Introduction

Even in countries such as the UK where philanthropy is well developed, the changing context can often bring to the fore questions about the role of philanthropy and how it can be used to maximum effect.

Below are some observations about how recent developments are influencing the nature of philanthropy in the UK: 

Leveraging all assets

Why are charities' investments in the spotlight?

Foundations in the UK have between them approximately £43bn of assets.[1] There is growing attention not just on how they deploy their income to support charitable causes, but how they invest their endowments.

Traditionally, foundations have focused on how they achieve their mission through the deployment of income from their endowment. However, gradually more foundations are starting to consider how they can effect positive change, and potentially secure even more sustainable returns, through the way they think about their investments.

There are a number of ways in which this has manifested itself in recent years. In 2013, we highlighted the growth of interest in social investment – investing in organisations or funds that generate not just a financial return, but also a social and/or environmental return. Networks of foundations, including the Social Investment Impact Group, continue to provide opportunities to engage and invest in the field.

The high profile 2013 BBC Panorama programme about how Comic Relief invested its assets in companies that were deemed to be in contradiction of its mission also brought the relevance of responsible and ethical investment to the fore. As a result of the public’s response to the programme, Comic relief amended its investment policy.

Through positive and negative screening or active engagement, more foundations are now seeking to incorporate environmental, social, governance or other factors – including ethical – into their investment decision-making processes. Some are also thinking about how best to align how they invest with their mission. Such considerations have given rise to a growing network of some of the UK’s largest foundations, working together to develop and share best practice in relation to responsible investing. Indeed, this is becoming an international theme, with a number of foundations with endowments, such as the Rockefeller Brothers Fund, joining a movement that is choosing to divest, reflecting concerns about climate change. 

Campaigning

What is the impact of the Lobbying Act?

Providing support for campaigning is an important role for foundations, and debate regarding the Lobbying Bill has recently shone a light on this.

The issues facing society cannot be solved by philanthropists funding service delivery alone. Whether the aim is to promote education, tackle climate change or reduce inequality, far greater resources are needed than the money UK foundations distribute annually. That is why supporting campaigning to raise awareness about social and environmental issues, to influence policy and to hold government, corporations and civil society to account has always been an important part of what philanthropy can do.

Looking at our findings, whilst million pound donations are typically used to create or top-up private foundations or to fund major capital costs such as new buildings, some were directed towards campaigning work. For example, in 2013 three seven-figure donations were made to support environmental advocacy work.

The draft Lobbying Bill generated significant debate among civil society organisations and foundations in 2013 due to concerns that it may limit their ability to carry out their charitable objectives. In response to the draft bill, the Association for Charitable Foundations issued a submission that stated: “We believe the Bill as currently drafted could substantially restrict the ability and confidence of foundations, and those they fund, to engage in the public or policy sphere in the pursuit of their charitable objectives. This not only threatens the way charities and civil society organisations have traditionally operated, but potentially constitutes a severe restriction on the quality of public debate on issues which relate to all the areas where charities and foundations work.”

The Lobbying Act was legislated in January 2014, having been through a series of changes which were welcomed by the National Council for Voluntary Organisations (NCVO): “The bill now provides a much more sensible balance than it did to begin with between creating accountability and transparency in elections while still allowing for charities and others to speak up on issues of concern.” According to the NCVO, the Act is not intended to limit the normal campaigning activity of charitable organisations.[2] 

History

What is the history of philanthropy in the UK?

The philanthropic impulse is likely to have existed as long as society, but the first organised charity, the King's School in Canterbury, was founded in 597AD. Given the dominant role of the Church in the past, it is unsurprising that religious causes were the prime beneficiaries of charitable donations for many centuries. Poverty relief, human welfare and education became common recipients of the philanthropic effort during the Age of Enlightenment.

The Victorian Age (1819–1901) was a period of great growth and maturity for philanthropy in the UK. Many of today’s most popular charities, such as the National Society for the Prevention of Cruelty to Children (NSPCC) and the National Trust, were established in the 1800s, while prominent philanthropists of the time included Charles Dickens and Baroness Burdett-Coutts (granddaughter of Thomas Coutts, the founder of Coutts).

During the 1940s, the UK created a welfare state, with the basic premise that the government should provide universal health care and education, as well as other social support and protections. This still shapes the context of philanthropy in the UK today, as major donors tend to believe private philanthropy should not be a substitute for government funding in these key areas. Instead, philanthropy is seen as a way to support activity that falls outside the realm of the state or business.

Today, philanthropy is popular both politically and culturally in the UK. The government has a dedicated Minister for Civil Society based in the Office for Civil Society, who drives government policy in the area. The government also encourages charitable giving, primarily by offering tax incentives and relief to donors.

In the UK, there are three separate regional regulatory bodies for charities. The largest is the Charity Commission, which covers England and Wales, in addition to the Office of the Scottish Charity Regulator and the Charity Commission for Northern Ireland.

National public fundraising campaigns such as Comic Relief/Sport Relief and BBC Children in Need have arguably become part of popular culture, and receive extensive media coverage. Media interest in reporting on major philanthropy has also increased, and million pound donors in the UK do tend to receive publicity for very large gifts, especially when the donor is happy to be named.

While some philanthropists wish to remain anonymous, there is a significant amount of information in the public domain about donors. Even so, there are efforts to further increase the flow and availability of information about funders. For example, in 2013 the Indigo Trust launched an initiative with the aim of ensuring that within five years, 80% of grants made by UK charities, foundations and others would be reported as open data to agreed standards.

The UK also has a tradition of honouring philanthropists. These honours include the Carnegie Medal of Philanthropy, the Beacon Awards and state honours. The Prince of Wales Medal for Arts Philanthropy also honours philanthropists who support the cultural life of the UK.

[1] Association of Charitable Foundations, Top 300 Giving Report, 2014

[2] National Council for Voluntary Organisations (NCVO), Lobbying Act FAQs, 2014