A manifesto for philanthropy: Giving on the political agenda

The relationship between government and philanthropy is determined by prevailing political attitudes as well as cultural and social norms around the ‘right’ roles for government and for private citizens. Since philanthropy was first subject to English legislation, under the Statute of Charitable Uses Act of 1601, the role of private wealth in promoting public welfare has provoked a range of political reactions, from those who viewed it as a symptom and others a cure for the inequality of the time.

For many centuries, philanthropy was effectively the only means of providing healthcare, education and other social services for the poor. But since the late 19th century, and especially with the creation of the Welfare State in the UK in the mid-twentieth century, tax-funded, government-organised services took over much of that provider role, redefining the space available for philanthropic activity; the precise dimensions of that space remain unclear to this day.

Over the years, the pendulum has swung between a ‘Left’ and a ‘Right’ view; the ‘Left’ being that philanthropy should be kept at ‘arms length’ from the state, providing the ‘frills’ that no government could be expected to provide, acting as a challenger to the status quo and an engine room for innovation in tackling social ills; and the ‘Right’ view, one of ‘rolling back’ the state to make more space for philanthropy so that private wealth can be harnessed as a provider of services such as education, health and social care for the nation.

However, in more recent times and in light of the economic, environmental and social health crises that currently preoccupy media, politicians and the public, this sharp definition between Left and Right has softened. Politics may be giving way to pragmatism and there appears to be some consensus forming around the desirability of growing giving.

Speaking at NCVO’s Autumn Conference, chief executive Stuart Etherington said, “It is very clear to me that politicians of all sides understand and respect the contribution we (the voluntary sector) make to the lives of people and communities.  There is also a clear consensus that we can and should be enabled to take on a greater role in some spheres.”

In the same month, speaking at the annual conference of chief executives body ACEVO, Conservative shadow minister for the Cabinet Office Francis Maude stated that many of the Labour government's measures to support the third sector have been good, and would not be immediately dismantled by an incoming Tory government.

Those measures Maude refers to, as reported in Philanthropy UK’s September newsletter article Legislating for philanthropy use the four levers of influence identified by social scientists Jeremy Kendall and Martin Knapp, namely: funding, regulation, tax relief and encouragement such as visits, honours and role models.

Tax reliefs are probably the most widely known aspect of government support for philanthropy. The UK has enjoyed a fiscal regime that encourages philanthropy since 1986 when the Conservative government introduced payroll giving and then set up the Gift Aid scheme in 1990 to refund the income tax paid on some donations. In 2000 the Labour government extended both the payroll giving and Gift Aid schemes by removing the lower and upper thresholds so that donations of all sizes became eligible for tax relief. In 2007/08 the public purse subsidised charitable giving with almost £1.4bn in tax breaks, (see Table 1).

The £1.4bn of public expenditure that is spent on incentivising and encouraging philanthropy may be a large amount in absolute terms, but in context this amount is only a tiny fraction (0.25%) of total public spending which totalled £560bn in 2007/08.

Promoting giving post-election

The next UK General Election must take place on or before 3rd June 2010. In light of that fact, Philanthropy UK has invited ministers and leading politicians from the major political parties to offer their thoughts on what they would do to promote and support a culture of giving in the UK. From their responses it is clear there is an alignment of views around the importance of government’s role in establishing a giving culture.

Angela Smith, Labour MP and minister for the third sector, says, “Of course, the decision to volunteer or to donate is a private one. However, I believe government’s role is to facilitate the growth of a culture of giving: to help people build regular giving into their everyday lives so that they can contribute to the causes that matter to them.”

Nick Hurd, the Conservative shadow minister for charities, social enterprise and volunteering, says, “My party is committed to exploring how government can help create new ‘social norms’ around higher levels of giving, both of time and money. It is part of our mission to encourage people to feel a greater sense of social responsibility and depend less on ‘big government’. We need to encourage more role models from different walks of life to inspire and motivate others to follow their lead.”

