University of Kent.

A recent report published by the True and Fair Foundation (TFF) into income generation in the charity sector has once again brought to public attention the dilemma facing charitable organisations with a retail arm: What are charity shops really for?

The report highlights the low profit margins of charity shops, averaging 17%, with some large charities such as Scope making only a 5% profit margin in their shops; 13% less than high street giant Next, using for-profit retailers as a benchmark for charity shop success. Recommendations for a reduction in charity shop mandatory rate relief (they currently pay 80% less than other high street retailers, with the option for local councils to grant a discretionary 100% rate relief) also suggests that charity shops should not be treated any differently to for-profit shops. The comparisons in the report treats charities as ‘for-profits in disguise’, to paraphrase Burton Weisbrod; where their commercial output is more important than their charitable cause.

The TFF report has been criticised for its misrepresentation of statistics and flawed analysis, with several umbrella bodies and charities featured in the report such as Sue Ryder and Guide Dogs for the Blind speaking out against inaccuracies that undermine the work of their charity shops. Nevertheless, I would argue that the problem with the report goes beyond that of misrepresentation or poor quality research. Crucially, the report has fundamentally misunderstood the value of charity shops.

Firstly, charity shops are an important resource for those on low incomes for everyday items, as well as for second-hand bargain hunters in search of unique purchases. In spite of claims that they are becoming prohibitively expensive, Avril Maddrell and Susan Horne argue in their book Charity Shops: Retailing, Consumption and Society that many charity shops price their goods dependent upon what local people can afford, ensuring they don’t price themselves out of their local market. My own research into charity shops also found that a smaller shop without the pressure of competition within a chain of shops was more likely to price goods down rather than up. Also, haggling prices down or ‘letting people off’ a few pounds continues to occur.

Secondly, a charity shop provides some welcome relief from consumerism and its malcontents. The tendency towards ‘fast fashion’ and the disposal of items before they are at the end of their use is balanced by the donation of these goods to charity. The Giving Something Back report by Demos reports that the reuse of goods sold in charity shops reduce CO2 emissions by roughly 3.7 million tonnes a year – a figure similar to the entire carbon footprint of Iceland. Charity shops are, according to a report by WRAP UK, the most common source for pre-owned clothing in the UK, which goes some way towards reducing the £140m worth of clothing that ends up in landfill each year.

Thirdly, and perhaps most importantly, charity shops are the public face of a charity on the British high street. They raise awareness of smaller organisations that do not already have a high public profile; they work to embed a charity within a community through recruitment of volunteers and involvement in local events; and they provide a friendly, welcoming environment where browsing and chatting is encouraged. They are also a gateway point for entry into the local job market, with people of all ages learning skills and progressing to paid roles through volunteering in a charity shop.

Whilst charities more generally have been subject to a great deal of scrutiny in the past year for their fundraising practices and executive salaries; charity retail has, until now, emerged mostly unscathed. In response to this form of criticism, charity shops have an opportunity to defend the valuable asset they are to society; not only as an income source for charities but as an employability resource, a recycling site and as the ‘kind face’ of the UK high street.

Zuckerberg: the applause, the criticism and the need to discuss philanthropy

Our blog has gone a bit quiet over the past few months whilst we’ve focused on lots of research projects and getting our new Masters degree in Philanthropic Studies off the ground. But today philanthropy is headline news again, as Mark Zuckerberg and Priscilla Chan celebrate the birth of their daughter by donating 99% of their Facebook shares “to advance human potential and promote equality for all children in the next generation”.

Many people will applaud this decision, and inevitably some will chip in to question it.

The applauders will rightly point to the importance of this power couple as role models for their generation, and how their decision helps to redefine ‘success’ as involving both the creation and distribution of great wealth: the Millennials aspire to give and take, unlike their ‘Loadsamoney’ predecessors.

The questioners will worry about philanthropic power being concentrated in the hands of people who already have power in abundance, and point to the creation of a new organization the Chan Zuckerberg Initiative as evidence that the ‘new philanthropists’ prefer to retain control rather than trust existing charitable initiatives.

Applauders can respond by noting that setting up a new initiative guarantees the donors’ ongoing involvement, and that the gift of time, knowledge and contacts helps to multiply the value of the financial donation. Whilst Zuckerberg has insisted in the letter to his daughter explaining his plans that he will “continue to serve as Facebook’s CEO “for many, many years to come”. But he is still only 31 and has plenty of time for a ‘Second Act’ as a full-time philanthropist, following in the footsteps of Bill Gates – the first great tech ‘billanthropist’ – who stepped down from running Microsoft at the age of 49 to focus on running the Bill and Melinda Gates Foundation.

The questioners will no doubt still have an array of concerns, including the re-direction of public funds to private philanthropic choices via charitable tax reliefs, the relationship between Facebook’s tax status and it’s founder’s private generosity, and the likelihood that Zuckerberg’s political and cultural influence will be enhanced as a result of this decision.

Philanthropy is an arena in which such debates thrive because there is no fixed agreement on exactly what philanthropy is, why it exists or what it can and should achieve. This is what makes it such an interesting part of life to study and think about. Understanding philanthropy is our central purpose in the Centre for Philanthropy at the University of Kent. However heated the debates become over the merits and implications of the Chan Zuckerberg announcement we welcome the spotlight returning to this most fascinating of topics.

 

 

7 days is also a long time in philanthropy

The political sphere normally lays claim to a monopoly on momentum, with the oft-quoted line: ‘a week is a long time in politics’. But the last 7 days have seen a huge amount of activity and new developments for philanthropy in the UK.

Firstly the 2015 Beacon awards were announced – including an extremely well deserved celebration of Trevor Pears, whose family foundation has generously supported our newest colleague, Pears Philanthropy Fellow Dr Triona Fitton.

Secondly, the annual Giving List, published as part of the annual Sunday Times Rich List in association with CAF, reported that the richest members of our society collectively gave away £2.6 billion last year, an 8% increase on the previous year, and including four people who gave away 9-figure sums (£100 million or more). Whilst the top spot on the main Rich List is now held by Len Blavatnik, who made one of the UK’s biggest-ever donations in 2010 (£75m to Oxford University), another generous donor, Richard Ross, has ‘donated himself off the Rich List’ by giving so much away.

Thirdly, a new academic centre has been launched at the LSE, which will help to advance the nascent field of philanthropic studies. All of us at Kent welcome the creation of The Marshall Institute for Philanthropy and Social Entrepreneurship and congratulate the founders and donors, Paul Marshall and Sir Tom Hughes Hallett, who discuss the thinking behind their exciting initiative in this article.

Here’s hoping the next 7 days are full of even more positive news for UK philanthropy.

Loneliness in Older Age: How Can Volunteering Help?

 This is a guest blog from my colleague Dr Eddy Hogg

Research by the International Longevity Centre and the charity Independent Age demonstrates the growing problem of loneliness in older age, particularly for men (report – http://www.ilcuk.org.uk/index.php/publications/publication_details/isolation_the_emerging_crisis_for_older_men). My own research, undertaken in collaboration with Age UK, shows that volunteering can be a really powerful way of overcoming this loneliness and developing the social networks that help sustain a happy and healthy older age.

As we increasingly live longer and as divorce rates continue to rise, an increasing number of older men are living alone. While retirement, divorce and widowhood can all be contributing factors to loneliness, they can also be triggers to engage in volunteering, either for the first time or as continuation of previous engagement.

