Entrepreneurial philanthropy, charitable expenditure and donor behaviour under CGAP research spotlight

By: 

Cheryl Chapman

Managing Editor, Philanthropy UK

A five-year study of ‘entrepreneurial philanthropy’ was one of several new research projects showcasing preliminary findings at the ESRC Centre for Giving and Philanthropy’s (CGAP) conference held last week in London.

The study, Entrepreneurial Philanthropy in the 21st Century, from the Hunter Centre for Entrepreneurship, at the University of Strathclyde Business School, aims to "break through the propaganda" around such philanthropy and ultimately promote more of it, according to CGAP visiting professor Charles Harvey, pro vice-chancellor for humanities and social studies at Newscastle University.

The importance of the research is underpinned by the fact that in the UK for the first time in history more money is being given philanthropically among the living.

The research, which will use secondary data on 100 philanthropists and engage in discourse with a selected group of them over five years, aims to generate significant understanding of contemporary approaches to philanthropy, which borrow from business and investment models.

It takes as its framework three types of capital; ‘social’, such as networks, ‘symbolic’, such as reputation, and ‘economic’ or money, and explores their influence on entrepreneurial philanthropy.

Preliminary findings show that ‘entrepreneurial philanthropists’ are older than generally thought, said presenting lecturer Jillian Gordon, whose research focuses on philanthropy and entrepreneurship. It shows 57% of those selected, having given £1m in their lifetime, are aged between 46 and 65 years old. Less surprisingly 88% are male and most are middle class, but are very well educated generally graduating from the elite Russell Group of universities. Gordon explained that women are often ‘hidden’ within this group, with wives playing important but informal roles.

In a keynote speech, John Anderson, CEO of The Entrepreneurial Exchange, gave a warts-and-all account of his experiences of working through Enlight, a new venture philanthropy fund for members of the exchange. He offered a telling insight into the mindset of an entrepreneur; “they think big, think long-term and take risks,” he said,

He said while social enterprise is seen as a ‘big opportunity’ – “It is well run with good outcomes,” there must be a sense of realism, “The cultural shift towards social enterprise and entrepreneurial philanthropy is going to take years.”

Dr Beth Breeze, of Kent University, gave a well-received presentation of her newly published research How Donors Choose Charities, which she said, “Aims to reveal the meanings and motivations on decisions to give, and help policy makers and practitioners learn more about the social reality behind the figures.”

Based on interviews with a range of 60 committed donors recruited with the help of The Charitable Aid Foundation (CAF), the findings show that donors’ decision-making is not very scientific and is based more on personal taste than a response to urgent need, which supports a supply led theory of giving.

Personal taste, professional and personal backgrounds, the perception of a charity’s competence often based on the quality and quantity of direct mail, and the impact a donation will have above those from other donors or government, were identified by Breeze as four non-needs based criteria used by donors in selecting charities.

The findings show donors have a hard time selecting charities because of a lack of time to evaluate them methodically or rationally, and difficulty in accessing available information. In lieu of a scientific approach, donors opt for a number of strategies, including self made classifications – “we give to animals, the elderly, education,” - rules of thumb, and making judgements about ‘worthy’ or ‘unworthy’ causes.

Breeze revealed donors used even less rational methods of selection, including ‘sticking a pin in’ and ‘door mat roulette’ - whichever charity appeal landed on the donor’s doormat on their birthday was given a donation.

“It shows committed donors are not always careful donors,” said Breeze.

The paper is a wake-up call for policy makers and fundraisers in assuming donors are motivated by need and points to a re-think regarding communication materials.

Other presentations included Rationing and Philanthropy, which tackles the topical question of ‘how do you do less with more?’, and Charity and Social Redistribution which will map the terrain of charity expenditure within in England and Wales and later Scotland and Northern Ireland to discover whether deserts and oases really exist. CGAP is working on 11 new projects in all. 

How Donors Choose Charities, Findings of a study of donor perceptions of the nature and distribution of charitable benefit is available from the Kent University website.