Liberal Democrat MP Jenny Willott, shadow charities spokesperson, reflecting on the current recession, says, “At this difficult time, the government has a role to play in doing more to encourage a culture of giving, irrespective of the country’s economic health.”

The creation of devolved government and the recent rise of green politics has brought new political voices to bear on this issue. The Social Democrat and Labour Party’s (SDLP) Margaret Ritchie, in her role as Northern Ireland minister for social development, and the Green Party’s Jenny Lambert say that establishing a culture of giving is an important government role. The Scottish National Party’s (SNP) Linda Fabiani agrees but makes the point, “Promotion of a culture of giving is fine and good, but we have to recognise and celebrate that there are advantages on both sides of the equation – benefits to the recipients and extraordinary rewards to the donors.”

However, Plaid Cymru’s Dai Lloyd offers an alternative view, “While I value the important work done by charitable organisations and the acts of kindness and humanity by philanthropists I would urge a note of caution. Plaid Cymru believes that governments have a responsibility to provide universal public services to all. We do not buy into the theory that the state should be rolled back so that the charitable sector can take over. The charitable sector has an important role to play in supporting vulnerable people but it is not an excuse for rolling back state services as those on the right of the political spectrum would argue.”

The challenges of change

Creating a culture of giving presents difficult challenges, not least that attempts to do so could prove counterproductive according to Jeremy Kendall, who now works within the Third Sector Research Centre and is based at the University of Kent.

He says, “In addition to having policies that directly encourage giving through supportive legal provisions and incentive structures, politicians are now increasingly explicit that they intend to influence people's beliefs, values and norms, raising awareness of charity in the hope this will foster actual behavioural change, i.e. higher levels of giving commitment.

“This could be a double-edged sword because it could induce a sense that government is trying to impose an agenda and control the decisions that people feel are private ones. There's then the danger that giving is actually discouraged, for example, in situations where potential givers believe such policies reflect an attempt to push things onto them and others which they believe should really be done by government.”

This is not the only difficulty associated with policies which try, or seem to try, to change the balance between statutory responsibility and independent giving, says Kendall. “Obviously, efforts made by politicians to encourage philanthropy more generally can have fundamental implications for the way that priorities are set because there may often be differences between what is popular and what needs to be done from a collective societal perspective. For example, some donors may want to fund things that are hard to defend in terms of social policy - compare cat protection charities with domestic violence NGOs. These are amongst the reasons why government efforts to shape norms, especially when they may seem to involve a rebalancing of the division of labour between the state and the third sector are, and will remain, deeply contentious.”

Karl Wilding, head of policy and research at the National Council for Voluntary Organisations (NCVO), raises other issues regarding the feasibility of attempting to promote a new culture of giving, “Changing giving culture is difficult to do and to fund. Even if it was possible, programmes that aim to change culture cannot work within a five-year election cycle – it could take 10 electoral cycles before any change occurred. Then how do you prove attribution? This is a key factor for funders and government who want to see the impact of their giving/spending,” he says.

Policies to promote philanthropy

How would the political parties engender a new spirit of generosity?

Not surprisingly, with a UK General Election imminent, the party representatives who contributed to this article did not provide extensive detail of their policy plans, and many touched on the same triggers – tax reform and connection with communities, being the most common.

Angela Smith says she is proud of Labour’s prophilanthropy policies to date, particularly the extension of Gift Aid, “I’m proud of the fact that Labour extended Gift Aid so that every donation made by the taxpayer is eligible for tax relief – part of a package of measures which also abolished the ceiling on donations through the payroll, offered a 10% top-up on those donations and encouraged gifts of shares.”

Gift Aid is currently under review and a government response is expected soon, though the sector voiced huge ‘disappointment’ when the Chancellor failed to announce those reforms in the recent Pre-budget Report.

