View all newsletters
Have the short, sharp Spear's newsletter delivered to your inbox each week

Donation Nation

By Spear's

When it comes to charitable giving, UK high-net-worth individuals have for a long time been overtaken by their US counterparts. Warren Buffett and Bill Gates, for example, have together given away over $65 billion to good causes, ranging from malaria-prevention initiatives in Africa, to under-resourced high schools in Los Angeles. Indeed, with so much giving goodwill across the Atlantic, the UK’s deprived might well have been entitled to feel that they were living in a nation of Scrooges.

Now it seems the UK’s super-rich are learning to give again, and in doing so they are re-awakening a forgotten tradition of philanthropy that has been in gradual decline since the Victorian era, in favour of self-assistance schemes such as trade unions and cooperative movements. But the new generation of philanthropists are not content with merely signing cheques again, they want to give on their own terms. With Coutt’s opening a new department devoted to philanthropy services, the Wellcome Trust becoming the first UK charity to issue investment bonds, and the astonishing success of Absolute Return for Kids (ARK), which raises sums in excess of £25 million at prestigious celebrity evening galas held in London, the new buzzwords are ‘venture philanthropy’.

Spearheading this altruistic revolution is New Philanthropy Capital, a charity founded by ex-Goldman Sachs partners Gavyn Davis and Peter Wheeler, who in 2001 set out to provide high-quality, investment-style advice for ‘a new breed of wealth generators coming through, guys who are taking their giving, their philanthropy very seriously indeed’.

New Philanthropy Capital is on the cutting edge. Unlike foundations such as ARK, it is not responsible for fundraising on behalf of specific charities or causes. The role of NPC, says CEO Nigel Harris, is closer to that of an independent research broker for people wishing to give upwards of £25,000 to a charitable area of their interest. ‘Typically these people have made it in very competitive businesses – financial services, equities, hedge funds, entrepreneurs – and they tend to be very passionate and concerned,’ he explains. ‘When they give their money away, there is no notion of financial return. They want to give it, but equally they want to find the best place for it to go, and they want to understand how that money is being used.’

The reason why the UK’s super-rich have been reluctant to give on a scale similar to the Buffets and Gateses, according to NPC, stems as much from a strong sense of business acumen as from a less accommodating tax system or cultural differences. ‘We start from the premise that one of the reasons people don’t give is that they lack assurance about where that money’s going and how much difference it’ll make,’ explains Martin Brookes, NPC’s head of research. In recent years, NPC has advised on over £20 million of donations to causes such as social regeneration of deprived urban areas of Glasgow, help for families of autism sufferers, and grass-roots initiatives tackling issues such as illiteracy, truancy and bullying in schools.

Those who employ NPC’s services are not seeking attention or plaques on the walls of hospital wards either. ‘A lot of people come to us, precisely because they don’t want to be publicised,’ admits Brookes. When asked about the reasons for this shyness, he speculates that it may often be down to the intensely personal motivations behind the donations. There are well-known individual role models coming out of the woodwork in the UK, such as Tom Hunter, who at 37 sold his sports retail empire to set up the Hunter Foundation; or Anita Roddick of Body Shop fame, who has used her profile to raise funds for the Body & Soul Foundation, which improves quality of life for sufferers of HIV and AIDS. But the majority are content to enjoy their good work in silence.

As Martin Brookes has pointed out, ‘there is a shocking lack of evidence [of efficiency] for a shockingly wide range of charitable endeavours’. This perception, coupled with the feeling among donors of being held at ‘arm’s length’ by charities, has in the past scared away many potential benefactors. Thus, there is a call to improve sector efficiency by submitting the charity world to the same pressures of performance and accountability as financial services. As Brookes emphasises, ‘we only work for the donor’. In fact, NPC’s charity selection criteria are infamously tough, with approximately three quarters of institutions failing to pass. ‘We have a very elaborate framework that we use to analyse them,’ Brookes admits, ‘and when we rock up and visit them, many of them say they’ve never seen this sort of thing before.’ This dedication to service drawn from experience of the financial world, means that donors are able to see what difference their donations have made in concrete terms, right down to the last penny.’

