Giving an example to UK entrepreneurs

Each of the case studies in The Centre for Entrepreneurs recent report about Migrant Entrepreneurs had a common philanthropic theme running through their success stories with each contributing heavily to the communities that they have joined and who have welcomed them in. This got little attention in the media but deserves further analysis. Is there a cultural difference in charitable giving and what effect will these role models have on philanthropy in the UK?

Philanthropic giving, be it within a country or to overseas projects is key to the world developing in both a social and economic sense. But it is clear to see that some countries’ citizens are far more willing to donate than others. The UK’s donations from individuals as a percentage of national income comes to a substantial amount, consistently in the top 5 nations in the world, but still falls behind the likes of the US quite considerably, often by two or three times. The question is are the US really just more generous, or are there ways in which we can change policy to emulate such high levels of charitable donations.

In the UK, the government is stating a wish to rein in spending, become more streamlined and get out of the way of frontline voluntary and not for profit organisations who it believes has a far greater understanding of how best to operate. However if we are to take this on board and truly get the government to stop the micro-managing of community benefit schemes, we must also find a way to replace the funding that is naturally expected to fall as the government has less clout within these organisations. Government funding for charitable organisations has often outstripped the fundraising income received from individuals in the last decade, so finding a way to replace this with a more philanthropic public is in the UK’s best long term interests.

Interestingly, we have seen that the UK public is actually ranked second highest in terms of likelihood to give to charity, according to the Charities Aid Foundation’s World Giving Index, with 76% of people doing so in 2013 compared to 62% in the US. What is telling however is that the top ranked country is Burma, with 85% of people saying they give to charity. This shows that the amount that someone earns does not necessarily impact their willingness to give, and this is actually mirrored in the UK, the poorest give away 3% of their income to charity compared to the richest who give less than 1%. It is here that we see the really difference between the UK and US culture of giving. The rich in the US are giving over three times more as a proportion of their income than those in the UK and it is at this top end of society that the UK is lagging behind.

If we can understand the reasons for the richest in the US giving away more, then we may be able to emulate it. The Evening Standard blamed the type of millionaires that we see in either country. In the US, many of those who have becomes the richest have often been self-made and are exalted for being so, this closer connection to those who are struggling having seen it first-hand leads to the rich feeling more obligated to give. This is in comparison to the UK in which the Independent has in the past suggested the rich are from rich stock and so do not feel so inclined to give. But is this just a convenient excuse that simply blames society and offers little solution?

With reduced but targeted government intervention, not only could we improve the levels of philanthropy in the UK by those earning most, but also direct the donations to maximise public benefit. The government could maintain a modicum of influence by reducing the tax breaks on some charitable sectors that are not as beneficial to those in need and increase them for the groups which had previously seen the majority of government funding. This is in a similar vein to the US which currently through ‘state-level identification of priority areas’ according to the Centre for Charitable Giving and Philanthropy’s meeting with Professor Mark Rosenman. If this could be implemented alongside a stimulus, replacing direct government funding for charities which gradually falls as private donations continue to increase as recent data suggests. By providing a more effective result for philanthropists, the UK can gain some momentum for the renewal of a philanthropic movement that was rife in Victorian Britain and could central to achieving government aims in becoming leaner and less centralised.

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