Government and philanthropy finding common ground?

By: 

Cheryl Chapman

Managing Editor, Philanthropy UK

Nick Hurd, minister for Civil Society

Government and philanthropy share an enigmatic relationship.

It has been understood in different ways:  some believe state funding ‘crowds out’ philanthropy; tax incentives may or may not boost giving; it is generally agreed philanthropy is not a substitute for state funding and could never replace it, while philanthropists do not like being led by government policy.

Birkenhead’s Labour MP Frank Field, in his 2008 Allen Lane lecture, described philanthropy as ‘a counterpoise’ to government. Field suggests the role of philanthropy “above all else is in establishing centres of power and influence counter-poised to governments. It is in this role that philanthropy becomes a crucial part of sustaining the freedom which a thriving civil society bestows on its citizens.”

 But there are grounds to re-think the boundaries of the relationship on the frontier of community funding.

 Under a new localism agenda, the building of Big Society, the dismal economic climate, and recent community unrest, government and philanthropists are prioritising community. They share similar visions: a wish for more cohesive, happy and healthy neighbourhoods; the eradication of poverty, crime and inequality, the creation of sustainable community organisations and a will for individuals and local groups to take ownership of their communal lives. Both believe in a grassroots up approach.  

In recent months we have seen a welter of government actions that have put in place the building blocks to help communities and individuals take ownership and encourage philanthropy in the community, including:

•           the publication of the wide ranging Localism Bill which shifts power from central government to communities,

•           the retention and introduction of tax incentives such as Community Investment Tax Relief  (see page 24) and another to encourage legacy giving,

•           the delivery of new funds such as the £80m Communities First Programme to help the most deprived communities, the £30m Transforming Local Infrastructure Fund, a £10m innovation in giving fund, and the £55m Catalyst endowment building matched fund to support arts organisations and to encourage philanthropic funds

•           the newly announced Social Action Fund, worth over £20m, that will offer grants of £100,000 and more to projects across England to expand volunteering and giving of time, money, knowledge and assets.

•           the introduction of the Giving White Paper to “increase levels of giving and mutual support in society and catalyse a culture shift that makes social action a social norm”.

•           the creation of Big Society Capital to develop the infrastructure for a new social economy, bolster social enterprise and draw in investment,

•           and the launch of social investment bonds to release new capital funding into socially-focussed initiatives.

 Many of these actions are part of a government vision that calls openly on individual philanthropists and trusts and foundations to work in partnership with it to find new ways to fund and foster better communities.

In launching the Giving White Paper at Downing Street on Monday (May 23), Francis Maude, minister for the Cabinet Office, said: “The building of a bigger stronger society will not be done by government but by citizens. However, it will not emerge overnight and government has to play a role in supporting it. That is why, after levels of giving have flat lined for years, this government is taking action, introducing policies to make giving give back, cut red tape and spark innovation. These changes form part of our desire to build a big society, where power is decentralised, public services are opened up and social action is encouraged.”

 But there remains scepticism from funders and the Third Sector around Big Society “as a fig leaf” for cuts. While millions of government pounds will help community groups to build the Big Society, charities expect to lose billions as a result of spending cuts. The latest NCVO data predicted figure is £2.8bn, although a TUC study found that in the first year of cuts losses actually amounted to just £100m.

A Cabinet Office spokesman said in response to ‘fig leaf’ claims: “Big Society offers the voluntary sector many new opportunities to grow.

“Our reforms will allow the voluntary sector to bid for public service contracts worth billions of pounds. Big Society Capital has launched with an expected £600m to give the sector access to much needed finance, which will help them expand and bid for these new contracts. And we’re doing more to support giving and philanthropy including measures in the budget estimated to be worth £600m over the lifetime of the Parliament. This is just the start.”

 In a recent seminar focussing on how to promote the culture of giving hosted by Tory think tank Policy Exchange, Gareth Davies, head of the Office for Civil Society (OCS), offered a view on how philanthropists and government interact. He said government was not there to “direct or corral philanthropy” but to build on the “edgy, experimental” work that philanthropists could do. He added, government could scale up philanthropy-funded pilot projects that were proving successful, pointing to the four newly-launched social impact bonds aimed at saving the country millions by targeting and supporting deprived families.

 And in an open letter to the sector in early October, Nick Hurd, minister for Civil Society, scoped out the role for philanthropy in Big Society, saying: “We believe that the debate around the Big Society is about encouraging individuals and organisations to think about the contribution they can make whether that is in the form of philanthropy, and social investment, or giving up time and expertise through volunteering or community service.

“It is also about enabling people to have a voice in shaping the communities and areas around them through mobilising local networks (community organisers) and encouraging civil responsibility (National Citizens Service)”.

Philanthropists have voiced optimism at the government’s commitment to the genuine support of philanthropy – Tom Hughes-Hallett, chairman of the independent Philanthropy Review that made its report in June, is one of them.

However, Dr Beth Breeze, philanthropy researcher  at Kent University and author of several reports, says philanthropists are unlikely to be swayed into acting a certain way through government pronouncements: “The relationship between philanthropy and public expenditure is complicated. Donors do not want to simply act as a substitute or a ‘gap plugger’ for things that would otherwise be paid from general taxation, but nor do they prioritise acting as some sort of balancing act to governmental decisions. One definition of a mega-donor is someone who can make their own decisions about what to fund without reference to the decisions of others, be they fellow donors or public officials. The US academic Paul Schervish calls this the ‘hyper agency’ of the wealthy donor. It means that many philanthropists march to the beat of their own drum, without reference to the vagaries of government policy.

“Philanthropy is driven by personal passions not by government policy, so philanthropists are unlikely to make significant changes to their giving in the light of pronouncements by politicians. That said, contemporary philanthropists are interested in maximising the value and impact of their donations, so opportunities to get matched funding or develop partnerships with public funds are often attractive, though it is difficult to discern if such initiatives actually prompt philanthropic acts or simply alter their timing.”