Philanthropy and charitable giving in 2024

The Charities Aid Foundation has published its latest Charities Aid Foundation UK Giving Report 2024, showing the results of its widespread research into public giving patterns. The giving behaviour it reveals shows the importance of the Charity Commission’s push for more philanthropy.

In November last year Orlando Fraser launched the Commission’s new push to encourage more philanthropic giving in the UK. The UK is now the world's third most generous nation, with 71% of people giving to charity – a total of 12.7 billion per year in 2022, a record of which we as a nation should be most proud.

In a speech given at Kent University Fraser explained that the top 1% of taxpayers (on an income of £160,000 or more) give disproportionately low, and declining levels of charitable donations. The average monthly donation of the top 1% is £48.

This figure becomes even more surprising when seen in the context of the CAF report, which shows that the average mean monthly donation for the UK is £65. The report explains that those living in some of the most deprived areas give a greater percentage of their income than those living in some of the richest areas.

Charities are experiencing higher than ever demand on their services, while overall charity sector income has fallen due to the cost-of-living crisis. Those on average incomes cannot afford to increase their donations. Government funding should not be relied on to make up the shortfall. This philanthropy from high net worth individuals could be invaluable.

What is so great about Philanthropy?

Fraser explained that not only is extra income needed by the sector, some aspects of philanthropy make it particularly beneficial for charities.

Firstly, philanthropists are often entrepreneurs who are used to taking risks. They are willing to fund and facilitate innovation in the charity sector, offering funding with fewer strings attached than traditional grant funders. This means that charities can experiment to find the most effective way of achieving their aims. Subsequent government funded programmes can be delivered more efficiently with improved impacts. One fantastic example of this is the Diabetes Grand Challenge. The Steve Morgan Foundation gave an unprecedented £50 million to JDRF and Diabetes UK to fund innovative research projects with the aim of curing or radically improving treatment of type 1 diabetes. Ground-breaking developments are already taking place.

 Secondly philanthropists understand that charities have overhead core costs that allow them to operate for the public benefit. Philanthropists are more willing to fund these costs. The public has a strong preference for 100% of their donation being used for the charity’s objects, so philanthropic funding can help charities raise more money for their projects.

Finally, philanthropy can give rise to more charitable giving, building networks of charity work that help support and nurture each other. Fraser gives the example of Made in Stoke on Trent, a project which encourages people with local connections to give back in support of local communities. The charity’s mission is to create a community of 10,000 people who contribute to the regeneration of Stoke-on-Trent. This sort of initiative can build connections, innovation and support further charitable work.

What explains the undeveloped culture of philanthropy in the UK?

Fraser cites the Beacon Collaborative “Our economy offers the freedom to create great wealth, but with reward must come responsibility.”

This ‘social contract’ is breaking down; the gap between rich and poor growing wider and there is an increasing lack of empathy and understanding that the lucky should help the unlucky.

The author also wonders if the fact that charities are having to plug the gaps left by cuts to public services, combined with the additional 45% rate of tax applied to the top 1% leaves a rather bitter taste in the mouths of potential philanthropists.

The British are also traditionally unwilling to talk about money. In the US there are higher levels of philanthropy and less embarrassment around money.

So what is the Commission’s plan?

Fraser explains that one of the statutory objectives of the Commission is to promote the effective use of charitable resources. As set out above, philanthropy can promote innovation, efficiency, stability and further fundraising.

Firstly, the Commission has recruited Rory Brooks a philanthropist, to the non-executive board of the Charity Commission. He will champion the Commission’s work on philanthropy in the years ahead.

Secondly  the Commission will improve its data analysis and presentation to help philanthropists and their advisers find the right charities to fund.

Finally they plan to hold summits with key stakeholders to promote philanthropy. They aim to influence government policy and work with overseas regulators.

How can we help?

Mills and Reeve has an established philanthropy practice working for individuals and businesses. If we can help contact Adam Williams [email protected]  

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