Current giving, philanthropy, and the shaping of Big Society

Current giving, philanthropy,and the shaping of Big Society Cathy Pharoah, Co-Director, ESRC CGAP

Private action, public benefit?Current policy context - a new focus on the relationship between private individual decision-making/preference and meeting public needsClassical economic approach to private philanthropic action - individuals step in to provide public goodswhere governments failRecent governments – examples of measures to support private action for public benefit a) modernisation/ extension of charitable tax reliefs (Lawson, 1988-1990) b) ‘Private action, public benefit’ (Strategy Unit Consultation, 2002) ‘to modernise charity law and status to provide greater clarity and a stronger emphasis onthe delivery of public benefit’Flies in the ointment- ‘impure altruism’ and crowding out theory (eg Andreoni, 1990)- limited evidence of redistributive effects – US research, Clotfelter (1992) and Reich (2005): UK; recent ‘charity deserts’ work (eg Mohan, CGAP) www.shaw-trust.org.uk

Need for a nudge‘Libertarian paternalism’ (Thaler and Sunstein, 2008) ‘……Free to choose…..but we argue for self-conscious efforts, by institutions in the privatesector and also by government, to steer people’s choices in directions that will improve their lives ‘.…in many cases individuals make pretty bad decisions – decisions they would not have madeif they had paid full attention and possessed complete information, unlimited cognitive abilities andcomplete self-control’.Giving Green Paper (White Paper due 23rd May 2011) – ‘…….Big Society ambition……a country in which people are in more control, supported topursue their collective and individual goals, and are less reliant upon the state’ ‘……paper is about how we can increase levels of giving and mutual support in our society andcatalyse a culture shift that makes social action a social norm.’ ‘…….people giving what they have…to support good causes and help make life better for all’.Is ‘supporting good causes’ enough? How far can/ will private philanthropy fill gaps in meeting social www.shaw-trust.org.ukneeds which emerge as government expenditure reduces?

Review of the current private giving andphilanthropy* landscape - some key featuresRecent trends in current philanthropy:the organisations currently soliciting private supportthe private giving cakerecipients of private givingprivate donorsNew needs, demands, and big society issues*philanthropy is used to refer to the wider context of philanthropicaction, within which private giving is one element www.shaw-trust.org.uk

The philanthropy-seeking sector?Registered charity sector has doubled in a decade, £24 billion - £52 billionPlus charitable quangos and major cultural institutions which do not report to Charity Commission, but may be major fundraisersNon-registered voluntary associations/ community groupsSocial enterprise sector (eg CCI, IPS, Credit Unions)Tax-exempt entities (universities, Brownies)Housing associationsIndependent SchoolsBig Society? www.shaw-trust.org.uk

Philanthropy cake Billions (estimated) 0.5 Companies (cash) 1.1 HRT/ Mass Affluent 1.7 UNHW 2.0 Legacies 2.4 Foundations 9.5 General Public £1 + Gift Aid Tax Reclaim TOTAL = 18.2…ish! www.shaw-trust.org.ukSources: McKenzie and Pharoah, www.cgap.org.uk/uploads/TaxAndGiving.pdf; UK Giving 2010 (CAF/NCVO); HMRC Table 10.2, 2010; Legacy Foresight 2010; Sunday Times Rich List, 2011

What gets the Community devt/ Benevolent Elderly biggest slice regeneration Youth/ leisure of our giving* Service/ex-service Educn/professional cake? Health Inf/ Research Chest and Heart International Arts and culture General soc welfare Cancer Envt/ Conservation Religious (welfare) Children Animal welfare Disability, deaf, blind, mental health Religious (International) Religious (mission) Hospices/ hospitals*Includes individual, corporate, private trust and legacy giving www.shaw-trust.org.ukSource: Pharoah, Charity Market Monitor 2011, CaritasData (forthcoming July 2011)

Which Elderly Benevolentfavourite Chest and Heartcauses get Community devt/ Religious (welfare)the biggest regeneration Cancerslice of the Service/ ex-service Health Inf & Research General soc welfarestatutorycake*? Religious (Internl) Arts and culture Hospices/hospitals Envt/ Conservation Children/ youth/ Educn/ professional leisure Disability, deaf, blind, International mental health*Animal welfare and religious missionary causes have disappearedSource: Pharoah, Charity Market Monitor 2011, CaritasData (forthcoming July 2011) www.shaw-trust.org.uk

