DCMS’ Community Match Challenge could signify a new relationship between government and philanthropy

 

“Philanthropy from Aristotle to Zuckerberg” – A Contemporary UK Perspective

 

Paul Vallely’s new book “Philanthropy from Aristotle to Zuckerberg” is breathtaking in its ambition and scope. It is undoubtedly an important book not only on the history of philanthropy, but also as an analysis of its role in society. His conclusion from this immense study of two-and-a-half millennia of giving is that our “contemporary conceptions of philanthropy are impoverished and in need of enrichment.”

In an article published in The Guardian on 8th September, Vallely states “elite philanthropy is about elite causes”. A little later: “the growth in philanthropy in recent decades has failed to curb the growth in social and economic inequality”– by favouring causes dear to the rich, philanthropists, in general, have failed the poor.

He goes on to argue: certain forms of philanthropy are non-democratic, because they divert public policy. Others are anti-democratic, by being politically interventionist.

The article draws on a single chapter from the book: Is Philanthropy Bad for Democracy? It draws out a number of increasingly common criticisms of philanthropy. What the article does not address is how British society has faced up to these challenges in the modern era. Nor, indeed, does it consider how philanthropists themselves are seeking ways to improve the practice of philanthropy.

For that analysis, readers must turn to the book which examines the historical and cultural influences that have shaped modern philanthropy.

Indeed, as the book’s title suggests, the problems of philanthropy are nothing new. From Aristotle to Zuckerberg, philosophers, ethicists and religious leaders have wrestled with the same challenge throughout the world and throughout the ages: it is hard to separate ego from the act of giving. The problem with philanthropy, simply put, is that it can combine an expression of self-interest with the act of concern for others. Thus, the results can be unhelpful for those being helped and its motivations may be impure.

The effects of this, as Vallely rightly observes, can include tackling symptoms and not causes, concentrating giving into causes that are of most interest to the elite, or, more extremely, behaviours that are politically interventionist.

Philanthropy and taxation

Let us begin with the most popular criticism of modern philanthropy; that it is a form of tax hypothecation. In the article, Vallely challenges that the effect of tax reliefs “is often to give the wealthy control in matters that would otherwise be controlled by the state,” and furthermore, “tax relief adds the money of ordinary citizens to the causes chosen by rich individuals.”

In the case of Gift Aid in England and Wales, he states “the highest-rate taxpayer would need to pay out only £55, because the state would provide the other £45.” Yet this misses the crucial point that under the Gift Aid system it is up to the charity to claim tax relief from the state. The ultimate responsibility lies with government to determine the organisations that are eligible to benefit from this relief, not the philanthropist.

Moreover our public benefit test, which Vallely rightly observes was pioneered in England in 1601 in the Charitable Uses Act, vests the power in government to determine the criteria by which charitable organisations are eligible for these tax privileges.

In England and Wales, these rules are implemented and monitored by an independent Charity Commission that assesses the validity of each charitable organisation both when it is set up and annually through a reporting process. The Charity Commission’s regulations are detailed in 50 separate guidance documents. Meanwhile, its enforcement procedures aim to ensure that the charities to which philanthropists give, as well as those they set up, act in the interest of public benefit and the wider democratic process.

The Office of the Scottish Charity Regulator has similar powers in Scotland, as does the Charity Commission for Northern Ireland.

In other words, our tax, legal and regulatory systems all hold the space between personal freedom and public interest and provide mechanisms curb the actions of individuals or organisations if these are required.

Philanthropy and government

Arguing further on the subject of democratic legitimacy, Vallely asserts in the article: “the sheer scale of contemporary giving can skew spending in areas such as education and healthcare, to the extent that it can overwhelm the priorities of democratically elected governments and local authorities.”

Again, if we put this statement into a UK context, The Sunday Times Giving List identified the top five British donors in 2019 as Lord David Sainsbury, Dame Janet Wolfson de Botton, Sir Chris Hohn, Jonathan Ruffer, and Sir Brian Souter and Dame Ann Gloag. Collectively they gave £749.3 million to charity in 2019.

