current giving, philanthropy, and the shaping of big society
TRANSCRIPT
Cathy Pharoah, Co-Director, ESRC CGAP
Current giving, philanthropy, and the shaping of Big Society
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Private action, public benefit?Current policy context - a new focus on the relationship between private individual decision-making/ preference and meeting public needs
Classical economic approach to private philanthropic action - individuals step in to provide public goods where governments fail
Recent 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 on the 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)
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Need for a nudge
‘Libertarian paternalism’ (Thaler and Sunstein, 2008)
‘……Free to choose…..but we argue for self-conscious efforts, by institutions in the private sector 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 made if they had paid full attention and possessed complete information, unlimited cognitive abilities and complete self-control’.
Giving Green Paper (White Paper due 23rd May 2011) –
‘…….Big Society ambition……a country in which people are in more control, supported to pursue 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 and catalyse 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 needs which emerge as government expenditure reduces?
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Review of the current private giving and philanthropy* landscape - some key features
Recent trends in current philanthropy:
the organisations currently soliciting private support
the private giving cake
recipients of private giving
private donors
New needs, demands, and big society issues
*philanthropy is used to refer to the wider context of philanthropic action, within which private giving is one element
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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?
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Philanthropy cake (estimated)
0.51.11.72.02.49.5
£1 + Gift Aid Tax ReclaimTOTAL = 18.2…ish!
Sources: 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
Companies (cash)
HRT/ Mass Affluent
UNHW
Legacies
Foundations
General Public
Billions
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Benevolent
Elderly
Youth/ leisure
Educ'n/professional
Health Inf/ Research
Chest and Heart
Arts and culture
Children
Disability, deaf, blind, mental health
Religious (mission)
Hospices/ hospitals
Religious (International)
Animal welfare
Religious (welfare)
International
Cancer
Community devt/ regeneration
Service/ex-service
General soc welfare
Env't/ Conservation
What gets the biggest slice of our giving* cake?
*Includes individual, corporate, private trust and legacy giving
Source: Pharoah, Charity Market Monitor 2011, CaritasData (forthcoming July 2011)
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Children/ youth/ leisure
InternationalDisability, deaf, blind,
mental health
Educ'n/ professional
Arts and culture
Community devt/ regeneration
Religious (welfare)
Service/ ex-service
Religious (Intern'l)
Health Inf & Research
Env't/ Conservation
Hospices/hospitals
General soc welfare
Chest and Heart
ElderlyBenevolent
Cancer
Which favourite causes get the biggest slice of the statutory cake*?
*Animal welfare and religious missionary causes have disappeared
Source: Pharoah, Charity Market Monitor 2011, CaritasData (forthcoming July 2011)
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The donors - trendsLong-term study –
‘The New State of Donation – Three Decades of Household Giving to Charity 1978-2008’ (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 time
Increase in donor giving and generosity, but no change in general population giving over 30 beyond parity with increase in general expenditure
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Average donations by GB households
millennium effect Asian tsunami
total population
donor population
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‘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 decreasingly likely to give
Age 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 older people were devoting 3% of their spending to charity, compared with 2% at the beginning.
this is largely due to their increased spending power (www.cgap.org.uk/uploads/BriefingPapers/CGAP BN7 How generous is the UK.pdf)
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0.4% 0.4%0.3%
0.4%
millennium effect1.9%
1%
1.7%
0.2% of expenditure on potatoes and 0.4% on cheese in 2008
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Donor preferences and differential influence on causes supported – some illustrationsDifferences 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)
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Arts and culture examplecorporate 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 sponsorship directed 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, now outstripping 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 a diverse arts community’ (Diane Ragsdale, RSA Journal Spring 2011)
generally increasing competition for trust funds eg both BLF and Lloyds TSB Foundation have recently reported escalating numbers of applications.
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Venture philanthropy/ social investment?
Statutory funding cuts - £3 – 4 billion? (over 4 years)
Sub-sector diversity - cuts will be highly unevenly experienced
Special/ 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
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Social investment, social financeChallenges 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?
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Philanthropy – some trends, issues
Philanthropy 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 driving reconfiguration?