Nicholas Ferguson
12/01/2005
Many Americans may not realize that 19th-century British philanthropists created the model for the charity balls and fund-raisers so prevalent today from Newport to Bel-Air. Of course, that was when Glasgow was effectively the Silicon Valley of its time. Since then, charitable giving in Britain has declined dramatically. The world wars left Britain with little surplus wealth, and in the 1950s and 1960s, taxes rose to sky-high levels. Individuals felt that they simply could no longer afford to give.
With socialism as the adopted stance of both the Labour and Conservative parties, the postwar consensus was that the state would pay for nearly all social services, from national health to universities, museums and galleries. A 1948 opinion poll found that more than 90 percent of Britons felt there was no longer a role for charity in the United Kingdom. Curiously, volunteerism—giving of one’s time—continued more or less unabated.
Today, the per capita rate of personal giving in the UK is roughly half that found in the U.S. Important changes are taking place, however, that may narrow this gap. Margaret Thatcher permanently lowered tax rates to levels that are sensible and acceptable. Britain has been the most successful economy in Europe over the past two decades, and evidence of bountiful wealth creation, such as buy-out funds and hedge funds, is booming.
Simultaneously, a fundamental shift in the UK’s attitude toward giving is also occurring. In higher education, for example, every university now realizes that it must raise money from alumni. (In Britain, only 3.5 percent of alumni, even at the most successful fund-raising schools, give regularly, compared with 60 percent of Harvard graduates and an average of 22 percent of U.S. public university alumni.) Growing numbers of charities are targeting social problems, as well. Giving, we now see, is on the rise. Average monthly per capita donations in 2002 (the last year for which figures are available) were £13, a record level.
As overall wealth grows in the UK, many of the families who have made fortunes during the past several decades are creating their own foundations. These groups, ranging in size from $500 million to $10 billion, address numerous worthy causes. Two of the best-known foundations, incidentally, were founded by families who migrated to England: the Westons from Canada and the Rausings from Sweden.
Something Borrowed
Venture philanthropy groups are also appearing. Stephen
Dawson, a corporate financier, has created a philanthropic organization called
Impetus Trust, while Jennifer Moses, a former partner at Goldman Sachs, leads
ARK (Absolute Return for Kids), a fast-growing charity funded mainly by the
hedge fund community. ARK’s fund-raising dinners directly imitate the Robin Hood
dinners in the U.S.
In fact, Britons have unashamedly copied many ideas for
improving the infrastructure of the UK’s philanthropic sector from their
counterparts across the Atlantic. Community foundations, a vital part of the
philanthropy sector in the U.S., were virtually nonexistent in Britain until the
1980s. Today 58 such organizations regularly reach out to more than 90 percent
of the UK’s population; last year the Community Foundation Network distributed
£53 million to more than 18,000 community groups. Still, there are many sources
of philanthropic funding in the UK that no one has sufficiently tapped.
Corporate and work-based philanthropy, which is so important in the U.S., barely
registers in Britain. Religious organizations, in particular, achieve much
higher levels of donations in the U.S. than their British equivalents.
Yet a
fundamentally new approach in Britain toward personal giving continues to gain
momentum, a trend reflected in recent alterations of tax policies to benefit
donors. The current Labour government has unquestionably made important
contributions to the renaissance of philanthropy in Britain. Gordon Brown,
Chancellor of the Exchequer, has modernized and promoted Gift Aid, a tax plan
that increases the value of charitable gifts by 28 percent. Brown also
introduced certain charitable tax incentives for those in higher income brackets
and for payroll giving. Like so many Britons, Brown and the Labour Party realize
that no government has enough money to do everything necessary to make Britain a
better place.
| Nicholas Ferguson is chairman of SVG Capital and the privately funded nonprofit Institute for Philanthropy in London. |  |