In recent years there has been an explosion of interest in the UK in promoting philanthropy, encouraging new giving mechanisms and looking at new donor constituencies. There has been a perception that they do these things better across the Atlantic. ‘Why can’t the UK be more like the US?’ they cry. The purpose of this article is to explore differences in what we might call the culture of giving – traditions and attitudes – among the wealthy, which are emerging from research on both sides of the Atlantic.
There are various sources to draw on for the US analysis, but until now there has been no comparable research in the UK. Part of the brief of Philanthropy UK is to address this gap. Although the analysis of the UK research is still work in progress, we can identify several emerging themes.
Tax and government responsibility
‘If it were not for the savings in taxes – the notion that the government really is participating in a gift – I think there would be an awful lot less giving.’ (Quoted by Dr Teresa Odendahl in her research with 135 wealthy US donors in 1987.) Part of the reason for giving, and for giving the maximum for which they received a reduction, was antipathy to the idea that their taxes would otherwise be contributing to the maintenance of a welfare state. Creating a foundation is seen as a way of ‘not giving all your money to the government in taxes’. Essentially people see the use of the tax system in this way as a form of hypothecation – earmarking taxes for a specific purpose.
In Francie Ostrower’s research, almost everyone rejected the idea of reducing tax incentives for giving and allowing the state to use the increased revenue to support the types of welfare and cultural activities which have benefited from philanthropy. Quotes included ‘That’s socialism’ and ‘If I wanted to live that way I’d move to Sweden’. There was also scepticism about the ability of government to provide an effective substitute for private philanthropy.
Antagonism to the welfare state is far less marked in the UK. All those interviewed believe in the principle of the welfare state; they see it as the government’s task to pay for certain things out of taxes, although people’s priorities clearly differ. While the cost of social services is always an issue, there is not the same impetus to ‘tell them where their dollars can go’. Only one person interviewed explicitly referred to tax as ‘my money’. It was recognized, however, that the state cannot do everything and the wealthy have a duty/responsibility to contribute.
For decades the state has taken responsibility for health, education, pensions and social welfare, with taxes rising accordingly. Generations brought up in a welfare democracy do not regard access to basic services as a matter of charity, but one of rights – rights reinforced by government. But the increase in demand for and perceived patchy quality of service provision means that while many have a sense of responsibility, they feel it must first be directed to their own (extended) family.
Although the focus of this paper is culture and attitudes, there is one practical difference relevant to the wealthy donor: the use of intermediary charitable vehicles and planned giving is far greater in the US. In the US, 63 per cent of charitable giving was funded through gift funds, trusts and foundations. Fewer than 50 per cent of those interviewed in the UK had set up trusts.
In the US, donors are able to enhance the effectiveness and significance of their donations of capital through schemes which are not available in the UK. It is believed that over 40 per cent of major gifts, and more to endowments, are based on the type of mechanism which allows the donor to pledge an irrevocable charitable gift at some time in the future, enjoy or allocate the income on the capital (for example to a child) and obtain tax relief at the time of the commitment. This way the donor can enjoy the appreciation of the recipient in his lifetime.
Much US giving is linked to community. People feel a responsibility to embellish their community; they feel that excellent local services reflect well on their own success. Those who do not contribute risk being perceived as ‘free riders’ or not ‘doing their share’. Community links are reinforced by very large commitments to religious causes (some 40 per cent of all charitable giving), often associated with the place of worship, or through payroll giving (involving 37 per cent of employees supporting local activities through organizations like United Way).
A similar sense has developed in the UK in recent years. For example, the renaissance and pride in Birmingham was influenced by, and now reinforced and exploited by, the rise to prominence of the City of Birmingham Symphony Orchestra, under its charismatic conductor Sir Simon Rattle, and partnership funding for lottery-funded projects is strongly linked to civic pride. But that pride is not always underpinned by significant private support for capital projects.
People based in areas with a strong sense of local identity do seem to feel a strong commitment to putting something back into that community. For example, the five people interviewed who are based in and around Newcastle make the majority of their gifts to local causes. But it is not possible to say to what extent this is influenced by the existence of the very successful Tyne and Weir Community Foundation, with its very active director, by the evident surrounding deprivation and need, or by passionate local sentiment – and distance from London.
Volunteer activities and leadership
Volunteer activity, particularly board membership, is of huge importance for giving among the wealthy in the US. Financial contributions are just part of an overall involvement with non-profit organizations (NPOs). In the recent US research, 57 per cent of donations went to causes with which the donor was associated. In the UK, fewer than one-third of respondents give over 80 per cent of their donations to causes where they are directly involved.