Volunteering is inherently a social activity, generally undertaken alongside others in a spirit of camaraderie and a desire to do something worthwhile. While what volunteering consists of differs enormously from role to role, these social and self-esteem benefits occur whether an older volunteer is a school reading buddy or plants trees for a wildlife organisation.

Where older people volunteer in support of other older people, the benefits are doubled – not only is the recipient of the support alleviated of loneliness and other issues they may have, but also the volunteer has a purpose and the beginnings of a social network. As a result, charities across Britain are increasingly looking to ways whereby they can connect older people in ‘buddy’ schemes which encourage mutual help and support.

In the debate about loneliness and support in older age, volunteering should be placed centre stage.

Inspirational Fundraising & moral philosophy in action

You may have already seen this advert as it has had more than 12 million views on YouTube,  but I only became aware of it thanks to today’s online edition of Third Sector which featured it as ‘film of the week’.

I spend much of my working life trying to understand donor decision making, and it is a rare gift to be able to watch in action as people are confronted with a situation of need and decide whether or not to respond.

The film, created by the Norwegian branch of SOS Children’s Villages, shows a young actor shivering at a bus stop because he has lost his coat. Passersby who encounter him must decide whether or not to respond and if so how. It is fascinating to watch their faces as they struggle with deciding what to do – then cheering as the vast majority give him a coat, scarf or gloves.

The point being made by the charity is that many Syrian children are facing a freezing cold winter and need help. The film is a 200 second encapsulation of the point made by the philosopher Peter Singer, whose famous ‘Drowning Child analogy argues that we have a moral obligation to help others if we can, and that obligation is not removed by geographical distance.

You can watch the ad here. I hope that some of the 12m YouTube viewers decided to donate – it certainly prompted me to do so.

 

Something worth blogging about: Open Philanthropy UK

One of the paradoxes of engaging in social media is that the busier you are doing things that are actually worth blogging or tweeting about, the less time you have to blog and tweet.

These past 4 months I have been immersed in rich data on rich givers – writing up a year of in-depth study of UK philanthropists for a new book Richer Lives: why rich people give, co-authored with the wonderful Theresa Lloyd, which thankfully – after many many late nights of writing and re-writing – was sent off to the printers last week and will be published on the 30th September.

I’ll write more about the findings once I don’t risk spoiling the media embargo, and once I’ve got off my chest all the things I’ve wanted to write about but have been too busy to breathe never mind blog.

The first ‘something worth blogging about’ is a new effort to encourage more open data on philanthropic activity. The Indigo Trust  is helping to promote an important initiative to encourage UK donors to be more transparent in their grant making. As a researcher, I’m obviously all for people sharing the detail of how much they give and to what causes, but there is a much more important agenda at stake here than making the lives of researchers that bit easier. Opacity favours none and causes concern to many – we all know there is a climate of suspicion about philanthropy and philanthropists in the UK, so why not dispel some misconceptions about the shady goings-on of rich givers and cast a light on what they actually do, rather than what the cynics think they do?

In a note of the first meeting to discuss this initiative, Indigo explain the benefits better than I can:

We believe that being transparent in itself is the right thing to do, but the reasons for encouraging openness go far beyond this.  In summary, openness makes grant making better.  We believe that opening up grant data will enable more effective collaboration amongst funders and between civil society and funders, allow for more effective strategic planning which will ensure that money gets to where it’s needed the most, enable grant-makers to assess their impact and demonstrate this to the public and enable analysis of interventions across a whole sector such as health or higher education.

If you want to keep up with developments then check out the Open Philanthropy UK blog  – and if you’re a philanthropist keen to emerge from the shadows and shine a spotlight on your giving decisions, then do get in touch!

Great Greek Grads & Giving Pledge Goes Global

I’ve been in Athens this week, teaching a condensed version of my ‘fundraising and philanthropy’ masters level course, to 16 University of Kent students who are based in that fascinating city, studying for a masters degree in Heritage Management. It makes perfect sense to pursue that degree in a city where there’s the equivalent of a Stonehenge on every street corner. The course leader, Dr Evangelos Kyriakidis is a dynamic and energetic academic, who has not only designed this course but has managed to engage the support of a number of philanthropic individuals and charitable foundations so that full scholarships (fees and living expenses) are available every year to a cohort of students from developing countries. This initiative combines support for bright young scholars with a longer-term contribution to development, as their careers should eventually help to attract tourists to visit the heritage sites in their home countries. An excellent win-win for philanthropists seeking to make a difference in the world.

Talking of which, I returned to the UK to read the excellent news that 12 more names have been added to the Giving Pledge, including 4 in the UK. The pledge is a public commitment, now signed by more than 100 individuals and families, to give the larger part of their wealth to good causes. When this pledge was first launched in 2010, it was suggested that such a public statement of intent would not appeal to individuals and families outside of the USA, so it is heartening to find that is not the case. Here’s some comment on this development from the UK’s Matthew Bishop, co-coiner of the term ‘philanthrocapitalism’, whose opinion is always worth reading.

A victory that needs to be front page news

Last week’s front page of The Times made many people’s hearts sink – including mine.

The Times had exposed a scam that takes advantage of charity tax relief to enable unscrupulous individuals to claim millions of pounds without actually making any meaningful contribution to charitable activity.

Unsurprisingly, some made the link between this revelation and last year’s Budget which attempted to cap charity tax reliefs. Along with many others, I had argued at the time that it was mathematically impossible to enrich oneself by donating, despite widespread public suspicions that tax avoidance was a major motive behind philanthropy.

So thank god for the news, reported in Third Sector, that the attempt to defraud the tax system and damage the image of philanthropy has failed.

But it is still an awful shame that this story was not nipped in the bud the moment it surfaced. The Charity Commission’s statement that it was “not comfortable” with the set up is hardly the kind of firm regulation we need to ensure public confidence in giving and philanthropy.

I hope the Times gives equal, front-page coverage to the news that this scam has failed – otherwise our chances of growing a stronger culture of philanthropy in the UK will become that bit more remote.

Philanthropy, Fairness and Democracy

The past year has been a turbulent one for philanthropy in the UK.

Whilst progress has been made in doing more to celebrate and encourage those who give away some of their private wealth to promote the public good, the repercussions of last Spring’s Budget continue. The proposal to impose a cap on charity tax relief was announced, roundly criticised, and eventually (and thankfully) dropped. But the pain it caused to philanthropists, who found themselves labelled as tax dodgers and accused of contributing to ‘dodgy charities’, goes on. Earlier this week when the topic came up in a roomful of donors, the emotional impact was apparent. A man who has given generously to a range of causes said he was ‘apoplectic’, and in fact seemed to still be in a state of apoplexy.

So at a time when the motives of philanthropists and the purpose of philanthropy is under such scrutiny,  it is welcome that this year’s Attlee lecture focused on this very topic. Sir Stuart Etherington’s lecture, called Philanthropy, Fairness and Democracy is well worth a read. Here’s the concluding paragraph to whet your whist:

Society is a better place thanks to the altruism and reciprocity of us all: rich and poor, young and old, donors of time and money. And whatever the weaknesses inherent in philanthropy and voluntarism, the value and values they bring mean we should nurture and celebrate them. 

