Philanthropy

Baroness Thornton Excerpts

Thursday 2nd December 2010 Lords Chamber

[Baroness Thornton]

My Lords, I congratulate the noble Lord, Lord Janvrin, on initiating this debate. I also congratulate other noble Lords on their contributions to what has been a fascinating debate, with each contribution serving to illustrate the knowledge and experience that resides in your Lordships’ House.

The great philanthropist Andrew Carnegie said that the man who dies rich dies disgraced. Without doubt, the history of giving and philanthropy is ancient and honourable—there are records of generosity and civic and monumental good works that go back hundreds if not thousands of years. In medieval times, giving to the needy—and the endowment of monasteries, Barts hospital, universities, cathedrals and schools—was one way of ensuring of your place in heaven. Ironically, the schools thus endowed, established originally to educate the humble and less well-off, included some which are now our most expensive public schools—but I do not intend to go down that road today.

Today there is probably a less clear line to the Almighty. It is difficult to explain, for example, why Michael Jackson was the most generous giver to charity of all rock stars, or why Bill and Melinda Gates and Warren Buffett give through their foundations the equivalent of the budget of a small state for the eradication of some of the world’s most horrible diseases in the poorest countries. Carnegie’s maxim is as true today as it was when he made his huge bequests in 1901, which were the equivalent of £7 billion today. As the noble Lord, Lord Luce, said, people want to give something back. Indeed, what else should you do with such huge amounts of money when you reach the point that you want for nothing and there is nothing that you cannot afford? I echo the noble Lord, Lord Phillips, in asking who is the greater philanthropist, the person who gives £1 billion from a fortune of many times that size, or the old lady who finds £20 from her weekly state pension for the homeless or the Haiti disaster?

Several questions have been explored in the debate, the first being how to encourage philanthropy at all levels. Does our tax system encourage or make giving difficult? What are the barriers? I hope that the Minister will be able to tell the House what progress is being made in that direction.

I was told a few days ago by the director of one of our great arts and heritage institutions that it is easy to donate a valuable work of art after you are dead but, because of the suspicion and bureaucracy of the Inland Revenue, you have to be very determined to do it if you are alive. Another leader of an arts institution has said that, while endowments have their place, tax incentives for giving are a matter of urgency in this period of savage cuts.

On that theme, the Charities Aid Foundation, which has been mentioned many times today, estimates that almost £750 million is lost to the charitable sector in unclaimed gift aid. Maximising donor usage would compensate for the fall in overall donations of more than £700 million. I urge the Government to continue the work of the previous Government to raise awareness of gift aid among the public through creative, widespread campaigns. We know that incentives exist within the tax system for higher earners to give. Some donors can claim tax relief for themselves at 20 per cent of their gross donation, or redirect any tax refund to charity. However, recent research by the Charities Aid Foundation revealed that 50 per cent of higher rate taxpayers are unaware of that tax incentive. When unaware respondents were informed of the option, more than half said that they would be willing to give that personal relief to charity, but the current processes are a barrier to doing so.

The second question that this debate raises is where the balance lies between philanthropic giving and the provision of, say, education and health, through taxation and democratic accountability. Like other noble Lords, I turn to America to explore that question. The point can be illustrated by the example of the chief executive of Facebook, Mark Zuckerberg, who has recently set up a foundation with $100 million worth of Facebook stock to be used to improve education in America, with the primary goal of helping children being educated in Newark.

Mr Zuckerberg has had a long-standing interest in education, particularly in the low salaries of teachers, and the donation comes at a time when the foundations and wealthy investors in America are increasingly funnelling large amounts of money to public education—but, I have to say, with strings attached. In Washington DC this year, foundations have pledged millions of dollars to pay for an increase in teachers’ pay, which is tied to teachers’ ability to show that they can help students improve. It is clear that that money is at least in some part substituting for state funding to ensure the fabric and standards of those maintained schools. Who can say that that is not worthwhile philanthropy? However, in the UK context, it raises some interesting questions.

What does the Minister think about that as a direction, and is it the direction in which the Government intend the big society to progress? I note that Sam Middleton, of ResPublica, states in an article on the very useful Philanthropy UK website:

“In this age of austerity, where unprecedented levels of public debt mean less money for the state to spend, the Big Society, far from asking philanthropists to blindly step in to fill the gap left by the removal of government funding, provides the opportunity to revolutionise fundraising and the interactions between donors, civil society organisations and communities”.

That is interesting and, to a certain extent, reassuring, but I am not entirely sure what it means. Perhaps the Minister could explain and give us some examples. I agree with my noble friend Lady Pitkeathley that charity giving, voluntary work and philanthropy are not substitutes for adequate public provision.

In exploring those matters further, I have reflected on the role of the cancer charities, Macmillan and Cancer Research UK. Macmillan raises millions to support people with cancer, particularly by the employment of Macmillan nurses in the NHS. Cancer Research UK also raises millions to conduct vital cancer research—importantly, within the NHS. I hope that no one is suggesting that those organisations could possibly provide NHS cancer services. That works, I suggest, because the balance is right. It works best because the public sector and the charitable sector are working in harmony.

I have worked in and with the charitable sector all my life. I started my working life working for Gingerbread. I worked for Citizens Advice and then for the late and distinguished Lord Young of Dartington, then Michael Young, at the Institute of Community Studies at Bethnal Green. Indeed, I remain a volunteer, and I have never doubted that I gain much more from being a volunteer than I give.

The charitable sector in the UK is one of our national treasures. One of the strengths of the sector is its relative flexibility and agility. Given the right leadership, a charity can innovate and adapt more quickly, more easily and with more creativity than large public or corporate bodies. We need to celebrate that.

It is interesting that family foundation giving is defying the economic downturn and making a substantial and growing contribution to tackling society’s ills. That is in a report produced by the ESRC Centre for Charitable Giving and Philanthropy at the Cass Business School. It lists lots of the established charities of which your Lordships will be aware: the Wellcome Trust, the Gatsby Charitable Foundation, the Leverhulme Trust, the Wolfson Foundation and the Monument Trust. It also talks about the new family foundations that have been established over the past couple of decades, largely funded by the successful entrepreneurs of an era of expanding global markets: the Waterloo Trust, set up by the owners of Admiral Insurance; the Volant trust, set up by J K Rowling; the Foyle Foundation; the Martin Smith Foundation; and the Children’s Investment Fund Foundation.

I conclude with some more questions for the Minister. The Government have been vocal in their promotion of and support for philanthropy, charity and volunteering, but we have to judge actions not by words but by what actually happens. We need to say that many charities are experiencing huge anxiety about their future. ACEVO estimates that charities face £3 billion in cuts, and I wonder why the Charity Commission is facing a 33 per cent cut over the next few years. I am great admirer of the Charity Commission; it is one of our best and most effective public bodies. I am concerned that the strategic review that it is bound to undertake as a result of the cuts that it faces will lead to a diminution of its effectiveness and, therefore, the support that it can give the charity sector.

We have had a wonderful debate, and I look forward to the Minister’s remarks.