In the US, 71 per cent of interviewees serve on a board, over 75 per cent engage in fundraising activities and over half are involved in event planning. In the UK, the proportions are significantly less, particularly for fundraising. The boards of major educational and cultural institutions, and charities generally, have a broad remit. Many fear what they perceive to be the dangers of a board driven by donors. They quote the dictum ‘give, get or get off’ with disdain. Things are changing, however, and organizations are exploring how to adapt the US philanthropic board model, but it is a process requiring a change in the corporate culture of NPOs which may not be appropriate for all.
Being an immigrant society
There are few families in the US who do not claim at least one immigrant great-grandparent and many count an immigrant grandparent in their family. A strong theme is the extent to which people feel gratitude to a society that gave refuge and economic opportunity.
This motivation has been strong in the Jewish community and is emerging in some parts of the Asian community in the UK. But without further detailed research it may be hard to distinguish between the impact of gratitude and ‘putting something back’ – the immigrant factor – and the strong influence of traditions of tithing, prevalent in Judaism and Islam, among other religions.
Philanthropy as a characteristic of the elite
Equally important in the US, philanthropy is linked to the nature of upper class culture. The US may lack the class distinctions and social traditions which still persist in the UK, but analysis of US philanthropy shows that it becomes a mark of class status that contributes to defining the culture and boundaries of elite life, a ‘way of being part of society’ and ‘one of the avenues by which society makes its connections’.
This is not the case in the UK. The extent to which elite philanthropy opens doors to the highest levels of British society is limited and there are many people who are thought to be members of the upper levels of the social hierarchy in the UK who are not perceived to be major philanthropists.
Public celebration of wealth and philanthropy
We know that wealth, wealth creation and philanthropy are celebrated in the US, although with the current reduction in stock values and the many recent reported cases of corporate malpractice, confidence may be dented. In the UK, however, we have seen some churlish media reporting of major gifts. The scepticism associated with political donations, or with donors of questionable probity in their public lives, is transferred by extension to other gifts. Many of those interviewed in the UK sense that the status of philanthropy is low and link this to the attitudes of journalists and academics to commerce and wealth creation, which they seem neither to understand nor to respect. It is therefore harder to identify and celebrate role models who could be part of a strategy to encourage major philanthropy. But even here things are changing, as the philanthropic activities of those who made money in the 1990s in the UK start to bear fruit.
A different culture?
Attitudes in the UK are changing: there is a realization that the state cannot do all, a feeling that philanthropy can provide cohesion in society in the absence of organized religion, and the notion that ‘if you want to defend prosperity you have to attack poverty’. This is linked to debates on corporate social responsibility and governance.
But there is still a fundamental gap. A strong theme in the US is that philanthropy’s strength lies in allowing individuals to support the causes they value. Donors value the individualism in terms of choice, initiative and impact which they believe the current US system represents. For these reasons, philanthropy represents more than a mechanism for channelling money to good causes. It is seen as representing some of the most valuable and even defining elements of American society. For one woman, philanthropy is ‘the idea of giving and citizen participation – I think that’s what America’s all about’. One man discussed ‘the whole difference between our system and the European system, where the government fills the gap and the people don’t do anything’. Philanthropy not only sustains a set of organizations; it sustains a set of values.
1 I have drawn directly from Francie Ostrower, Why the Wealthy Give (Princeton University Press, 1995), and Paul Schervish and John Havens, The Mind of the Millionaire (Boston College, 2002). Other sources are referred to in the text.
2 Philanthropy UK was set up by the Association of Charitable Foundations in April 2001 as a three-year project. It is funded by the Esmée Fairbairn Foundation, the Gatsby Charitable Foundation and the Lloyds TSB Foundation for England & Wales. The project brief is to promote new philanthropy, including encouraging the creation of new foundations, in various ways. Details can be found on the website at http://www.philanthropyuk.org
3 Quoted in Trust Monitor in 1990.
4 See note 1.
5 As reported in research by the Institute of Public Policy Research, published in May 2002.
Theresa Lloyd is Director, Philanthropy UK. She can be contacted at firstname.lastname@example.org
The full report of Theresa Lloyd’s research in the UK, based on 100 interviews, will be available by the end of the year. The book will include a chapter which will be an expanded version of this article.
For more information, see http://www.philanthropyuk.org