How paying tax differs from giving to charity

The debate about the relationship between taxes and philanthropy was opened up by this year’s Budget and its (thankfully) ill-fated proposal to cap tax reliefs on major donations.

But whilst that proposal went away, the important issues it pushed to the forefront about the nature of the difference between paying tax and making voluntary contributions remain pertinent but so far unanswered.

A US commentator, Mark Rosenman, has written this interesting piece about these issues in his country. He notes that research shows when taxes go down, there is no concomitant rise in donations, and he also notes that philanthropically-funded institutions do not meet the same needs or serve the same people as those that democratically elected governments tend to prioritise.

Mark’s piece may be – as ever – about the US but it contains many interesting points for those of us in the UK who are concerned about similar issues, and is well worth a read.

U-turn is the best Jubilee gift for charities

Yesterday the Chancellor announced he would not proceed with the proposed limits on tax reliefs for charitable donations. This was a surprising, yet deeply welcome move. Despite the proposal being unworkable, unfair, uninformed by evidence, and opposed by a unique coalition of donors, charities and public opinion – the government seemed unlikely to pursue the only ‘U’ anyone wanted: a full U-turn.

In the ten weeks since this proposal was first announced in the March Budget, the mood music from the Treasury has shifted from insulting (“philanthropists are tax dodgers”) to intransigent (“this will happen”) and finally to face-saving (“how can we fix this without looking bad”). The desire to save face and avoid a politically-dreaded U-turn, made a watered-down version of the original proposal seem the most likely outcome. So yesterday’s announcement was a welcome bombshell – the best Jubilee gift for all those reliant on raising funds from the rich.

Language Matters: do we ‘manage’ or ‘respect’ our donors?

Yesterday I enjoyed taking part in a lively online discussion organised by the Guardian newspaper’s Voluntary Sector Network. The topic was ‘Managing Major Donors’ and a good panel of experts was assembled to field questions on this topic, which is of increasing importance to charities up and down the country.

Over two hours, we addressed issues such as how to initiate relationships with people who have the potential to make major gifts, how individuals differ from corporate donors, and the extent to which impact reporting matters. The transcript of the whole discussion is available here and I hope it makes useful reading for people looking for advice in this area.

But all through the session I had a niggling worry about the title. Do the generous, wealthy people who choose to share their resources (including money, time and expertise) with good causes really want – or expect – to be ‘managed’ by the charities they support? This is part of a wider problem of the language used in the fundraising profession, whereby anyone we hope might support us becomes a ‘prospect’, who is then put into a ‘prospect pipeline’ and invited to ‘cultivation events’ before becoming a donor who is ‘managed’ or ‘key worked’.

One of the worst examples I heard was a senior fundraising consultant say – in front of a seriously major donor – ‘how can we extract more funds from people like X?’ Extract? Are we taking out teeth or inviting people to join us in creating a better world?

I am just as guilty of making flippant comments and using intemperate language, and was rightly put in my place a while back by a major philanthropist who gently suggested that perhaps we could all have a bit more respect when talking about the people who choose to use their private wealth to promote the public good.

So my mid-new year’s resolution is to stop saying things that I wouldn’t say if the donor could hear me. I’d be interested to hear if anyone else has noticed a similar problem in their organisation.

7 days is a long time in philanthropy

Just over a week ago, I was relaxing after giving one of the final lectures on my ‘Fundraising and Philanthropy’ course, anticipating the chance to get out and enjoy the sunny weather. Readers, I was wrong. That afternoon, George Osborne gave his Budget and dropped the bombshell of a new cap on all personal tax reliefs.

If the sun has shone since that fateful day, I would’t know about it (though I haven’t put in nearly as many hours as the heroic Karl Wilding at NCVO who launched the GiveItBackGeorge campaign before Osborne had sat down).

Unlike colleagues who immediately understood this was madness and all efforts had to be immediately activated to stop it, I originally thought it was just a mistake. Given the iron core of pro-philanthropy sentiment running through this government, they couldn’t possibly mean to include charity reliefs in the cap, and as soon as they realised their mistake they’d issue a clarification and we could all go back to sunbathing. Reader, I was very wrong again.

When Third Sector magazine reported HMRC had confirmed they did indeed mean to include charity reliefs, my heart sank even further and I realised the extent of the battle now being faced by everyone who cares about promoting a philanthropic culture in this country.

For now, the focus is on doing the maths and explaining the complex issue of tax reliefs in as simple a way as possible, to prove that this cap will hurt charities and their beneficiaries. Everybody’s brain is aching – mine more than most as I don’t count numeracy amongst my limited range of skills. So three cheers for Rhodri Davies of the Charities Aid Foundation, who has written this superb blog containing worked-out examples of the impact of the Budget measures on giving. I can’t recommend it highly enough.

For those of us who are tired, innumerate and still reeling with disbelief, there is something we can do that doesn’t involve being as clever as Rhodri or as irrepressible as Karl: Click onto this page right now and back the GiveItBackGeorge campaign.

 

Turning the anti-philanthropy media tide?

The Guardian newspaper is my paper of choice, and read by pretty much everyone that I know and like. I met my husband with the help of the Guardian Soulmates service, and a highlight of last summer was our son’s joke being published in the Guardian kids page. So it’s fair to say that the Guardian is the most significant brand in my life and the one aspect of living in the UK I miss the most when I can’t get my daily fix.

But no relationship is perfect, and that paper’s coverage of philanthropy has long been the imperfection I’ve put up with in return for getting a reliable update on what’s going on in the world, and for the joy of reading my favourite columnists (thank you Tim, Lucy, Hadley, Zoe). If you don’t agree, or never noticed, that the Guardian has it in for generous rich people, here’s two particular low points in their coverage of philanthropy:

(1) Michelle Hanson’s barbed response to news that Bill Gates was committing over $30 billion to good causes:

“Bill Gates is giving millions [sic] to charity. So? Why not? What else could he possibly do with all his money except coat himself in treacle and roll in banknotes?” (28/11/06).

(2) Simon Jenkins’ comment on Warren Buffett’s decision to add another $30+ billion to the Bill and Melinda Gates Foundation:

“when the world’s second-richest man gives most of his money to the world’s richest man, we do well to count our spoons” (28/06/06).  (If anyone can tell me what he means, I’d be glad to hear it).

So the broadly positive article on philanthropy, published  in yesterday’s Guardian, asking why the UK public is so suspicious of philanthropists, was a very welcome novelty. Granted, I’m quoted in it a few times – that’s nice and good for our university ‘impact’ scores – but I am genuinely delighted to see someone (thank you Jon Henley) make the argument that it’s time to cheer, rather than jeer, at wealthy people who decide to use some of their private wealth for the public good.

Plenty of fellow Guardian readers disagree, as the comments beneath the online version of the article make clear. But as Jenkins might say: when the world’s best newspaper provokes the world’s best readership, we do well to count our spoons.

FT coverage of 2011 Million Pound Donors Report

As the first coverage of our new report on donors making gifts worth £1m or more is hidden behind a paywall, I’ll paste it here – until someone tells me I have to take it down!

 

Donors say: give us more of a break

By Elaine Moore

Financial Times, Saturday 10th December 2011
The government hopes to encourage greater charitable giving by introducing tax incentives for donors – but wealth managers are unsure whether lower tax bills will reverse a decline in philanthropy.

