Philanthropy

Lord Hodgson of Astley Abbotts Excerpts

Thursday 2nd December 2010 Lords Chamber

[Lord Hodgson of Astley Abbotts]

My Lords, I am delighted to add my congratulations to the noble Lord who introduced the debate. I am particularly pleased to do so as I share his view that there is a moral duty on each of us to put something back into society, particularly those of us who are fortunate. It is important to do so whatever the economic weather; when the economic weather is stormy, as it is at present, it is doubly so.

My noble friend Lord Phillips said that giving something back could be a matter of time as well as money—of course, he is absolutely right about that—and the pressures of modern life have made that more difficult. However, I regret to say that there has also been a growth in what I call the selfish gene. The tendency to ask “What’s in it for me?” has become more prevalent in our society. We need to think about what has made people less responsive to their wider responsibilities. My noble friend referred to business schools being asked to provide courses on ethics. I am not against that but business schools could perform a more important task in undertaking serious intellectual analysis of what one might call a social return on investment. If we could find a way to analyse and measure what the social return of these various projects could be—in the way that we have accounting standards now—it would be an extremely useful way of developing alternative ways of measuring what is going in on our society at the grass roots.

The challenges have been laid out. I wish to concentrate on three brief points. How do we encourage the extremely wealthy and the moderately wealthy to contribute, and how do we encourage the 30 to 50 year-olds, who are probably rather below par in the giving arena, also to do their bit? I declare my interests, which are recorded on the Register, as president of the National Council for Voluntary Organisations and chairman of the Armed Forces Charities Advisory Committee. As regards encouraging the wealthy, we need to do more to find ways to encourage people to set up grant-giving foundations. This is critical because they provide long-term dedicated funding, which is much needed by charities and which is not really available through the gift aid programme. They do so often in areas that are edgy and not immediately populist, as the right reverend Prelate the Bishop of Newcastle said. We know that charities concerned with children and animals are appealing. That is absolutely splendid; I am all for that; but we need to find ways to encourage giving to more difficult, less popular, causes, which none the less have an important role to play in our society.

There are three things that we could do to encourage people to set up foundations and to participate in this way. First, we could look at the bureaucracy of reporting. The accounting SORP—statement of recommended practice—has expanded year by year and could, and should, be cut back. We should look at the Trustee Act and laws on diversification, which are more of a concern in theory than in reality, but nevertheless lead people to believe that they may lose complete control of the way the foundation they have established operates. Referring to a point made by the noble Baroness, Lady Pitkeathley, we need to reflect on the difference between the US and the UK in balancing the right of society to have transparency about what is going on with the right of privacy for someone who is giving a great deal of money to charitable causes. I have said in the House before that the British disease is not idleness but envy. This means that some people are frightened to establish a foundation because they think that it may open them up to adverse criticism.

The second point I would like to make concerning the moderately wealthy is to support the remarks made about the importance of establishing a regime for charitable remainder trusts. The great concern of the moderately wealthy is that their circumstances may change and therefore the gift that they gave irrevocably to a charity may leave them short of funding in their old age. If we had a charitable remainder trust regime, they could give the capital to the charity, which is what it needs, and at the same time could have some form of income flowing from it for their lifetime and that of their wife or husband. That would encourage people of moderate means, particularly those whose assets are tied up in a single asset such as a house, to be more generous during their lifetime.

Thirdly, I turn to venture philanthropy, which may appeal to 30 to 50 year-olds. All the evidence I have come across shows that web-confident 30 to 50 year-olds are increasingly disinclined to contribute to a huge, anonymous pool. They want to see how their money is being used and its effect, and the more specific that is, the better. It is a real challenge to the sector to find ways to connect means with ends. I am glad to say that the NCVO is doing some creative thinking on this and I think there is quite a lot going on in the sector generally. Examples of this are emerging. My noble friend Lady Barker, who will be speaking in a minute, has pioneered—I am glad to help that in a small way—a project called See the Difference. I will not spoil her thunder as I am sure that she will wish to refer to that project but it enables people to give money through the web to a specific cause and see how a difference is being made. I am sure that this idea will be very important in the future. This is just one example but there are several others out there in the marketplace. They ought to be encouraged and we ought to try to find ways to be as creative as possible in linking people’s funding with specific outcomes which makes them feel that they have made a real difference.

This is a critical debate and the noble Lord is to be congratulated on it. I hope very much that we can follow up some of the ideas that have been put forward.