Owen Byrne, BDB Pitmans
The Chair of the Charity Commission, Orlando Fraser KC delivered a keynote speech at the University of Kent on 9 November entitled ‘Philanthropy Past, Present and Future’ which called for greater philanthropy, especially from the top one percent of earners in society.
First Mr Fraser congratulated the UK for its current philanthropy, drawing on Charities Aid Foundation publications which said the UK is the world’s third most giving nation, with 71 percent of people regularly donating money to charitable causes, and estimating that in 2022 Britons gave £12.7 billion to charity, suggesting it was our most generous year on record.
Why the need for greater philanthropy? Most immediately, demand for the services charities provide is at its highest. Second, he sees it is a crucial part of an ‘implicit, national social contract’, also referred to as a moral imperative, that with great privilege comes great responsibility, the privilege being the opportunity for wealth creation made possible by the economy.
Those on ‘average incomes’ could not be expected to shoulder the burden because the cost of living is squeezing their resources already, and the government cannot be expected to make up charities’ shortfalls, though their additional support of £750 million for charities during the Covid pandemic was specifically mentioned as crucial support at that time.
Mr Fraser’s concerns are that the top one percent of earners are not ‘pulling their charitable weight’, giving less than the same level of earners in other comparable societies and giving less away in value relative to their incomes. To support this he cited data published in 2021 by Pro Bono Economics which noted that incomes of the top one percent of earners was up ten percent over the previous decade but their donations to charity fell by over 20 percent.
More unrestricted funding
Philanthropic giving, he outlined, can ‘facilitate innovation, allow charities to take calculated risks in trying out new ideas, ultimately smoothing the path for new ways of delivering for beneficiaries’.
With that in mind, he called for the larger-scale donations to be unrestricted – allowing the funds to underwrite core operating costs and so ‘allowing for monies raised through public fundraising to be prioritised for front-line service delivery’.
His logic for that is that philanthropists, often entrepreneurs themselves, understand that to make big changes, a charity may have to take a risk or have to make long-term investments in people, systems, and in bricks and mortar.
The wider public of course are keen to see their donations being spent directly on-the-ground for that particular cause, but the Commission is clearly concerned about the ongoing trend for philanthropists wanting the same and it wants to gently reverse that trend. It is easy to see why someone who is able to give a large donation for a cause – enough to change the dial – might be keener to see their donation make an immediate impact directly on the cause rather than allow it to be used for longer-term core costs, but at the end of the day charities do need someone to contribute for the core costs.
Accepting and Refusing Donations
Another interesting policy point is that Mr Fraser promised, in early 2024, guidance for charities on accepting or refusing donations. There has been a lot of attention on this over the last few years but clearly there is some concern at the Commission that some trustees are being overzealous in this area.
Mr Fraser was clear in saying the law generally expects charities to accept monies which are being made available in order to deliver on their purposes for the public benefit, and not to refuse or return them without very good reason.
Charities can’t accept illegal donations and he recognised there will be times where reputational reasons will mean acceptance causes more harm than good, and he made it clear that the Commission would for the most part accept the trustees’ exercise of their discretion and would rarely intervene.
However, he was careful to say that ‘rarely is not never’ and the Commission would intervene if decision-making is materially irrational. In very stark language he added: ‘ demonstrative personal squeamishness around sources of philanthropic funding may benefit the sense of righteous progressiveness of a trustee or the charity executive, but it will most likely not serve the beneficiary reliant on the services a charity provides.’
The Charity Commission has a role as promoter of philanthropy, not just a regulator
In his speech Mr Fraser also put a stake in the ground for the Charity Commission to have a role promoting philanthropy, not just being a regulator. As regulator it provides the framework by which generates public confidence in giving to charity in the first place, but it is also a respected ‘convenor’ of stakeholders and it is recognised as an ‘honest broker’ – i.e. it can use its authority and influence, independent of commercial or political interests and without being blinkered on one specific charitable cause, and has the ear of decision-makers in central government.