Between the 2009 and 2010 tax years, the number of large donations of more than £1m fell by 15 per cent, according to the latest Million Pound Donors report from Coutts.

This fall “mirrors the general sentiment in the economy and financial markets in the year 2009/10”, the private bank says – and matches a similar fall in the US.

As a result, UK charities are facing new challenges. Multimillion pound donations still largely go to the same causes: universities and arts institutions. That leaves charities with less money to compete for, as the value of large donations has also fallen from £1.5bn to £1.3bn in the space of a year. And their funding is running out sooner, as the time that individuals take to make a decision about giving has increased.

To boost the depressed level of donations, the government has confirmed plans to introduce a lower rate of inheritance tax (IHT) for charitable donors.

As of April 6 2012, a new 36 per cent rate of IHT – down from 40 per cent – will apply to those who leave at least 10 per cent of their estates to charity.

This tax rate will apply to the remainder of their estates – including jointly-owned property and some trust assets.
However, the complexity of implementing the rules could limit its impact, say tax advisers.
Law firm Boodle Hatfield points out that the new inheritance tax rule will apply to just 3 per cent of estates. Other advisers, including PwC, have therefore asked whether there is a simpler way to encourage the wealthiest members of society to increase their giving.

Some have called for the introduction of “charitable remainder trusts” in the UK – a form of tax relief available to US donors who promise to give away an asset to charity after death. So far, there has been no positive response from the government, but advisers believe the possibility remains open.

Philanthropy offices in Britain’s private banks agree that favourable tax treatment alone will not change the culture.
Research in the government’s philanthropy green paper, published last year, reveals the scale of the gap between levels of UK and US philanthropy. In the UK, individuals give on average 0.5 to 0.8 per cent of their investable assets to charity. In the US, investors give up to 3.5 per cent of their annual assets.

Coutts says this is partly due to the tradition of charitable donations, differing tax systems and the sophistication of US fundraising schemes.

Several high-profile individuals are now trying to promote philanthropy in the UK through a campaign titled Legacy 10.
Its aim is to persuade the wealthiest members of society to leave at least 10 per cent of their estates to charity.
Such “clubs” are already established in the US, where mega-donors – such as billionaire investor Warren Buffett – encourage their peers to donate half of their wealth in their lifetime. But the impact of the economic slowdown is expected to maintain downward pressure on giving.

“We think that, in the years directly after the financial crisis, donors were still honouring pledges they had made in the years preceding it,” says Beth Breeze from the Centre for Philanthropy, Humanitarianism and Social Justice at the University of Kent. “Now we see donors approaching things a little differently.”

In straitened times, charities are becoming more imaginative in their approach to fundraising.
Social impact bonds, already used by public institutions to raise money from private investors, are being utilised by the charity sector to gain revenue.

Scope, the disabilities charity, has entered capital markets with a £20m bond issue on the Luxembourg-based Euro MTF stock market, designed to pay for new retail and fundraising operations.

“The charity bond programme operates in a similar way to the corporate bond products,” says Geoff Burnand at Investing for Good, which set up the bond.

“Charities using the programme will be able to issue tranches of debt at varying amounts, maturity dates and coupon rates which gives them certainty over their cost of funds and away from dependencies on irregular donation flows.”

Government “matching” schemes have also proved successful. Support for higher education was boosted by a scheme that promised to match any contribution from an individual to a university.

‘Thankyou’ is not the hardest word

Today I finally heard some common sense from the Manchester gathering of Tories, as Ed Vaizey MP told his party conference that charity chief executives have to roll their sleeves up and get properly involved in the tough but essential job of raising the funds that keep their organisations going.

It reminded me of an American I met when working at the Institute for Philanthropy, who told me about a dinner party in London where it seemed more acceptable to discuss the BO of the person she was sat next to, than to ask them about their charitable giving.

The British cultural problem with money encompasses donations as well as earnings, and extends to the most curious places, including the colleagues of fundraisers who manage to persuade themselves that raising the income to keep the charity going (never mind to keep their salaries being paid) is not their job and therefore nothing to do with them. I remember asking a colleague for help with approaching a tricky but valuable prospect – he refused, despite agreeing it sounded a tough job, and offered the sage advice: “but hey, that’s fundraising!” I made a mental note that not a penny of any income raised from that source should be used for his projects!

Sadly Mr Vaizey went on to rather spoil his message by churning out the usual nonsense about charities being useless at thanking and recognising donors. I’m sure a few are, but on the whole charities (or more to the point, their fundraisers) work extremely hard to ensure that donations are promptly and properly acknowledged, and donors are thanked in as proper and personal way as funds allow. But it’s one of those classic damned if you do/don’t scenarios – for every donor who feels unappreciated by their chosen charity, there’ll be another who thinks its a horrendous waste of money to be sent any sort of follow-up communication after their gift.

I simply don’t believe that none of the charities supported by Mr Vaizey have failed to engage or thank him, and I wish he had balanced his remarks by sharing examples of good donor care. These are tough times for charities and we need helpful policy support, not populist, crowd-pleasing posturing.

Learning to love ‘appalling’ and ‘quease-making’ philanthropists

Today is my first day back at work after a blissful 8 months of maternity leave. I’ll miss hanging out with little Meredith but am also delighted to be back in the wonderful world of philanthropy.

Towards the end of mat leave, this bliss was slightly punctured by coming across yet another anti-philanthropy rant in my newspaper of choice, the Guardian. Columnist Zoe Williams is not a fan of rich people giving their money away to good causes. She writes that philanthropy ‘appals‘ her and that philanthropists maker her feel ‘queasy‘. But the stand-out phrase for me is when she writes: “I object to high-net-worth philanthropy in principle”. What, all of it? Every instance of someone with resources choosing to use it to help others, rather than to help themselves?

I couldn’t resist firing off this letter to the Editor which also questions her assertion that “inequality is a precondition of this kind of lavish spending”. I think of ‘lavish spending’ as being about buying jewels or a massive yacht, rather than education for poor kids, but maybe that’s just me.

The problem with this sort of column is that regular use of words like ‘unpleasant’, ‘vulgar’ and ‘obscene’ to refer to rich donors, impacts on the decisions of the wealthy about whether, and how much, to give away. As Theresa Lloyd’s study of ‘Why Rich People Give’ shows in these quotes from potential donors:

“Why are the media nasty? They don’t do good news. They are snide and they pander to jealousy. The obituaries of philanthropists are nice but during their lifetime journalists dig. There’s nothing to be done” (Lloyd 2004, p.232)

“Reforming the press is a hopeless cause. We won’t be able to change their negative approach. You need to accept from the outset that whatever you do will be rubbished in newspapers” (p.234)

Many Guardian readers will have enjoyed Williams’ rant, because in the UK many people conflate ‘philanthropist’ and ‘tax dodger’, and make assumptions that all fortunes have dubious origins. Tell that to the recipients of Anita Roddick’s massive charitable legacy, who benefited from the wealth created by her ethically-sourced peppermint foot cream.

First day back at work and I’m already drafting plans for my next research project: ‘How can the UK learn to love philanthropists?’.

Jimi Heselden, multi-million pound philanthropist, R.I.P.

I was very sad to read about the untimely death of UK philanthropist Jimi Heselden, in a tragic accident yesterday.