Nick Hurd recently suggested that Labour may scrap it altogether for higher rate tax payers. He has also been vocal in calling for reform of the incentive which he says is “plagued by red tape”, though he tells Philanthropy UK he is not convinced tax is the best answer to promoting giving.

“I am not sure that tax is a big driver, although we have said that we will look at reforming Gift Aid to make it more efficient, and tax breaks to stimulate social investment in the most deprived areas.”

There is evidence based on US research that Hurd is correct to some extent. Research from the Center on Philanthropy at Indiana University†, shows for most wealthy donors, tax incentives do not have a huge impact on their giving. The majority are motivated by the desire to meet needs and give back to society, with social connections and personal experiences also playing a part, says the Institute for Philanthropy’s White Paper, which cites the research. In fact, over half of high net worth philanthropists claim that they would not change their donations even if they received no tax reductions, and only 10% would dramatically decrease their giving, the research shows.

Tax aside, Hurd continues, “I think it is about finding ways to inspire more people to connect with the joy of giving, and helping them do that on a systematic basis. I am interested in encouraging more to be done through the workplace, with the help of progressive employers who see the commercial benefit of a really effective community programme.

“There is much more we can do to connect local wealth generators with the opportunity to help their local community,” he adds.

The Liberal Democrats would focus on eliminating what they see as barriers to giving, Jenny Willott says. “We are currently seeing more barriers rather than fewer. The recession has created a veritable army of potential volunteers: people seeking work who want to maintain existing skills and develop new ones. They are too often given is information and told that if they volunteer, their benefits will be cut. This needs to be cleared up…if we are serious about promoting and supporting a culture of giving we must ensure that these often unintended barriers are eradicated as soon as possible.”

Willott also says that her party would actively promote tax effective charitable giving bank accounts, along the lines of the product recently introduced by Coutts.

“We would promote and support the integration of taxeffective charitable giving accounts with mainstream banking, so that donors can give money and claim Gift Aid far more easily, especially through online banking. By offering this to anyone with a savings account, the ease of giving would be advertised to the vast majority of the population, and once people get into the habit of giving they tend not to stop,” says Willott.

Jean Lambert, Green Party MEP for London, accepts tax incentives are important but feels establishing stronger links between people and their communities, and between those communities, would provoke greater giving.

Lambert says a culture of philanthropy in the UK could be encouraged if there was “more of a culture of communities working together. The reason people give to charities, NGOs or political parties is they believe collective action will make a difference.

“An emphasis on encouraging community activism by government might lead to more local giving (to the campaign for a new swimming pool in your town; for local employment-oriented charities) where you can see immediate effects, rather than national donations. Stronger and more-empowered local communities will also be able to find innovative solutions to issues like peak oil and climate change.”

And positive change will also come if donors are prepared to take risks, says Margaret Ritchie, Northern Ireland’s minister for social development. “There is a valuable role for philanthropists in providing ‘external challenge’, acting as a catalyst for some of the ‘uncomfortable’ and difficult issues we as a community must address. Many people here [in Northern Ireland] have taken risks for peace but we still need people, including philanthropists, to take risks for progress to a genuinely Shared Future for everyone.”

Conclusion

Because philanthropy involves the use of private ‘charitable’ money in the public domain, it will always remain a contentious issue and is unlikely ever to transcend politics. Some see government’s role in the promotion of giving as overly-interventionist while others consider it a governmental duty to do yet more. Whether politicians can influence levels of giving through policy is hard to prove, and there is a question over whether the taxation ‘stick’ or ‘carrot’ is best. Donors claim their giving is largely independent of external incentives, but the actual impact of innovative policies remains to be seen and is a challenge most parties say they are keen to take up. Those who believe that government has a role to play in promoting giving also seem convinced that as well as encouraging people to give more, a key aim must be to encourage more people to give – culture change is high on the agenda and parties, perhaps spurred on by the current global crises, seem to be arriving at some consensus around this idea.

† The 2008 Study of High Net Worth Philanthropy, 2009