The Top Ten Trends in British Philanthropy
The Top Ten Trends in British Philanthropy
By Fiona Hodgson, 8/29/07
With philanthropy enjoying an unprecedented boom in the United States, it’s an interesting time to look at how its British counterparts compare. Although both countries can trace their philanthropic traditions to similar “ancestors,” the growth of philanthropy in Britain has followed a more uneven course. Today, however, there are many signs that the UK is on the cusp of a philanthropic boom of its own:
1. The Return of Philanthropy
Britain enjoyed a Golden Age of Philanthropy in the 19th and early 20th centuries. Scottish-born Captain of Industry Andrew Carnegie stated that “he who dies rich, dies disgraced” and donated large sums of money to create a network of free libraries across the world. This, and other examples of transformative gifts, inspired many in the UK and the US, where philanthropy took hold and became the remarkable force for good that it is today. In Britain, pioneering philanthropists also enabled the creation of:
- Social services before the launch of the Welfare State
- The Campaign which led to the abolition of slavery
- Education and leisure opportunities for all.
After World War II, private philanthropy lost favor in the UK, but not in the US. A 1948 opinion poll found that over 90% of people felt there was no longer a role for charity in Britain. However, by the 1980’s philanthropy was on the rise. Once again, UK philanthropists were using their private wealth to affect the public good. Major achievements of recent UK philanthropy include:
- Famine relief and long-term aid to developing countries
- Health research and pioneering health services
- Campaigns for major social change.
In 2007, Gordon Brown announced that encouraging and leveraging private philanthropy in the UK was a major priority for the Labour Government.
2. Growth in the UK Economy
Over the past 20 years, the UK has become the economic engine of the European Union. Among its strongest points:
- London is a financial center that rivals New York City
- It has experienced 15 years of consecutive property market appreciation and a massive accumulation of private wealth.
The strong economy provides an ideal context for fundraising and philanthropy.
3. Accumulation of Private Wealth
The recent growth of private wealth accumulation in the UK is astonishing. The Sunday Times “Rich List for 2007” gives some eye-popping statistics:
- In 1997, Britain’s richest 1000 were worth 99 billion pounds ($198 billion).
- In 2007, Britain’s richest 1000 are worth 360 billion pounds, ($720 billion), a 263% jump over 10 years.
- There are 68 UK billionaires, treble the number in 2003.
- 92 women are in the top 1000, an increase of 20% since last year.
- 7 out of the Top Ten Super Rich were not born in the UK, reflecting London’s draw as one of the world’s most cosmopolitan cities.
The rapid growth of private wealth accumulation in the UK presents a unique opportunity for greatly increased philanthropy, both domestically and internationally.
4. Growth of Private Philanthropy: Mega gifts
Mirroring the growth in private wealth is a rapid increase in philanthropy at the highest levels.
- In 2006, the top 30 UK donors pledged over 1.2 billion pounds ($2.4 billion) for both domestic and international causes.
- To quote Tony Rogers, CEO of the Charities Aid Foundation (CAF), “We are seeing a new wave of philanthropic giving driven by people who want to be innovative, who are explorative by nature. They see their actions as social investment rather than straightforward charity.”
- In July 2007, Sir Tom Hunter announced his intention to donate 1 billion pounds ($2 billion) to UK and international charities. Echoing Andrew Carnegie, Tom Hunter told the media that “I don’t want to take 1 billion pounds to my grave with me. Philanthropy is the real motivator to continue making money.”
Examples such as these and other 7, 8 and 9 figure gifts are raising the bar exponentially for fundraising in the UK.
5. Rise of the “Committed Giver”
- There are 166,000 registered charities in the UK, raising around 30 billion pounds ($60 billion) annually;
- Private giving is slightly less then 1% of GDP, but still ahead of every country except the USA, and growing;
- 30% of people are non-donors (bystanders); 58% are casual givers (contributors) and 12% are committed givers (investors), who give over $250 a year to charity;
- Characteristics of the committed giver indicate that s/he is over 35 with an income over $100,000 per year. This group is growing quite rapidly.
6. Emergence of Philanthropy “Think Tanks”
In the past 5-10 years, several organizations have emerged, dedicated to the research and analysis of philanthropic and fundraising trends, with the ultimate aim of increasing giving across all charity sectors. Organizations such as the Institute for Philanthropy and New Philanthropy Capital are raising the visibility, understanding, and appreciation of philanthropy and fundraising in the UK.
7. Professionalism of the Fundraising Sector
Twenty years ago, fundraising was not a recognized career in the UK. Today, it is one of the fastest growing sectors, and demand outstrips supply by a large margin.
- Most universities, national arts organizations, hospitals and social service agencies now have a professional fundraising staff.
- Most charities have established an Annual Fund and are beginning to explore Major Gifts programs.
- National marketing campaigns such as “Make Poverty History” have been very successful in recruiting both donors and volunteers.
- So rapidly is the fundraising sector growing that an experienced major gift officer can choose from several options. Competition for talent is fierce.
8. Emergence of Capital Campaigns
Oxford and Cambridge Universities have long histories of fundraising and campaigns. However, it is only in the past few years that successful Capital Campaigns have been launched in health, arts, and humanitarian agencies. For example:
- The National Society for the Prevention of Cruelty to Children just completed a 250 million pound ($500 M) campaign.
- London School of Economics completed a 100 million pound campaign.
- St. Barts Hospital is currently in a multi-year capital campaign to renovate historic buildings and to build a new hospital.
9. Tax incentives to encourage Private Philanthropy
- The Finance Act of 2000 allowed high tax bracket donors to claim personal tax relief for the difference between the standard and higher tax rates.
- Gift Aid, created in 1990, accounts for 90% of all tax-efficient donations in the UK. Gift Aid allows charities to claim back standard rate income tax on gifts made by UK taxpayers.
- The Brown Government is exploring more tax-efficient vehicles to introduce.
10. Government incentives to leverage Private Philanthropy
In February 2007, the Government announced a 600 million pound ($1.2 billion) boost for higher education fundraising:
- In an effort to encourage and leverage private fundraising, the Government will provide 200 million pounds over three years for a matched-funding scheme.
- Private donations will be matched on a 2:1 private to public basis.
- The goal is to create sustainable funding for all institutions of higher education, in line with the Government’s goal of increasing the percentage of college graduates to 50% of the population. (As late as the 1980’s, only 6% of adults were college graduates.)
- The Government is considering expanding this model to other non profits, including hospitals.
In summary, the UK presents a dynamic, rapidly growing market for both philanthropy and fundraising. High net worth individuals in the UK are increasingly looking for global opportunities in philanthropy. The government places a high priority on encouraging private giving, through tax incentives and private/public leveraging of funds. Fundraising has become a well-regarded profession. Philanthropy is once more accepted in the main stream. The healthy UK economy and continued rapid growth in private wealth accumulation augur well for a bright future for philanthropy in Britain.