Legislating for philanthropy: government and giving

The decision to give is largely a private matter between an individual and their conscience. But the state has been active in building a more generous society over the last decade with good reason. Here we chart those actions and reasons and consider the next steps.

In a recent blog entitled ‘Towards a Modern Philanthropy’ Birkenhead MP Frank Field recalls his Allen Lane Foundation Lecture in which he talks about the disappointment Mrs Thatcher once expressed to him that her radical tax-cutting strategy had not lead to a rebirth of a giving culture in Britain.

“Her hope was that the spread of such a culture would ricochet through British society and in so doing, change it in a most fundamental way,” says Field, who until his election in 1979 was Director of the Child Poverty Action Group.

But it seems that having more money in our pockets, whether through tax cuts or greater wealth as we have today, is not necessarily a trigger for increased giving. The government has attempted to get Britain into the giving habit over the last decade by invested in a variety of promotional strategies. We have seen new regulation, tax incentive policies, organisations, strategic partnerships, initiatives and awards to encourage private individuals to donate time and money for the public good.

Investing in giving

Labour’s 1999 Getting Britain Giving package of measures, the brainchild of the National Council for Voluntary Organisations (NCVO) and the Charities Aid Foundation (CAF), created new tax incentives. These included the abolition of the £250 minimum for donations through Gift Aid, which allows charities, and higher-rate taxpayers, to claim back tax on donations, and the abolition of the £1,200-a-year limit on payroll giving. It also introduced new tax relief on gifts of shares and securities and an extension of the tax exemption for fundraising events.

In 2001, a £1m investment to fund the highly influential Giving Campaign until 2004 created a partnership between the  government and the charity sector, focussing on four specific work streams: ‘Targeting Wealthy People’, ‘Tax-Effective Giving’, ‘Employers and Employees’ and ‘Young People’.

It worked to build media interest, develop a brand for Gift Aid and set up payroll giving training courses.

The Giving Campaign concluded in its final report, A Blueprint for Giving, that “there is no single big idea that will dramatically change the culture of giving in the UK”, and that “the way forward lies with a set of targeted initiatives”.

In 2005, the government published A Generous Society, the Office of the Third Sector's (OTS) strategy for charitable giving, setting out plans for working in partnership with the voluntary and community sector to foster a deeper culture of planned, regular and tax-efficient giving.

Further funding

With it came a new strategic funding stream worth up to £1m per year to support organisations aimed at promoting charitable giving in England and Wales:

• Philanthropy UK, an initiative of the Association of Charitable Foundations (ACF) which offers independent advice to philanthropists wanting to give more effectively.
• The Community Funding Network (CFN), which takes an active role in expanding charitable giving at a local level. Many community foundations in England are local funders for Grassroots Grants, a £130m
  government programme running from 2008 to 2011.
• Giving Nation, an initiative of the Citizenship Foundation, which supports the teaching of charitable giving as part of the citizenship curriculum, providing free resources and an awards initiative.
• The Beacon Fellowship, a philanthropy awards scheme, now run by CFN. 
• Institute of Fundraising, a membership association, for the development of online guidance for fundraisers on tax efficient giving.

The latest moves to kick start giving in the UK include the 2008 launch of the UK's first independent, multidisciplinary and academically based Centre for Charitable Giving and Philanthropy to support high-quality research and “develop the necessary evidence base to improve understanding of charitable giving and philanthropy”.

A partnership between The Economic and Social Research Council (ESRC),  the OTS in the Cabinet Office, The Carnegie UK Trust and the Scottish government, it has received a total joint investment of £2.2m over five years.

Phil Hope, then minister for the third sector, explained its raison d’etre: “Giving is a major source of funding for the third sector. The Centre will provide the sector, and the government, with the robust evidence it needs to really capitalise on the many successful methods already used to encourage giving.”

More recently the government made a high-profile commitment to promoting philanthropy with the appointment of Dame Stephanie Shirley as its ‘Giving and Philanthropy Ambassador’ who will support ministers and the OTS in championing philanthropy.

The appointment followed the pledge made in Real Help for Communities: Volunteers, Charities and Social Enterprises, for an action plan outlining £42.5m in support for the third sector in the difficult economic climate.

In its 2009 budget the government announced new research into the effect of charitable tax relief on donors to inform thinking on Gift Aid. The research will be published in the autumn. Meanwhile, HMRC continues to consult on the revision of the Substantial Donor rules (Finance Act 2006), working with donors, charities and advisors to ensure that this anti-avoidance legislation does not have a negative impact on charitable giving.

An opposition view

With an election just around the corner, there is growing interest in what the rival parties will bring to the table on promoting philanthropy. The Tories published a Green Paper in June 2008, called a Stronger Society, Voluntary Action in the 21st Century, makes 20 policy pledges towards creating a society geared to giving. The main thrust of the plan is to simplify, streamline and reform systems such as Gift Aid, with other ideas, such as establishing a new ‘social norm’ around giving, also mooted.

David Cameron presents it as ‘a sea change’ in how the government, society and the voluntary sector will work together in future: “… our aim is to change government: from being an object that gets in the way of civil society to being a force that gets behind civil society, open to, and supportive of, the energy and initiative of a free and civilised nation,” he says in the introduction.

Both parties recognise the important role philanthropy has to play in people’s lives, on a public and private scale. It both boosts charitable funds and ‘provides the frills’, as investment fund manager and philanthropist Nicola Horlick puts it, to services that governments cannot be expected to provide; but as Peter Frumkin writes in his book ‘Strategic Giving – the art and science of philanthropy’, philanthropy also helps people find meaning and purpose in their own lives, supporting ‘the self-actualisation of donors’.

John Studzinski, senior marketing director of Private Equity Firm Blackstone, anglophile and philanthropist points out, “Philanthropy means ‘the love of mankind’ and above all is about human dignity. If we ignore it, we ignore a crucial part of society.”

As Frank Field MP concluded in his Allen Lane Foundation Lecture, “State-driven action is a poor substitute for the nobility of a natural instinct to do good by one's fellow creatures. But when habits have been lost, as the giving habit has to some extent, law has a role to set standards of behaviour which then themselves, hopefully, become, once again, ‘an affair of the heart’.”

Our Dec 2009 Newsletter will focus on Politics & Philanthropy and will be asking the major political parties for their views on charitable giving and their plans to promote it.