Mr Heselden kindly agreed to appear in a case study in the 2009 Coutts Million Pound Donors report, to talk about his path from poverty to philanthropy.

He  had a fascinating story to tell of  a man who was born and brought up in a poor suburb of South Leeds (which is also my home city), and who wanted to give something back when he became a successful entrepreneur. He told me, “I feel a very strong connection to those parts of that city. I’m interested in giving other people a chance to get on in life”.

He also said, “when I make a decision, I like to act fast” and was more than true to his word. Within just 4 days of meeting the chief executive of the Leeds Community Foundation, he made an initial donation of £10m, and I’ve read that his total philanthropy has since exceeded £20m.

His case study ended with these words: “What’s most important to me is knowing that so far I’ve been able to help out 61 good projects in parts of Leeds that mean something to me, and knowing that the money I’ve got banked in the Community Foundation means I can carry on giving something back by supporting many more local projects in the future”.

It’s terribly sad that Jimi Heselden won’t be around to see the difference his generosity will make, but his decision to share a big chunk of his wealth will be felt far into the future and the ongoing impact of his philanthropy will hopefully bring some comfort to the loved ones he has left behind.

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.

A wizard of a £10m philanthropic gift

In today’s news we learn that Harry Potter author JK Rowling is giving £10 million to the University of Edinburgh to fund a new research clinic investigating Multiple Sclerosis (MS) as well as other degenerative neurological conditions, such as Alzheimer’s, Parkinson’s disease, Huntington’s disease and Motor Neurone Disease.

The clinic is to be named after her mother – The Anne Rowling Regenerative Neurology Clinic – who died from complications relating to MS at the age of 45. Interestingly, JK Rowling herself turns 45 this year, proving yet again that our philanthropic choices are directly linked to our autobiographies. As our recent research on How Donors Choose Charities illustrates, it is donors’ personal experiences, rather than objective assessments of needs, that are the prime drivers of giving and philanthropy in contemporary UK society.

It’s also interesting that this donation has been given to a university rather than to one of the MS charities. Our annual study of charitable donations worth £1m or more, finds that Higher Education Institutions are by far and away the most popular destination for these largest of gifts. Universities receive around 40% of the total value of ‘million pound donations’, a far larger slice of the philanthropic pie than any other type of beneficiary: the arts and culture sector receives just under 30%, international aid and development receive around 13% and no other cause is on the receiving end of more than 10% of the total value of £1m+ gifts.

In the 2009 edition of the report, we quote Joanna Motion from CASE (Council for the Advancement and Support of Education) who explains why universities are so popular amongst the richest donors. She says, “donors see universities as the places where we have the best chance of  tackling the big challenges facing society… They are robust, here for the long haul and used to managing large and complex projects”.

It appears that universities have the edge on charities in attracting the biggest donations because donors have more faith that their money will be well managed, well spent and result in meaningful impact. And that’s a magic combination for any type of donor, not just Harry Potter’s creator.

Why incentives for organ donors matters to fundraisers

I haven’t blogged in a while as life, work and (finally) summer have got in the way. But I can’t resist writing about today’s news story that proposals are on the table to create financial incentives for organ donors.

It is tragic that so many people die waiting for a transplant, and I entirely support the suggestion that donating become ‘opt-out’ rather than ‘opt-in’, which enables people to retain control over their body parts whilst ensuring that the majority, who are quite happy to see their organs used by someone else after death, are not foiled by having not got round to joining the donor register. But I’m not at all sure about the impact, or effectiveness, of offering inducements to nudge people towards making the decision to donate organs.

I got started studying charitable giving as a result of reading a wonderful book by Richard Titmuss called ‘The Gift Relationship: from human blood to social policy’. Published in 1971, Titmuss compares the blood donor system in the UK, where donors make a ‘free gift’ of their blood, with the system in the US, where donors are paid to donate. He concludes that the UK system produces healthier blood, as people are not incentivised to cheat by making excessive numbers of donations or attempting to sell infected blood. But, perhaps more crucially in the context of those of us trying to encourage charitable giving, he wrote that the importance of a voluntary national blood service lies in the fact that very few opportunities exist in modern, technical, large-scale organised societies for ordinary people to act altruistically outside their own networks of family and friends. He therefore concludes that we must maintain a voluntary, rather than incentivised system for donating blood (and, by extension, for donating organs) because it is important to create and support structures in our society that allow and encourage people to demonstrate generosity to strangers.

The voluntary giving of blood and organs is part of a wider set of norms regarding the exchange of significant gifts between strangers that fundraisers rely upon. We draw upon that tradition every time we ask someone to give away some of their private wealth to support the public good. I do hope that any changes to encourage organ donation do not end up threatening the concept of free gifts in our society.

It’s not the money, stupid

Popes, catholics, bears and woods all came to mind when reading a recent article in the Wealth Bulletin. Apparently,  a new survey finds that a quarter of people defined as Ultra High Net Worth (UHNW, translation: the super-duper rich) say donating to charity is not key for them. According to the author of this survey, “They prefer either to invest their money or spend it on luxuries for themselves and family, but giving it to others less advantaged than themselves is not an important part of their lives.”

The notion that the rich automatically give, and that the poor can’t afford to, is frustratingly widespread and utterly wrong. Anyone who has tried to raise funds knows that the capacity to give is not the same thing at all as the desire to give. Money is a necessary, but not a sufficient, factor behind philanthropic decisions.

People don’t make donations just because they can afford to. If that were true then every rich person would be a philanthropist, and every fundraiser who met a rich person would walk away with a big cheque. And if there were a direct, causal link between money and donating then people on low incomes would not be so generous, yet we know that the poorest 10% actually give away more as a percentage of their income than do the richest 10%.

The UHNW people in this survey presumably know that they have money to spare, but a quarter of them do not yet know why philanthropy would be a good use of their money, how their donations would make a difference, and that they might even get a bigger kick out of helping others more than purchasing further luxuries for themselves and their loved ones.

So let’s stop being surprised that wallets don’t open automatically, and remember that people give because:

  • they think the cause is important
  • they feel good about supporting a particular charity
  • they trust the leaders of the charities they support
  • they are passionate about making something happen
  • they want to be part of a charity they admire
  • they enjoy meeting other donors
  • they couldn’t live with themselves if they didn’t

So it’s not really about how much money you have or don’t have. Whether rich, poor or even UHNW, it’s about knowing what needs exist, being asked properly to help, believing the donation can make a difference and being able to enhance our own lives at the same time as trying to improve the lot of others.

All kinds of charities have the X factor

Have you heard that this year’s beneficiary of the X Factor charity single is an organisation working with parents in prison, and that they were chosen after narrowly edging out competition from a befriending scheme for asylum seekers and a project that provides protection for female sex workers? No, of course you haven’t heard any such thing because it’s not true. This year’s X Factor charity single will raise funds for the Great Ormond Street Hospital (GOSH), the 150 year old London-based children’s hospital that provides world-class care for young patients and their families. GOSH is a great charity, it meets important needs and its successful fundraising is admired by many, including me. But isn’t there something wearily predictable about it being chosen as the beneficiary of this Autumn’s blockbusting celebrity fundraiser? What about other causes in greater need of a boost in funds and raised profile, including those that meet more complicated needs and can’t offer such appealing photo shoots?

