The data on million-pound giving in the UK during 2015 is heartening, demonstrating substantial increases in both the number of million-pound donations and their collective value.
Below are some observations about how recent developments are influencing the nature of philanthropy in the UK:
'Boom time' for philanthropy
Increase in UK giving powered by new and repeat donors
Since the Millennium, much has been made of the ‘re-emergence and re-invention’ of philanthropy, and there is even talk of a ‘new golden age in philanthropy’. But until now such claims could easily be written off as anecdotal, isolated examples and perhaps even wishful thinking.
The absence of credible data on the top end of UK giving was the prime reason for starting the annual Coutts Million Pound Donor Report in 2008 and it is only now, as we near the 10th edition of the report, that we have sufficient year-on-year data to substantiate claims about trends.
There will always be outliers in this sort of data. Some peaks are the result of one or two unusually large donations, and some troughs are simply the absence of a handful of similar sized donations in the subsequent year. But over the course of nine years of collecting this data, we can more confidently speak of a ‘boom time’ for UK philanthropy.
That boom is driven by the emergence of new million-pound donors. Last year we identified 33 first time seven-figure donors, and this year we find another 35 who have not previously appeared at any stage in our dataset. Perhaps most encouragingly, seven of the first timers from 2014 gave again at this level in 2015.
These repeat donations are welcome, and they are also unusual because the received wisdom is that the biggest gifts happen irregularly (perhaps only once or twice in a lifetime) and only as the result of a long process of prolonged conversations between the donor, their family and their advisers as well as between the donor and the recipient charities. So, while the rise in million-pound donations in the UK is obviously first and foremost due to the generosity of established and emerging philanthropists and foundations, some credit should also be given to the recipient charities that have clearly earned the trust of donors and prompted them to give again.
Universities top the list
Higher education likely to remain most popular cause
Higher education is yet again the most popular destination for million-pound donations, receiving over a third (35%) of the total value of gifts made in 2015, and almost as much as the other nine cause areas put together, with the remainder (27.4%) being ‘banked’ in foundations for future dispersal.
This is an international trend, reinforced by the exceptional $3bn gift announced on 21 September 2016 by Priscilla Chan and Mark Zuckerberg to a consortium led by the University of California, San Francisco.
Universities are the most favoured cause, for three reasons:
• They are large, enduring institutions that have the capacity to utilise large sums
• The variety of activities on campus – from cutting-edge research and scholarships to arts, sports and student welfare – creating opportunities that accommodate the personal interests of almost every donor
• They have a track record of impact that appeals to ambitious donors who wish to change the future by funding scientific breakthroughs or educating the next generation
No other cause area has such wide-ranging appeal and, importantly, no other cause area benefits from the level of fundraising expertise as that found in university development offices as a result of years of investment in capacity building, as well as matching funding from government. It is therefore unlikely that higher education will be overtaken by any other cause area in the foreseeable future.
Gifts from overseas
UK charities have global appeal
28 million-pound donations were made by donors based outside the UK, and as these donations were slightly larger than the average, overseas donors account for 10% of the total value.
Most commonly these came from charitable trusts and foundations, as was the case for 13 of the 28 overseas donations worth a total of £63m, six of which went to universities whose global reputations likely account for this finding. But an even larger sum came from the nine individuals and families based overseas, who collectively gave £82m, with six of those nine gifts going to universities. The diverse staff and student population of higher education institutions, in addition to the factors discussed above, likely account for those decisions.
However, other causes including the arts and international development, as well as charitable trusts and foundations established in the UK, also benefited from seven- or eight-figure investments by donors based outside the UK. This suggests that some UK charities enjoy a strong reputation beyond its borders, with the robustness and transparency of UK charity regulation likely to appeal to many overseas donors and foundations, as well being the result of donors living a multi-state lifestyle with homes, business interests and connections in the UK as well as their native country.
Charity governance in the spotlight
Effective governance has long been of interest to major donors and the organisations they support but has recently been a topic for event sharper focus.
Last year we noted how fundraising practices had been in the media spotlight. Some charities are already making adjustments in how they contact donors and potential supporters, in anticipation of changes that will prevent them contacting people who have not given recent and explicit consent to receive communications. The consequences for identifying new supporters among the general public are as yet unknown but are predicted to lead to a substantial drop in income from mass fundraising for some charities. If this comes to pass, the need for sustained and growing support from major donors may well increase.
A focus on fundraising practices was followed by a heightened focus on charity governance, with a succession of newspaper front pages criticising the governance, management and ethical practices of some charities. The repercussions continue to be discussed by policymakers including multiple Public Accounts Committee reports and a select committee enquiry on charity in the House of Lords.
Good charity governance has long been a key interest to major donors, both in relation to the organisations they support and in relation to their own role as trustees of private or corporate foundations. Over the years, the case-studies featured in this report have shown that when considering which organisations to support major donors not only look at the activities the organisation undertakes, but also consider the effectiveness and robustness of leadership, including chief executives, the senior management team and the board. In some cases major donors who become significantly involved with the organisations they support serve on their boards of trustees.
Considering the potential impact of the EU referendum
It is as yet unclear if and how the result of the referendum held in June 2016, in favour of the UK leaving the European Union (EU), will impact major giving.
Charities could be set to lose around £200m per year of EU funding, and those focused on issues such as community relations, refugees and asylum seekers, hate crime and race relations, appear to be experiencing an increased call for their services.
While UK universities are the most popular destination for million-pound donations, the higher education sector receives far greater sums from EU funding, and 18 universities rely on this source for more than half of their research funds. How this might be replaced post-Brexit is unclear.
As illustrated in last year’s report, the charitable sector continues to face a challenging financial environment amid the ongoing push for austerity. Charitable organisations are understandably concerned that an exit from the European Union will further negatively affect the funding landscape. In periods of austerity there is often concern that philanthropic gifts will be used to replace lost funding, rather than to enhance the public sphere. While some donors may take a ‘needs must’ approach and in some cases supplement what the UK government or EU funded, clearly no amount of philanthropy could plug the gaps, and many argue it should not be asked to do so. Research also shows that a call to help ‘plug gaps’ can be deeply unmotivating for major donors.
The overall impact of the result of the EU referendum on philanthropists is, therefore, as in every other area, unclear as yet. Nevertheless, many charities will be concerned that its impact may be negative and deter donors at a time when demand for charitable activity is already on the rise.
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.