October/November 2013: Reinventing philanthropy

Written by Beth Breeze and Theresa Lloyd
October/November 2013

Reinventing philanthropy

Beth Breeze and Theresa Lloyd analyse the history of philanthropy, finding it
is not a simple, static activity, with philanthropists open to change

MUCH OF what we know — or think we know — about philanthropy is based on the 3 ‘A’s: assumptions, anecdotes and American studies. The idea that there exists a ‘new philanthropy’ is a good example of something that is widely assumed to be true being based more on speculation and selective examples, rather than on a reliable evidence base.

Why would anyone make such a claim without good reason to do so? A ‘preference for novelty’ has been noted as a defining feature of our times because we assume that if it is new it must be intrinsically better. Tired products are re-packaged as ‘new and improved’ and political parties get a fresh lease of life by prefixing the word ‘new’. The opposite of ‘new’ underscores this preference: obsolete, old fashioned and out of date.

This preference for novelty is at least a century old: in Thorstein Veblen’s caustic study of ‘conspicuous consumption’, published in 1899, he notes: “A fancy bonnet of this year’s model unquestionably appeals to our sensibilities to-day much more forcibly than an equally fancy bonnet of the model of last year; although when viewed in the perspective of a quarter of a century, it would, I apprehend, be a matter of the utmost difficulty to award the palm for intrinsic beauty to the one rather than to the other of these structures.”

But what have fancy bonnets or ‘new and improved’ products got to do with contemporary major donors? The phrase ‘new philanthropy’ emerged towards the end of the twentieth century and gained traction over the past decade as interest grew in understanding the nature and motives of contemporary philanthropists.

It has a triple meaning — new types of donors, giving to new types of causes and using new methods of giving — and is generally viewed as a change for the better, contrasting favourably with the allegedly careless and paternalistic approach of philanthropic forebears, especially bewhiskered Victorian industrialists and do-gooding Lady Bountifuls!

Philanthropic impact
None of this stands up to historical scrutiny. Many major donors in the past exhibit characteristics that are supposed to be unique to today’s new philanthropists: being young, entrepreneurial and first-generation rich: Thomas Guy, Isaac Wolfson and Joseph Rowntree all fit this description.

Probably the best known British-born philanthropist, Andrew Carnegie, was selfmade, started giving at a young age and by passed existing charitable structures to set up his own vehicles to tackle the causes he cared about.

The suggestion that historic donors didn’t care about impact is equally easily dismissed: in 1758 the philanthropist Jonas Hanway resigned as life-governor of the Foundling Hospital after calculating that it cost £60 to raise a foundling in the institution, which was more than twice the £25 needed to raise a child within a family.

The rise of new recipients of philanthropic spending is the easiest claim to substantiate — the emergence of the environment as a favoured cause and the extended scope of international development efforts are a result of scientific
advances and the positive aspects of globalisation.

But it is easy to overstate this change, as similar shifts in the focus of philanthropic attention have occurred throughout history. Just as climate change and global health are prevailing concerns at the start of the 21st century, it was popular to help poor maids to marry in the 15th century, to pay ransoms for people captured by pirates in the 16th century and to make contributions to rebuild London after the Great Fire in the 17th century.

As the most urgent social problems change over time, so too the philanthropic response alters, as noted in a 1934 book (called The New Philanthropy!) by Elizabeth Macadam: “The worthy citizen of the eighteenth century relieved his conscience by a gift to an orphanage; the benevolent lady of the nineteenth century distributed soup and blankets. Her daughter ‘taught the orphan boy to read and the orphan girl to sew’; her grand-daughter went ‘slumming’.The twentieth-century lady is on the committee of the village institute; her daughter is a guide captain and her son helps at an unemployment centre.”

In our recently published book, Richer Lives: why rich people give we present an in-depth study of why and how the richer members of our society give away their private wealth. We explore the question of ‘the ‘newness’ of ‘new philanthropy’ and conclude that those making significant donations in the second decade of the 21st century cannot be characterized as any ‘newer’ than philanthropists in any other era.

Myths of old & new
The role of philanthropy and philanthropists has been continually re-invented to
reflect contemporary needs, dominant values, available wealth, technological developments, new forms of financing and tax structures and the broader socio-political context.

In other words, philanthropy cannot be divided into ‘old’ and ‘new’ but is always evolving as a product of its time.

However, we are able to make comparisons between the older and younger donors operating today, as our study involved revisiting rich donors last interviewed in 2002 (the findings of which were published in Why Rich People Give by Theresa Lloyd) as well as adding a new cohort of donors, with a younger age profile, who we first interviewed a decade later in 2012.

This research design creates a unique opportunity for a longitudinal study of UK philanthropists, which will be revisited again in 2022, 2032 and so on – a sort of ‘ten up’ of the philanthropy world!

So what are the key messages from the 2012 update? Consistent with our argument that there is no sharp divide between philanthropy in different eras, we find more similarities than differences between our two groups:

Philanthropy is a very important aspect of the lives of both younger and older donors

Over a quarter of all our interviewees rated the importance of philanthropy in their lives as ‘10’ on a scale of 1-10 and, encouragingly for the future, the belief
that philanthropy is of growing importance was ten percentage points higher amongst emerging or newer donors.

Whilst many of our interviewees reported instances of feeling unappreciated and unfairly criticised for their giving — notably having their motives questioned, but also their choice of causes — overall, they sense that the political and cultural climate for giving in the UK has improved over the past decade.