The donors - trendsLong-term study –‘The New State of Donation – Three Decades of Household Giving to Charity1978-2008’ (www.cgap.org.uk/uploads/reports/The new state of donation.pdf)Participation in givingongoing 30-year decline from 32% to 27% in participation (halted c 2000?)participation declined steadily in all age groups BUT the over 60s (except very recently in 20-25s)participation grew steadily amongst over 65spositive link between age, income and participation growing stronger over timeIncrease in donor giving and generosity, but no change in general population giving over 30beyond parity with increase in general expenditure www.shaw-trust.org.uk

Average donations by GB households millennium effect Asian tsunami donor population total population www.shaw-trust.org.uk

‘Generosity’Income and amount givenpositive link between growing stronger over time‘generosity’ increased among donors, though not population as a wholepoorer households continue to donate a higher % of income, but decreasinglylikely to giveAge and amount givenshare of total giving contributed by over-65s grew from 24% to 35%the gap between older and younger households widened, and by 2008 olderpeople were devoting 3% of their spending to charity, compared with 2% at thebeginning.this is largely due to their increased spending power(www.cgap.org.uk/uploads/BriefingPapers/CGAP BN7 How generous is the UK.pdf) www.shaw-trust.org.uk

millennium effect 1.9% 1.7% 1% 0.4% 0.4% 0.4% 0.3% www.shaw-trust.org.uk0.2% of expenditure on potatoes and 0.4% on cheese in 2008

www.shaw-trust.org.uk

Donor preferences and differential influence oncauses supported – some illustrationsDifferences between what wealthier and less wealthy donors support eg Bigger gifts favour arts, smaller gifts favour animal welfare (Scharf and Smith) (2010)Membership – a survey showed 10% of organisations receiving public funds regarded membership as their most important source of income (TSRC, Working Paper 45)‘Engaged’ philanthropy - active donor involvementDifferences in causes supported by different types of private philanthropy support eg:  legacy ‘counter-trend’  companies – by-passing charities?  cross-currents in health – research/ information (foundations and individuals) drugs/ alcohol rehabilitation, aids, mental health (NHS) care (NHS, individual donors) www.shaw-trust.org.uk

Arts and culture examplecorporate investment of £144 million – over one quarter of all corporate cash givingskew to the major national institutions, with well over half of all corporate sponsorshipdirected to London, and 83% to national organisations11% drop in corporate support in 2010but charitable trust giving to the arts is at £155 million - growing since 2004, nowoutstripping corporate support(Source: Arts and Business Private Investment in the Arts 2010)‘In the US support from private foundations has tended to gravitate towards larger,high-profile ‘fine arts’ institutions – the plurality of the US model is not resulting in adiverse arts community’ (Diane Ragsdale, RSA Journal Spring 2011)generally increasing competition for trust funds eg both BLF and Lloyds TSBFoundation have recently reported escalating numbers of applications. www.shaw-trust.org.uk

Venture philanthropy/ social investment?Statutory funding cuts - £3 – 4 billion? (over 4 years)Sub-sector diversity - cuts will be highly unevenly experiencedSpecial/ social investment funds - £1 billion (10-year growth,1-2% of sector)Programme Related Investment - £3 million per annum?BSB - £400m?Current sector borrowing (largely mainstream banks) - £ 3 billion (ish)New markets, opportunity www.shaw-trust.org.uk

Social investment, social financeChallenges to existing non-profit sector boundaries: private giving and investment voluntary and trading income charitable objectives accounting requirements tax requirements legal requirements legal formsAssessment of capacity - speed, direction, scale of change? www.shaw-trust.org.uk

Philanthropy – some trends, issuesPhilanthropy part of a pluralist society, but not inherently diverse or pluralist? History/ path dependenceIncreasing dependence on narrower base of donorsIncreasing competition for resourcesLong-term trends?Philanthropic resources – new? redirection of existing?Giving or investing – tensions in culture/ motivationThe new donor – fact or fiction?New technologies/ methods – substitution or new markets?Future philanthropy - funding gaps, shifting sector direction or drivingreconfiguration? www.shaw-trust.org.uk

Current giving, philanthropy, and the shaping of Big Society

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Current giving, philanthropy, and the shaping of Big Society — Presentation Transcript

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