Philanthropy

Baroness Pitkeathley Excerpts

Thursday 2nd December 2010 Lords Chamber

[Baroness Pitkeathley]

My Lords, I, too, thank the noble Lord, Lord Janvrin, for securing this debate and giving us the opportunity to focus on this important topic. I declare two interests: I chair the advisory body for the Office for Civil Society, which funds Philanthropy UK, the leading resource for free and impartial advice to aspiring philanthropists; and I am married to the chief executive of the Association of Charitable Foundations, which manages the project.

Is there anybody who is not in favour of encouraging philanthropy? You can hardly be against it, even though, in the United Kingdom, it can have negative connotations of the very rich patronising the poor for their own ends—a hangover from Victorian times, perhaps—or, nowadays, of very rich people taking advantage of tax loopholes or just offsetting their guilt about being rich. Even with those negative associations, it is generally thought to be a good thing for the individual or foundation doing the giving, for the recipient and for society at large. However, it has its complications. Your Lordships may be familiar with the quotation from Edith Wharton, the American novelist:

“There is nothing like the exasperation of the would-be philanthropist when he first discovers that nothing complicates life as much as doing good”.

Many philanthropists have echoed the words of the founder of Sears Roebuck when he said that making his first million dollars was a lot easier than giving it away wisely.

Of course we should encourage more philanthropy, but I will sound some notes of caution. First, we should not be tempted to go too far towards the American model, in which giving is seen much more as the ordinary expectation when an individual makes money, and in which being acknowledged publicly is much more acceptable. We have a different tradition and culture in this country, and the difference is crucial in how we handle philanthropy.

Secondly, there is no possible way that, however well intentioned and well managed, philanthropic giving can replace or match government funding that is being withdrawn—the numbers simply do not stack up. For example, last year government spending on education, welfare and health was more than £300 billion, while all philanthropic giving—donations, legacies, corporate spending and trusts and foundations—only came to £16 billion. Philanthropists are funders at the margins and do not have the capacity to support even the whole of the charitable sector, let alone replace government funding on a wider scale.

The Government’s focus on encouraging philanthropy is much welcomed by foundations and by individuals, but there is suspicion about it being politically motivated. Philanthropists want to make their own decisions and lead from the front, and the benefits of family foundations cannot be turned on and off like a tap. Of course, they want to work in partnership with government—they can see the benefits of that—but their motivation is to give, not to substitute for government funding. They give precisely because of their independence of action and their scope to drive their own visions. It is extremely important to remember that when engaging with philanthropists.

I am not suggesting that the Government’s attitude to philanthropy should be totally hands off. On the contrary, they should make it clear that the promotion of philanthropy is a critical component of their infrastructure plans, and should support the development of a structure to co-ordinate the growth of philanthropy in the United Kingdom and ensure that it is focused on donors. Too often, for example, fundraising is seen to focus on recipients and on the funding of special projects. To encourage philanthropy, we must view it through the eye of the prospective donor, as the noble Lord who introduced the debate reminded us, and must understand what information and support they need in order to decide to give, and to do so confidently and effectively. There is currently a daunting array of choices facing a potential giver, with much duplication and potential waste and a worrying lack of oversight or accepted good practice. Donors and their advisers would benefit from a common code of practice that ensured the best interests of both donor and beneficiary.

I agree with the noble Lord, Lord Janvrin, about the Government taking a lead in encouraging people to develop the habit of philanthropy. While we may say that this is not a good time to do it, when times are so hard, let us not forget that the poor have always given proportionately more of their income to charity than the rich. Tax relief is also important. Let us remember the differences between the United States and the United Kingdom in this regard, too. While gift aid is welcome, I agree that the cumbersome process of claiming back has a negative impact on givers and receivers. Transferring a higher percentage of the benefits of major gifts back to donors is strongly to be recommended. I look forward to the Minister’s response to those ideas.

There is evidence of untapped philanthropic potential in the United Kingdom, but it will not be fulfilled, either in money invested or in results achieved, unless there is great assistance to philanthropists to direct their wealth in a way that satisfies both them and the big society. We need more philanthropists, great and small; more widespread philanthropy; and more thoughtful and effective philanthropy. There is a case for establishing a single body with the overarching purpose of increasing philanthropy in the United Kingdom that would inspire and guide new philanthropists, and help donors make effective choices. Again, I hope to hear the Minister's response to that.

We should remember the benefits of giving. Citizen engagement benefits civil society. Giving connects people to society, and by encouraging all scales of giving and philanthropy, we develop society. While spontaneous philanthropy of the sort that we have seen lately in big gifts to the British Museum and the National Theatre is much to be welcomed, the true potential of philanthropy will not be realised if it is simply left to happen.