Of course, the X Factor is not the only corporate behemoth to pick a less-than challenging recipient for its fundraising efforts. Many organisations look for charity partners that offer a ‘halo effect’ in which their positive connotations are transferred to the company, their staff and customers. But this approach results in the exclusion of many excellent charities from such fundraising opportunities because their ‘face’ does not fit the corporate image, their beneficiaries do not command widespread appeal or they fail to evoke a ‘feel good’ factor.

Particular obstacles lie in the way of charities whose clients are perceived to be in some way responsible for their situation. Research shows that donors tend to favour charities whose beneficiaries are perceived to be disadvantaged for reasons outside their control: the more ‘innocent’ the victim, the stronger our desire to help. So what chance do charities working with prisoners, substance abusers or other ‘unpopular’ causes have, when pitched against fluffy puppies and sick kids in head to head popularity contests?

There are tens of thousands of charities doing good work across the UK, helping all kinds of people and doing great work to support a much wider range of causes beyond the typical focus on ‘kids, kittens and cancer’.  Wouldn’t it be nice if Simon Cowell and co recognised they also have the X Factor?

Do fundraisers raise funds?

It sounds like a rhetorical – or even facetious – question, but I’ve been thinking recently about the role that fundraisers play in raising funds for good causes. I started my career as a fundraiser and I think it’s a fantastic profession full of dynamic, inspiring and hardworking people who are doing their best, often on minimal budgets, to keep great organisations afloat.But in my current role as a researcher I’ve been interviewing donors about why they choose to support charities, and they rarely mention any interventions by fundraisers. The stories donors tell about what attracted them to a cause and their reasons for sticking with it usually centre on internal impulses – their own passions, concerns, empathy etc – or the urging of loved ones and associates to make a donation.

Yesterday I was reminded of this disparity between the official role of fundraisers as the expediters of donations and donors’ accounts that write fundraisers out of the picture. I went online to make a donation to the emergency response to the recent series of disasters in the Asia Pacific region . At one stage in the donation process I was asked to select from a list of 16 options to conclude the statement ‘I am making this donation because…’. I looked in vain for an option that related to my vague desire to ‘do something’ in response to the scenes of misery filling the TV news. But 12 of the 16 options that appeared in the drop down list were variations on the theme of being asked by a fundraiser (eg. ‘I saw an advert’, ‘I read a leaflet’, ‘I spoke to a fundraiser’) and none of the other 4 options were accurate (I wasn’t memorialising a loved one/celebrating a birthday/participating in a workplace scheme).

It is clearly unfair and untrue to write fundraisers out of the picture, yet this list assumed that funds are only raised as a result of such prompts.

Perhaps it doesn’t matter much; so long as funds are raised who cares who gets the credit? But if we are serious about creating a culture of asking to complement our culture of giving, then I suspect the fundraising profession needs to take two seemingly contrary steps. Firstly, it needs to remind donors that their impulses are often inspired, nurtured and sustained by the efforts of people working in fundraising departments. And secondly, it needs to recognise that people can make a decision to give without having been on the receiving end of any specific appeal.

Ballot Box Benevolence

About 10 years ago I was asked to contribute to a London radio discussion about whether or not people who play the National Lottery should get any say in which charities benefit from lottery money. It was an interesting debate to be part of, because my natural instincts in favour of ‘people power’ conflict with a fear that going down that path would unfavourably affect charities that work with ‘unpopular’ causes and beneficiaries. Who would vote for organisations that work with prisoners or asylum seekers or do research into medical issues that affect only a tiny percentage of people, but are in no less need of lottery funds than more popular causes like animal welfare, children and cancer research? We chewed over the pros and cons of this approach on air, but the wind was already blowing in the direction of public participation.

In the subsequent years, a portion of lottery money has indeed been influenced by public votes, including funds for heritage causes allocated via the TV programme ‘Restoration’ and funds allocated to regional organisations as a result of the ‘Peoples Millions’ scheme, which has so far distributed £18 million.

Another type of fundraising that sometimes uses popularity contests to pick recipients is corporate ‘Charity of the Year’ partnerships. There are 3 reasons this is a sensible approach:

(1) The staff and customers will be asked to get involved in fundraising so it is reasonable that they help to choose the cause that will benefit from their efforts, rather than it being selected by the chairman or a director.

(2) A good ‘fit’ is a pre-requisite for success in corporate partnerships; they rely on a natural empathy between the charity and company. Employees and customers are more likely to be enthusiastic and generous to a cause they have chosen.

(3) Voting has benefits for the employer as it can engage staff and enhance customer loyalty, and it has benefits for the short-listed charities who may pick up new supporters during the pitching process, even if they are not ultimately chosen.

But I still have doubts about using democratic procedures to decide which charities get support. What about those excellent organisations that are effectively excluded because their face doesn’t fit the corporate image, their beneficiaries don’t appeal to a majority of the electorate or they fail to evoke a ‘feel good’ factor amongst enough customers? I’ve written more about this in the current edition of Professional Fundraising magazine which you can access here 

What do you think? Is it right to introduce democracy into fundraising or is ballot box benevolence fatally flawed?

Philanthropists’ secret plans to save the world?

A number of different news outlets are reporting that a group of the most prominent US philanthropists met in secret earlier this month. The meeting was allegedly convened by Bill Gates and Warren Buffet, and attendees are repoted to have included pretty much all the top names in US philanthropy, including Ted Turner (the first billanthropist) George Soros, Oprha Winfrey, Michael Bloomberg and David Rockefeller. According to the Chronicle of Philanthropy, the attendees have collectively given away over $72 billion since 1996.

Everything about this meeting is fascinating for philanthropy-watchers. What ideas did they share? Might it lead to new collaborations? Might it lead to new recession-busting donations? And for UK based philanthropoids, the questions also include – could this happen here? Who’d attend? What would their collective donations amount to?

Perhaps the government’s new Philanthropy Ambassador, Dame Stephanie Shirley, is the woman who could repeat this exercise in the UK? Mind you, the US meeting was kept secret for weeks, wouldn’t it be nice if similar secrets were about to be spilled on this side of the pond?

The best donor is a living donor

Just read a nice story on the BBC News website about Northumberland millionaire Brian Burnie’s decision to sell his country pile and give all the proceeds to charity. Describing his decision to divest himself of his biggest asset whilst he and his wife still need a place to live, he says:  “We won’t exactly be selling the Big Issue but we will be downsizing.”

Burnie clearly understands the attractions of giving it all away whilst you’re alive rather than waiting ’til you’re dead and doing it in a legacy. He’s right of course, it’s more meaningful to donate whilst you’re still around and it’s more fun – charities can’t be nice to dead donors or show them what difference their support made. (Though as the Chair of the first organisation that I fundraised  for pointed out, you rarely get dissatisfied legacy donors!). But perhaps most crucially – and as others have pointed out – a charitable gift made in a legacy is really a gift from the descendants not the donor, who has no further use for that money.

‘Giving whilst living’ is a phrase you hear quite often in the US, but only a few UK donors have spoken openly about doing this, foremost amongst them being David Sainsbury, whose efforts to spend out the entire balance of his Gatsby Foundation have seen him become the UK’s first billanthropist

So well done to Brian Burnie, here’s hoping he inspires other UK donors to follow suit.

Is the 50% tax rate good or bad news for givers?