So, for example, when London-based stockbroking firm Execution Ltd. held their first annual ‘charity trading day’ in 2002 – all gross revenues from that day’s trading going into a charitable trust – they approached NPC for advice on creating a donation portfolio. ‘We knew we wanted to do something, embark on a social philanthropic programme, but we just weren’t sure what area we wanted to give to,’ reflects Execution’s James Blackburn, also an NPC trustee. ‘NPC came up with the idea of supporting community projects in the UK. First they researched the work that the charities did, and secondly they highlighted the leverage on the money that we would give.’ Now in its fifth year and approaching the £4-million fundraising mark, the Execution Trust have been able to support local charities across the UK, such as the project in Manchester, United Estates of Whythenshawe, which saw a vandalised church transformed into an active community centre and gym for the residents of the troubled estate.

Content from our partners
HSBC Global Private Banking: Revisiting your wealth plan as uncertainty abounds
Proposed non-dom changes put HNW global mobility in the spotlight
Meet the females leading in the FTSE

Speaking of other projects, such as the Fare family action group on the Easterhouse estate in Glasgow, awakens an unmistakeable enthusiasm in Blackburn’s voice. ‘They all stand out in such different ways, but what they all have in common is that the people who run them are absolutely passionate. And that passion infects us.’ Through face-to-face involvement, the importance of involving financial big business with local grass-roots projects goes beyond the usual charity scope of merely redirecting money. ‘What we do is give them all sorts of additional help,’ says Blackburn. ‘It could be consultancy work that would be impossible for them to pay for, given the priorities they face. Some of it will be completely foreign to them.’

As part of this continuing commitment, every year the charities funded by the Execution Trust are brought together in London to share their experiences and thoughts. The result of this is that projects like the Whythenshawe are able to develop towards self-sustainability through income-generating activities. ‘What we’ve done with the guys in Manchester is really a good example of what we do,’ says Blackburn. ‘It’s not all just about money. What they also lack are the skills to enable them to drive their charities on, to achieve all their goals.’

The process by which donors select charities to receive support is a rigorous one, as Harris explains: ‘We put together something like an investment portfolio with very detailed information – as much as the donor wants – on how the charity uses their money. Not only now, but after a year, even after the back-end of it.’ From the donor’s point of view, James Blackburn describes the implications of the partnership in simple terms. ‘If NPC didn’t exist we’d have a charity trading day and give it all to Comic Relief,’ he says. ‘Not to say that Comic Relief is a bad thing, but NPC have created alternatives for us. Our obligations to people who support us does not stop on the day that they give the money. That’s just when it starts.’

On a classic consultancy model, NPC charges fees on advice given to clients. But, before one hears accusations of ‘philanthropreneurism’, Harris and and Brookes are quick to point out that their services are charitable. ‘We’re not breaking even yet. But you know, we’re a charity, we’re not set up to do that.’ NPC survives on consultancy fees and funding from ‘people who buy our vision and the model’ – people like trustees Nigel Morris, co-founder of Capital One, and Harvey McGrath, chairman of Man Group Plc. Coming from a background as leaders in financial services, it is no surprise that when it comes to NPG’s client base, although they have seen a recent increase of clients from private backgrounds, ‘our natural stomping ground is in the City’.

With the government now beginning to bring the tax system in the UK more in line with progressive US policies that have for so long encouraged philanthropy, by simplifying the gift-aid donation process and offering double tax relief on appreciated assets, it is clear that there has never been a better time for high- net-worth individuals to give to the deprived.

Select and enter your email address The short, sharp email newsletter from Spear’s
  • Business owner/co-owner
  • CEO
  • COO
  • CFO
  • CTO
  • Chairperson
  • Non-Exec Director
  • Other C-Suite
  • Managing Director
  • President/Partner
  • Senior Executive/SVP or Corporate VP or equivalent
  • Director or equivalent
  • Group or Senior Manager
  • Head of Department/Function
  • Manager
  • Non-manager
  • Retired
  • Other
Visit our privacy policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
Thank you

Thanks for subscribing.

Websites in our network