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Most Charities Don't Know A Philanthropist - Tax Avoider Or Not

Mal Fletcher
Posted 02 May 2012
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Surplus wealth,’ said steel magnate Andrew Carnegie, ‘is a sacred trust which its possessor is bound to administer in his lifetime, for the good of the community.’

In the early part of the last century, Carnegie gave away enough of his vast fortune to underwrite 3,000 public libraries, a cluster of research institutes, colleges and concert halls and even an estimated 7,000 church organs.

Carnegie was, of course, an American. Yet his brand of philanthropy wouldn’t go astray in today’s Britain, especially given the crushing social impact of having more than one million young adults unemployed and growing problems with healthcare for the elderly and hospitalised.

Britain has a proud record when it comes to philanthropy and needs it today perhaps as much as she ever has. Yet rather than encouraging charity, we find ourselves heatedly debating the motives with which some of our most wealthy citizens give.

Two things are worthy of note here. Firstly, the government has a valid point. We should not have a situation where wealthy individuals or companies can choose between paying tax and supporting good causes.

Philanthropy should be something that is prompted by a sense of social duty, rather than personal profit or the avoidance of civic responsibility.

Second, the top-tier corporate world is not always as mean and grasping as it is made out to be. Some corporations not only give cash to worthy causes, they share with charities their own people-resources in support of self-imposed community service targets.

Of course, it doesn’t hurt the recipient of largesse if the government makes this type of involvement attractive and relatively easy for the donor. So tax breaks and other incentives may be in order – without the wholesale abuse of the system perpetrated by some at present.

The current debate about philanthropy, however, will doubtless be met with some bemusement by the hundreds, perhaps thousands, of charity leaders in this country who receive nothing at all from large companies or high-level donors.

Bill Gates has called his nation’s richest people to give away half of their wealth. So far, 57 of America’s wealthiest people have taken up his challenge. While Britain is home to something like 40 billionaires, only one of them – Lord Sainsbury – has thus far given away enough to qualify for fulfilling Bill Gates’ Giving Pledge.

Consequently, it doesn’t come as a complete surprise that a percentage of our most wealthy philanthropists – and hardly anyone seems to suggest that it is more than a minority – are giving mainly to avoid tax.

Yet almost all of the public discussion thus far has quoted relatively high-level patrons or leaders of large charities who do not represent the majority. Only a comparative handful of charities in this country receive donations from wealthy corporations or individuals.

For the most part, charities are supported by the generosity of everyday people who give out of a sense of civic responsibility and altruism. These charities receive nothing in the way of windfall bequests and must work very hard to get even the basic level of finance needed for their survival.

Most would probably welcome any large donation – even if it came as a convenient tax-dodge!

In The Times today, the chairman of Reprieve, Ken Macdonald, QC, gave thanks for the generous support of wealthy donors who enable his group to carry out their vital work.

The organisation works in advocacy for people living on death-row in prisons worldwide. Its committed workers, says Macdonald, are young lawyers who work for ‘salaries that many of their peers would laugh at’, has apparently seen very positive results in terms of having death sentences revoked and, in some cases, innocent parties freed.

This is very commendable work and totally deserves financial support. The fact that such a charity exists is worthy of celebration. Yet the chairman, as a top lawyer and Lib-Dem peer, can hardly be seen as representing the status of leadership in most charities.

For ninety percent of charities, enlisting an eminent public figure at its helm – whether in operational terms or as a figurehead – is beyond the realms of possibility. And without this kind of representation a charity often lacks the contacts or resources needed to press for substantial philanthropic giving.

In this sense, charities battle the hang-over effects of the class system of old. Britain today may feel far less class-bound than it was two generations ago, but the echo of class still resounds in some areas of social life – and it is both a blessing and a curse.

The old class system provided a certain level of noblesse oblige. There is still a level of this within the higher echelons of British society. Yet the same system often produced a very narrow and confining set of social networks, which limited the opportunities for self betterment among the less well-connected.

This issue of class is, of course, a problem for the Tory-Liberal Democrat coalition. Even if we accept, as I do, that having national leaders who went to expensive public schools is not necessarily a bad thing for the nation, it is the exclusiveness of their associations that raises the most questions.

The question we hear so often is, how can they relate to everyday people when they’ve only a very limited circle of reference?

The fact that we all have a relatively small circle of reference, based on our background and present experience, seems conveniently to be overlooked. Yet it is true that if you attended the right school, have the right accent and carry a smartphone with the right contacts in it, you can call upon a network of people-who-know-people when you need help in raising cash for your cause.

If you can’t call upon that kind of network, you’re not often even aware of the money that’s out there, much less able to connect with it.

Yes, there are websites that allow you to pursue crowd-sourcing, raising money from small individual donors. Many of these, however, are based in the US and most set a fairly low cap on what can be requested or raised.

And yes, some major philanthropic bodies publish public guidelines for those who wish to make charitable requests of them. However, finding out who these bodies are, locating the right application information and then going through the submission process – usually something that requires marathon stamina – often represents a stretch too far for smaller charities who run on or near empty most of the time.

We should be grateful for the philanthropy of wealthy trusts and individuals that does exist in this country. It comes from a long and proud tradition and long may it continue.

Yet the idea that many charities run on this is spurious. It paints a picture that can only harm the thousands of very worth charities that are right now fighting for their existence.

This is not a cry for a more socialist outlook – far from it. I lived for almost a decade with social democracy, Europe’s acceptable face of socialism, and found firsthand that for every layer of avowed compassion it displays, it will always add two layers of centralised administration.

Based in the beautiful city of Copenhagen, I saw the benefits of the social democratic approach in terms of benefits-for-all – even the bum on the streets is, in world terms, middle class. Yet I also observed how often it also kills the entrepreneurial spirit among its young people.

‘If the government is big enough to take care of every need,’ the unconscious thinking goes, ‘what point is there in me trying to break through in a new field? Sure, I might make some money, but I’d probably do just as well, without the risk, working for the state.’

One of our biggest challenges today, when it comes to social problems, is that we expect a little too much of government. That is, we give to politics a level of importance that it should not have – and wonder why we are constantly frustrated and disappointed by it. The fact is, not all solutions need be political ones.

But the government must at least set the tone for a community’s response, facilitating the shifts in mood and culture that are needed to boost people’s initiative and innovation.

We don’t need a more socialist system, but a less purely market-driven approach to charitable giving. That is, we need to find a way to level the playing field so that charities, with or without a long history or a hefty contacts list, can compete for support on a more equal footing.

What specific form this might take is up for debate. But tackling this question would provide a far better investment of the government’s administrative budget than trying to hunt down philanthropic ‘tax cheats’, or fighting criticisms of its budget decisions, both of which eat up huge amounts of time and money.

It might allow a much greater number and range of charities to enjoy the benefits of Carnegie's concept of a 'sacred trust'.


What’s your view?

Do wealthy people in your part of the world donate enough to charity?

Yes

No

Keywords: social comment commentary society charity charitable UK charities philanthropy philanthropist philanthropists bill gates giving pledge lord sainsbury british government reprieve the times newspaper

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