Since the Budget announcement that higher rate tax is rising to 50%, those of us who research giving have been bent over calculators trying to work out the implications for donors.

There’s been 2 types of response. Pessimists say, “people will feel poorer and pissed off at paying more tax so will donate less, aggravating any recessionary effect”. Optimists say, “giving just got cheaper – higher tax means higher tax relief, which could counter any recessionary effect.

So who’s right? In my experience – as both a fundraiser and a researcher – tax issues are not deal-makers or deal-breakers, but they are awfully handy for post-hoc rationalisations. Non-donors often say “I pay enough tax and have nothing to spare”, or “My tax is my donation to the greater good”. Some even blame the tax system for being too complicated:“I’d give more if I understood how the tax reliefs work”. 

I used to have no sympathy with that ‘tax breaks are complicated’ view. Under the Gift Aid scheme, so long as you’ve paid enough tax that year, all your donations are eligible for full relief. How complex is that? This proposition was once beautifully illustrated by an animal charity that sent supporters a leaflet showing a basket of 3 kittens that had benefited from their donation. The donor lifted a flap to reveal a 4th kitten which the donor could help simply by signing a Gift Aid form. But post-Budget, the depths of my innumeracy have been revealed and I too have struggled to calculate exactly how many kittens, or parts of kittens, will benefit when tax rates rise by 5 or 10%.

So I turned to the most financially astute person that I know, Professor Gareth Morgan of Sheffield Hallam University, who supplied these calculations and agreed I could share them:

Standard position for a 50% taxpayer – A £1000 net donation is worth £1250 to the charity with basic rate tax reclaimed but £1282 including the gift supplement (until 2011). The gross value of the gift is £1250 and the donor on 50% tax thus get an extra 30% personal relief = £375 (50% – 20%) . So the net cost to donor is £1000 – £375 = £625. So a gift which costs the donor £625 is worth £1282 to the charity – ie. the value to the charity is 205% of what it costs the donor!! Or conversely a donor who wants to fund a major item for a charity only has to sacrifice 48.75% of the final cost – i.e. £1m to the charity can be given at a cost of £487K to the donor.

Gareth concludes: This must be the best charity giving tax break anywhere in the world!

And if those figures didn’t make you dizzy enough, he adds:

If the donor is clobbered by the tax relief on pension contributions being limited to 20%, a donation to charity is much more tax efficient than a pension contribution – this is a completely new phenomenon. Also, however, the a large gift aid donation may have the effect of keeping the donor’s net taxable earnings closer to £150K and hence they may still get better relief on pension contribs than otherwise. Also for donors just over £100K taxable income in the band where the personal allowance is lost (£100K to £112K) the benefits of gift aid are phenominal.  The person is effectively on a marginal tax rate of 60% but a decent gift aid donation could keep them out of that.

Is it time to put the calculator back in the drawer and start spreading the good news to donors that pay higher rate tax?

The Giving List matters more than the Rich List

Today’s newly published Sunday Times Rich List 2009 is getting lots of press interest for all the wrong reasons. Widespread schadenfreude at the news that the 1,000 members have collectively lost £155 billion in the last year means there’s been no media space left to talk about what really matters: that despite the dramatic falls in wealth, the amount they are giving away continues to rise. To be precise, the 37.5% fall in wealth of the list members was accompanied by an 8% rise in giving.

Now admittedly there’s one methodological glitch in the otherwise admirable Giving List, which is the annual account of the philanthropic activities of our society’s richest members. For some reason, the compilers include pledges as well as donations that have been actually made. So, in 2008, Tom Hunter found himself at 3rd place on the Giving List due to his pledge to give away £1 billion in his lifetime. The figure £1,050,000,000 even appeared in the ‘recent donations’ column of the Giving List table – but that pre credit-crunch pledge means it’ll take an awful lot longer to hit the admirable £1 billion target.

So it seemed reasonable to anticipate the Rich List compilers would have quietly changed tack and not counted pledges anymore, when this one blew up so quickly. But in the new list, there in the no. 2 spot, is Lord Ashcroft, on the basis that he has pledged to leave 80% of his £1.1 billion fortune to charity upon his death. At least Hunter is still planning to give away his billion during his lifetime. Making your biggest financial donation after your death is surely more of a gift from your descendants than one that affects your own lifestyle?

But, without the Giving List we’d know next to nothing about the charitable acts of the wealthiest, so it is still very much three cheers for compiler Alastair McCall. It’s just a shame we’re more interested in luxury lifestyles and falling fortunes than in generous givers.

Which UK newspaper has the best philanthropy coverage?

Today’s Financial Times carries a letter from me , responding to a column they published last weekend, expressing a pessimistic outlook for philanthropy in the recession. So of course I’m momentarily biased. But for as long as I’ve paid attention to these things, I reckon the FT has provided the most extensive and thoughtful coverage of philanthropic issues.

It pains me to say that, because I’m a Guardian girl myself, but my favourite paper lets me down in this respect. They either assume philanthropy is a necessary evil due to an under-funded welfare state or is a plaything of ego-centric millionaires, both views being regularly espoused by star columnist Polly Toynbee. Indeed, in her book ‘Unjust Rewards’ (co-written with David Walker) philanthropy is described as ‘mere ostentation’, ‘a passport to the in-crowd’ and ‘another way of exerting power and control’.

The most jaw-dropping example of negative media coverage also appeared in the Guardian, courtesy of columnist Michelle Hanson who responded to the news that Bill Gates had committed over $30 billion to tackle global health problems, by writing on 28/11/06:

“Bill Gates is giving millions to charity. So? Why not? What else could he possibly do with all his money except coat himself in treacle and roll in banknotes?”

One of the reasons I’m drawn to studying philanthropy is because of this gulf between public opinion and donors’ own account of their actions. In essence, it seems that, whilst philanthropists tend to emphasise the altruistic, selfless and public nature of their acts, the media tend to emphasise the egoistic, self-serving and private benefits of their acts.

But this weekend – which brings news that David Sainsbury is the first Brit to donate £1 billion to good causes – wouldn’t it be nice if both the left-wing and right-wing press could focus on the positives, that people are willing to use their private wealth to fund public goods, and leave the negative stereotypes behind for once?

 

Will the 50% tax rate attract or deter rich donors?

Inevitably – it being the day after the Budget – we’re now fielding calls from journalists asking what difference it all makes to donors. One common question is: “will the new 50% tax rate attract or deter rich people from making donations?”.

The reason it could be construed as attractive is because all donations are eligible for tax relief, so the more tax you pay the ‘cheaper’ it becomes to give. A non-tax payer has to spend £1 to give £1, a standard rate payer only needs to give 80p for their chosen charity to receive £1 (the donation + the 20% tax relief), and the new highest rate tax payers will only have to pay 50p to give £1. In effect, the public purse will match-fund the donations of the richest.

The reason it could be construed as a deterrent is that someone paying 50p in the pound on tax, may feel they’ve contributed enough to the common good and be less willing to consider giving away a portion of what they have left.

The research says that neither outcome is inevitable, because tax relief is not a particularly significant factor in people’s decision to give, though it can affect how much they give. Hearing that it is now 5% cheaper to make a donation, will not turn a scrooge into Mother Theresa overnight. But when donors understand the tax breaks that are on offer, it can encourage them to raise the value of their gift. Someone planning to donate a few hundred thousand pounds might be tempted to go as high as £500k once they understand it could turn into £1m with a flick of the chancellor’s wand.