In the same year, central and local government spending on health was £153 billion and £88 billion on education. This means the total giving of the top five philanthropists in the UK that year would have covered less than two days of health spending and only three days of education spending. This hardly seems enough to skew priorities.

As stated in another article in The Guardian earlier this year, Paul Ramsbottom, chief executive of Dame Janet Wolfson de Botton’s family foundation observes: “despite [the] important contribution by the philanthropy sector, no one seriously thinks it could or should replace state-organised, tax-funded action. Public and private funding play different roles, enjoy different advantages and face different constraints. It is therefore perfectly possible to be in favour of higher levels of progressive, loophole-free taxation and also believe that private giving has a legitimate, critical role.”

Meanwhile, Lord David Sainsbury, also among the top five philanthropists in the UK last year and a former Labour science minister, is on record in The Guardian in 2017 arguing that charitable spending is not a substitute for social welfare because the amounts are too small.

He further argues that the role for charities, and by extension their philanthropic funders, is to take risk and innovate. These are functions, he observes from his experience, that governments are generally very poor at doing.

“You end up with this utterly ridiculous thing where you have a new idea, and you talk to a Treasury official, who asks whether you can prove that it will be successful. You have to tell them that the point is that it’s innovative – so by definition you can’t prove it’s going to be successful,” he says.

Far from being politically interventionist, Sainsbury is proposing a form of philanthropy that is complementary to the work of the state, enabling work in the public sphere that that the government itself cannot.

Campaigning and advocacy

Vallely concedes in his article that what he terms anti-democratic philanthropy is predominantly a US phenomenon and it is vital that we recognise the UK political context is vastly different from the US.

For example, there are strict limits on what candidates and parties can spend, which reduces the incentive for political funding. The UK bans political advertising and there are strict rules for the media and civil service during election periods. There is also guidance in place from the Charity Commission regarding campaigning and political activity.

Of note, that guidance opens with the statement:

“Campaigning, advocacy and political activity are all legitimate and valuable activities for charities to undertake. Many charities have strong links to their beneficiaries, and more generally to their local communities, commanding high levels of public trust and confidence, and representing a myriad of diverse causes. Because of this, they are uniquely placed to campaign and advocate on behalf of their beneficiaries. When charities seek to change the law or government policy, certain rules apply.”

Putting this into practice, it is interesting to consider the work of Sir Chris Hohn, co-founder of The Children’s Investment Fund Foundation and activist sustainability investor. The values outlined on the TCIFF website clearly states: “we strive to be politically savvy and invest in changing the politics and discourse surrounding our issues”.

One example of this is the donation of £50,000 made by Hohn to Extinction Rebellion and a further £150,000 donation was made from TCIFF. This took place shortly before the first rebellion in April 2019.

Just nine months previously, Client Earth conducted the first ever poll on the public sentiment on climate change in the UK and identified 62% did not think the government was doing enough to prepare for or adapt to the impact of climate change.

Extinction Rebellion operates on the principle that non-violent direct action is a proportionate response to the government’s failure to act on climate change and its failure to defend life. The first rebellion gained popular support and saw local councils and the Labour party declaring a climate emergency. Yet, the rebellion continues as the movement seeks to hold government to account on three issues: telling the truth on climate change, zero-emissions by 2025 and the creation of a citizen’s assembly.

As an activist and a shareholder, Hohn believes in holding government and corporations to account for their role in environmental damage.

A Financial Times article from December 2019 conveys Hohn’s views on the lack of disclosure on emissions. “If governments won’t force disclosure, then investors can force it themselves,” he says. “Investors don’t need to wait on regulators who are asleep at the switch and unwilling or unable to regulate emissions properly … They can use their voting power to force change on companies who refuse to take their environmental emissions seriously. Investors have the power, and they have to use it.”

Let us not forget either that Sir Chris Hohn, together with his former wife Jamie Cooper, have endowed TCIFF to make it one of the UK’s largest charities working for child health, protection and development as well as action on climate change.

