Minimum spend debate should be rooted in evidence not emotion

Keiran Goddard

In the last issue of Alliance Jake Hayman made a strident case in favour of a minimum payout percentage for UK foundations. There is much to admire about Jake’s wish to derive maximum social benefit from foundation resources. However, the article contained a number of significant points of misinformation, omission and misunderstanding.

There is a fundamental mischaracterisation of foundations as a sort of cabal of ‘silent self-preservers’. In reality, endowments are an enduring source of support for civil society, requiring careful, context-specific stewardship.

This often involves difficult choices about balancing the needs of today with the needs of tomorrow, all within the framework of a regulatory regime that obliges trustees to use their endowment and its income solely to advance their charitable aims.

More broadly, the comparison to the US is misleading. The US has no equivalent to the Charity Commission and there are much more expansive allowances around what counts as charitable spend, meaning a comparison of a say, a 4 per cent average UK payout vs the mandatory US rate of 5 per cent, is simply not comparing like with like. It is also worth noting that Canada has a mandatory payout rate of 3.5 per cent.

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