Donors give because it enriches their lives
Philanthropic acts are motivated by a complex array of factors, including different drivers for the same donor giving to different causes at different times. But the one shared motivation is that it is a means of enriching donors’ lives in many ways.

These include feelings of satisfaction at using their private wealth to support the causes they care about; the enjoyment of having unusual experiences and developing relationships with interesting people working in charities, as well as fellow donors and beneficiaries; the opportunity to integrate giving into their social life and retirement activities; and the beneficial impact on their family, as a way of sharing values across the generations and leaving a meaningful legacy beyond a simple sum of money.

Philanthropy is not a simple, static activity and philanthropists are open to change
Despite a widespread view of philanthropy as a straightforward, unchanging activity and the tendency to pigeonhole donors into ‘types’ (such as ‘driven by religious belief’ or ‘focused on local causes’), these simplifications sit uncomfortably with the reality of a complex, ever-changing sphere of activity populated by donors who are open to new ideas about how to best use their private wealth for the public good.

This book charts a widespread concern with being strategic, a desire to focus on underlying problems rather than symptoms, and a willingness to be more open about giving. These trends are aligned with new approaches and mechanisms, including social investment, venture philanthropy and taking up professional advice (though a willingness to pay for advice is more common amongst the younger donors). At the same time, we see renewed interest in old ideas such as tithing, giving anonymously and collaborative giving.

The end of the armchair philanthropist
Almost all those who give substantial amounts of money also give substantial amounts of time. Donors want to be involved with the cause they are supporting, though the level of engagement varies from donor to donor and from cause to cause, and changes over time, depending on their other commitments. The desire for involvement may create new pressures for
time-stretched charities, but project visits (‘seeing is believing’) can create a virtuous cycle of deeper commitment that leads to more donations.

Fundraising is improving but needs the input of donors as askers
The donors we studied feel that fundraising has become more professional over the past decade, especially in terms of the right research being conducted before approaches are made, and fundraisers having a better understanding of how different donors might want to engage with causes.

However, donors want to have relationships with the charity chief executive and the trustees, not just the fundraisers, and believe that sizable donations ought to create access to the charity leadership. Fundraisers also need more support
from major donors. While many major donors do get involved in asking, a sizable proportion (especially of newly emerging philanthropists) have never asked others to give. This needs to change, given the importance attached to being asked by someone known and trusted by the potential donor, and the role of peer pressure in securing a positive response.

Why do rich people give?
In addition to the importance of being asked well, by the right person, at the right time, our study offers ten further answers to the question incorporated in the book’s title: ‘who do rich people give’?

The original 2002 study identified 5 drivers behind the giving of wealthy people:

1. Because they believe in the cause, usually as a result of a personal encounter, such as ill health or proximity to a social problem. The affinity between the donor and the cause underpins and reinforces their enthusiasm.

2. Because they want to be a catalyst for change and make something good happen that would not have occurred without their input.

3. Because philanthropy helps them to develop as a person by gaining new knowledge or putting skills to work in a new context.

4. Because they feel a duty and responsibility to share their wealth; despite its old fashioned connotations, the concept of noblesse oblige is alive and well.

5. Because they enjoy the relationships that develop with the charity leadership, with fellow donors and with the beneficiaries.

Ten years on, we find these five factors remain in place as key drivers of giving, but we also identify five further explanations for why rich people choose to give away some of their private wealth to promote the public good:

1. Because they believe philanthropy is the right use of surplus money. Most people we spoke to were worth at least £10m and had large incomes on top of that wealth, so by any definition they have some to spare. Whilst we argue that the main reason some rich people do not give is because they feel financially insecure (however irrational that may be), our interviewees had a more accurate sense of their surplus and a desire to put it to good use.

2. Because they are clear about the complementary roles of government and philanthropy. There are many varied views about what should be funded by private individuals and what is the responsibility of the state, but drawing a clear line allows donors to focus on funding what feels right and appropriate to them.

3. Because they believe philanthropy is a good parenting tool. The vast majority of our interviewees have children (89 per cent) and many talked about their offspring when discussing their philanthropy — both in terms of involving them in funding decisions and in terms of choosing philanthropy as a better alternative to an over-large inheritance.

4. Because they appreciate appropriate recognition, despite awareness that it can fuel critics who see giving as driven more by ego than by generosity, Many of our interviewees felt that public appreciation – such as awards, naming opportunities and honours - was an enjoyable ‘bonus’. This view was held more strongly by established or older donors, one of whom explained: “It’s not an improper motive. There’s nothing wrong with wanting to be recognised as a good guy”.

5. Because they get joy out of giving. The final and most important reason why rich people give is refreshingly simple: without exception, the people we spoke to give because in some way it enriches their life to do so. The book goes into more detail on all the points summarised above, but we give the last word here to one of the many rich donors who spoke of the richer life they lead as a philanthropist:“I always say that philanthropy makes you feel good, and I don’t mean goody-goody two shoes, righteously good, but it just makes you
feel good inside. You get a buzz.”

Dr Beth Breeze is director, Centre for Philanthropy, the University of Kent. Theresa Lloyd is a philanthropy expert and consultant in strategic planning, fundraising and governance for charities

Related Articles

Most read stories...
World Markets (15 minute+ time delay)