Trends in giving

Today I once again visited Philanthropy UK, “the leading resource for free and impartial advice to aspiring philanthropists who want to give effectively.”

Here are their 10 trends in (British) philanthropy:

1. Private wealth is increasing

There has been a dramatic increase in the number of wealthy individuals as well as a shift in source of wealth in Britain: 15 years ago, 75% of the Sunday Times Rich List had inherited their wealth and 25% were self-made. Today that ratio is reversed. Meanwhile, the number of billionaires in the Rich List grew by 25% to 68 in 2007, while the country’s richest 1,000 increased their fortunes by 20% to almost £350 billion.

2. A new type of donor is emerging, altering the giving landscape

Changes in amount and source of wealth are giving rise to a new type of donor – one who is younger, typically (but not necessarily) self-made and socially conscious. The new philanthropists want to be engaged in their giving, using their business experience and expertise to support the charity more closely. They also are willing to invest a significant amount of capital – including funding core costs – and take significant risks to test innovative ideas. Importantly, because they are private individuals, they are able to take risks that government and many foundations, who are accountable to other stakeholders, simply cannot.

3. More people are giving during their lifetime

More people are choosing to give during their lifetime, rather than through a one-off legacy bequest. They want to experience the joy of giving and of the relationships they develop – with charity staff, beneficiaries and other donors. More people are talking publicly about their giving, providing role models to new givers.

4. Views on the amount of wealth parents should pass on to their children is changing

Especially among the self-made, more individuals are choosing to give much of their wealth ‘back to society’, through either legacies or lifetime giving. They will provide for their children, but charity is also important. A 2000 Lloyds TSB survey revealed that over half of people with liquid assets of £250,000 or more would prefer to either spend their money or give it to charity rather than to their children.

5. Givers increasingly want to see the impact of their donations

As they become more sophisticated and strategic in their giving, donors increasingly want to see the impact of their support. This goes beyond outputs, such as the number of people helped, to address the longer-term outcomes and impacts on beneficiaries, such as improved health or self-esteem. Donors are also demanding increased accountability and transparency from charities. They want to be confident that their money is being used both effectively and efficiently.

6. More donors are giving together

More donors are joining together to leverage their funding and to share learning. These include ‘giving circles’ such as The Funding Network, as well as funding vehicles such as ARK and the Private Equity Foundation. See The Philanthropy Directory for a full list.

7. Innovation in charity financing is growing

Philanthropists are embracing new ways of giving, such as venture philanthropy. They also are utilising new types of charity financing – including loans and equity – to support charities and social enterprises, filling a gap in the funding market. Meanwhile, charitable banks have been established, enabling social investors to help disadvantaged communities to achieve sustainable economic growth. See The Philanthropy Directory for a full list of new funding and financing vehicles.

8. There is a growing range of charitable services that help donors to give effectively

There is a growing infrastructure of charities and professional service firms to support and promote effective giving, and to help new and existing donors to take a more informed and strategic approach to giving. Meanwhile, private banks are expanding philanthropy services to their high net-worth clients. See The Philanthropy Directory for a full list of donor support services.

9. Information flows are improving

Publicly available information on charities generally has been wanting. However, this is changing with improved quantity and quality of information flows in the sector. These include online resources, such as the Charity Commission’s Register of Charities, GuideStar UK and Intelligent Giving, as well as research into different areas of charitable activity and tailored advisory services for donors from NPC and Geneva Global.

10. Individual giving is becoming increasingly important to third sector organisations

The recent growth in the number of newly wealthy individuals represents a new and potentially significant income source. Importantly, private individuals provide charities with unrestricted, sustainable and predictable income. They also play a critical role in maintaining the independence of the voluntary sector, especially as more charities are delivering public services on behalf of government.

Looking into the philanthropic “scene” in the UK and the US always strikes me as a bit of a travel in time. It’s not nice to say it but us Germans are a little behind. Much of it, and this thought came to me just now, is probably owed to the fact that giving is about money, and talking about money is largely considered a taboo. If you are wealthy and you give money to charity you get the “champagne sipping charity lady” label. If you’re involved in social change or belong to some environmental activist group you get the “poor student wearing a Che Guevara shirt” label. Either you have power or you have street credibility, can’t have them both… The times, they are actually changing. Black or white labels don’t work and won’t get us anywhere. I think us Germans think too much.

Back to betterplace. Of course the whole concept is an experiment. We are non-profit but with an underlying sustainable business model. That way, we can pass on 100 % of all individual donations to the intended project. In Germany, the public opinion is still “either you’re making profit OR you’re doing good”. The question is, though, can you do both? Is the only challenge to, patiently and through a constant dialog, change the public opinion? Or is it an impossible mission? Some days ago, Joana argued the pros and cons of companies being present on – and the dilemma of corporate social responsibility. Like all of us, she asks herself (and others): How can we all join forces to bring about social change in this world?


1 Response to “Trends in giving”

  1. 1 Philanthropic Travel August 18, 2008 at 3:14 pm

    “either you’re making profit OR you’re doing good”.

    Was ist das? Warum?

    Most companies today generally fall into one of two buckets, for-profit and non-profit. However, a third kind of company is growing in popularity with entrepreneurs, like myself, that threatens to change the paradigm of what it means to be in business. We call ourselves Social Venture Entrepreneurs.

    What it means to be a Social Venture Entrepreneur is evolving, but a simple definition is engaging in social value-creating activity that can occur within or across the nonprofit, government, or business sectors. While virtually all enterprises, commercial and social, generate social value (e.g. jobs, equity, etc.), fundamental to this definition is that Social Venture Entrepreneurship give equal weight to creating social value as well as personal or shareholder wealth.

    Social Venture Entrepreneurship extends beyond the more narrow scope of corporate responsibility that Wikipedia defines as, “a concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment.” Social Venture Entrepreneurs, by contrast, structure their business models to have a net positive effect on most, or all, of the aforementioned stakeholders through the normal course of business. Don’t get me wrong, I applaud the efforts and good work companies accomplish with their CSR initiatives. My intention is simply to highlight the differences between the two.

    The next logical question is, “Why don’t Social Venture Entrepreneurs just create nonprofit organizations?” Nonprofits are indispensable in that they help address inequity in the world in a way that socially responsible companies and/or governments are not. But the reality is, despite their best intentions and monumental efforts, nonprofits have not and cannot solve the issues they target. The resources are too limited and the problems too big.

    Traditional approaches are still falling short, especially as the intensity and complexity of social problems have grown. These persistent problems seem to demand new models and new ways of thinking to crack them.

    An entrepreneurial approach allows social organizations not only to maximize value from limited resources, but also to reallocate resources that would not otherwise be used to address inequity.

    This reallocation, or realignment of resources is one of the big ideas behind Social Entrepreneurship.” -David Chamberlain, Exquisite Safaris Philanthropic Travel Worldwide

    Learn More:

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