But the key finding from the research is that people give in order to make something that they think is  important happen, to get satisfaction and enjoyment, to bring meaning and significance to their life, and to create a lasting impact and legacy that they and their loved ones can be proud of. So any fundraiser thinking that 5% here or there is going to suddenly attract or repel hordes of donors is probably mistaken – but offering a vision that is 5% more exciting, or promising 5% better outcomes, might well do the trick.

Do gloomy economists encourage people to stop giving?

Media coverage of philanthropy matters because it sends a message that the topic is important and worthy of national debate. The Financial Times has long been one of the best papers to cover philanthropy, and last Saturday they had a piece cheerfully entitled: ‘Even in a recession, giving can go up as well as down’:

http://www.ft.com/cms/s/2/141f425e-27d4-11de-9b77-00144feabdc0.html

But the piece goes on to describe 3 different types of motivation: ‘pure altruism’, social pressure and those who do it to feel good and get a ‘warm glow’ – and argues that only altruistic givers will increase their donations during a recession. Despite the cheery headline, it gloomily concludes, “All the economists I spoke to were pessimistic about the outlook for charitable giving in a recession”.

Glad as I was to see the piece in print, it seems to me the FT focuses on individual donor motivations at the expense of recognising other significant  factors, especially the norms that we hold as a society about giving. Since the year 2000, a huge amount of effort and public money has been spent on building a ‘culture of giving’ in the UK. The central thrust of government policy is encouraging people to think of supporting charity as a perfectly normal, even obligatory, part of life, as it is in the USA. Living in a society in which giving is “what everyone does” and is a simple, routine habit, can counter-balance, or even outweigh individual motivations.

But the opposite is also true – a society that’s pessimistic about the outlook for charitable giving and insists that donations will inevitably decline risks promote the opposite norm: “everyone else is cutting their donations, so I will too”. 

As I’ve said before, the current economic situation is clearly dire, but publicly panicking risks creating a self-fulfilling prophecy and even talking ourselves into a giving recession.

Of course charities worry about not having the resources they need to do their good work. But the research shows that there isn’t a straightforward relationship between economic conditions and the amount of philanthropic spending that takes place. People don’t make donations just because they can afford to do so; if they did then every rich person would be a philanthropist, and unfortunately they’re not!

Contrary to the reductionist approach taken by many economists, as depicted in the FT, philanthropy is not simply a financial transaction. It is first and foremost a social act that enables individuals to create and communicate a positive identity, whilst meeting their own need to live a successful, significant and meaningful life that is affirmed by others.

Despite the tough times we are in, people still have a need to look good, feel good and do good, so there is no reason to assume that the new age of philanthropy will not persist.

Britain’s got Billanthropy

If sneak previews of the forthcoming Sunday Times Rich list are to be believed, this coming Sunday will confirm that (Lord) David Sainsbury has become the first Brit to give away a billion pounds to charity.

Ted Turner started the billanthropy ball rollling in 1997, when he pledged $1 billion to support the United Nations. Since then, the US has seen a number of billion dollar donors, notably Bill Gates and Warren Buffet who each committed over $30 billion to the mammoth Bill & Melinda Gates Foundation. So why has it taken this long for a Brit to join the billanthropy club?

It’s true that a million pounds sterling still goes a bit further than a million dollars, but once you reach this level of giving, it does seem that the idea of ‘a million’ or ‘a billion’ has a cultural significance of it’s own, that defies exchange rates. There’s some sort of resonance involved in giving those sums that £990,000 or $990,000,000 just don’t have.

This is why we decided to launch our research centre with a study of Million Pound Donors, collating and analysing data on every UK donation worth £1 million or more. That report is still available at http://www.kent.ac.uk/sspssr/cphsj/research/couttsmilliondonor.html 

In the charity sector people easily understand why we picked £1m as the figure on which to base our study, but in academic circles we risk being accused of picking an arbitrary figure – “what’s the methodological defence for excluding donations of £999k and including those of £1m and 1p?”. This is a good example of ivory tower-itis (every fundraiser knows the difference between a big donor and a million pound donor), but we do have an argument up our sleeve. We are replicating the very successful ‘Million Dollar Donor’ list run by Indiana University in the US for many years. Building on established research is, apparently, more ok than building on fundraising common sense. But mention of the million dollar list reminds us that in the year covered by our first report (2006/07), when we found 193 donations worth £1m or in the UK, our colleagues in Indiana found thousands of $1m+ donations.

So we should definitely cheer the news that UK philanthropy has it’s first member of the billanthropy club, but we shouldn’t expect anyone across the pond to be especially impressed.

Measured media coverage and time for smaller charities to thrive?

Delighted that the Radio Devon discussion was more balanced than much media reporting of the effect of the recession on giving. The host, Pippa Quelch, gave fair airtime to both the doom ‘n’ gloom charities and the more measured approach that says, let’s not panic but keep fundraising hard and creatively. I argued strongly that we shouldn’t under-estimate donors’ commitment to their favoured causes, and that it’s a mistake to assume they’ll drop their donations before making other adjustments to their household spending.

The representative from the RSPCA was generous in her concern for the less well-known animal charities, who lack the brand recognition that her charity enjoys and – she felt -would suffer even more in a recession. But in my research I speak to many donors who prefer the smaller, local causes where they know the people involved and can see for themselves what good they’re doing. Some make a conscious decision to boycott the big brands because they assume they are particularly wasteful in terms of overheads or simply don’t need their money. So perhaps increasing goodwill towards local charitable organisations can help them keep afloat during these difficult times.

Obama helps to launch Kent Philanthropy Centre blog

To mark the launch of the Kent Philanthropy Centre blog, the White House has revealed details of Barack Obama’s charitable giving http://www.whitehouse.gov/blog/09/04/15/Release-of-the-President-and-Vice-Presidents-Tax-Returns/

In the last tax year, when the Obamas’ joint income was $2.7m, the president gave away $172,050. At 6.5% of his income, that’s far higher than the average American donor, who gives about 2% of their income, and nearly ten times as high as the average UK donor, who gives nearer 0.7% of their income.

But philanthropy is not just a numbers game. The spotlight on presidential giving may explain the higher amounts involved, but just like Joe & Josie Donor, Barack Obama has to pick which causes to support out of the more than a million charitable organisations in the US that would love to receive his endorsement. It turns out that 37 lucky charities won the president’s greenbacks as well as his backing. His two biggest gifts, of $25,000 each, went to global humanitarian agency CARE and to the United College Negro Fund. Interesting to see that this prominent US donor fits the pattern we identified in our ‘Million Pound Donors Report’, available at http://www.kent.ac.uk/sspssr/cphsj/research/couttsmilliondonor.html where we found that the richest givers and major donors prefer giving to higher education and international development, as well as to health causes and their own foundations. Obama’s choice of causes that bear upon his own life experience is also typical, as philanthropy research shows that (contrary to popular assumption) giving is led more by donor interests than by beneficiary needs.

Wouldn’t it be nice to know if our own political leaders fit the profile of major givers? Any chance that No.10 will tell us how much Gordon Brown gives and to which causes? I’m sure 166,000 UK charities would like to know if they receive his personal backing, as well as his regular warm words of support.