The foundation’s website is clear about the organisations goal’s, aims and approach. It is committed to transparency, to using evidence and data to inform decision making and to delivering lasting change at scale. The approach of the organisation is to focus on systemic systems change, investing for the long term and addressing the causes of problems with a particular emphasis on supporting children along their life course.

This evidence-based approach that provides long-term investment in children’s futures is a long way from the criticism levelled by Vallely that philanthropic “Giving often depends on the personal whims of super-rich individuals.”

Power, empathy and governance

On a related theme, in the article Vallely asserts that “philanthropy is always an expression of power.” This technical argument is based on the inherent paradigm of the granter/grantee relationship – where one has the power to confer or deny a benefit to the other.

In emphasising only ego in this argument, Vallely misses the vital qualities of compassion, empathy and humility that not only drive so much philanthropy, but are also the essential counterbalance to its baser nature. Where empathy truly drives philanthropy the power dynamics are held in balance, because the benefit is given in response to a need that is heard and understood.

For some these qualities stem from their religious faith and experience. If we take the two remaining philanthropists from The Sunday Times top five, both describe their philanthropic drive in these terms.

In 2015, Dame Ann Souter, the former Stagecoach boss, spoke frankly to FT Wealth about her humble origins and the role her mother, chair of the Missionary Society at their church, played encouraging her children to support those less privileged.

“She would always encourage us to think what we could give … to others,” she says. “So for me, the number in “nothings” isn’t the issue; it is about having that heart to think about others less privileged than yourself.”

Meanwhile, Jonathan Ruffer, the investment manager and philanthropist, has invested £160 million renovation of Auckland Castle as part of a wider effort to support the regeneration of Bishop Auckland in the North East of England. Ruffer’s actions and beliefs about philanthropy draw on his deeply held Christian faith.

He made his position on the power dynamics of philanthropy abundantly clear in a 2014 article with the Financial Times. In the article, he confesses he has “a great fear of forcing blessings on people. People who fancy themselves as bringing blessings should be shot.”

For others, effective governance can ensure philanthropic decision-making is in tune with the needs of communities, thus counterbalancing any effects of ego. Returning to the Wolfson Foundation, of the 11 trustees only four are family members. The other seven are academics and all are supported by expert grant panellists and a wider network of advisers and reviewers.

Philanthropy and civil society

In the conclusion to his article, Vallely proposes that: “Philanthropy can recover a genuine sense of altruism only by understanding that it cannot do the job of either government or business. For it belongs not to the political or commercial realm, but to civil society and the world of social institutions that mediate between individuals, the market and the state.”

In this statement, Vallely affirms that civil society flourishes when it is recognised to be a shared responsibility of government, the voluntary sector and individuals. Indeed, the legal and regulatory context for giving in the UK holds in balance the roles and responsibilities of each of these parties.

Meanwhile, these five examples of elite philanthropy in the UK suggest that modern philanthropists are already aware of their responsibility for and accountability to civil society. Their actions seek to complement and to challenge government, not to replace it.

There is further evidence that their giving is community based, actively seeking a plurality of insight and opinion, tackling root causes and advocating where the policy response is failing the public’s expectations. All of these actions are identified by Vallely as tenets of better philanthropy.

To these, we would add that at its best, philanthropy recognises the need for accountability and responds with transparency. It seeks out diversity and works in partnership with the communities it serves. And, crucially, it is borne out of the understanding that with freedom to create great wealth comes a responsibility to wider society.

Undoubtedly, not all philanthropy in the UK will meet these tests. In spite of a rich and deep history, 21st century philanthropy in the UK is an emerging field. Through lack of support for their work, philanthropists often work alone. Rather than face a cynical judgement of their motivations, many avoid the public eye. Where they flock to elite causes, it is because their knowledge of the work of others is patchy and fragmented.

The solution to these challenges is not greater scrutiny, but better support to nurture and share good practices. If empathy and ego are two sides of the same philanthropic coin, let us not stifle the impulse to give through criticism, but rather – as our forefathers have done – debate the ethics that allow us to balance the needs of society, the state and the individual.

Without question, Vallely’s important book tackles these themes and sets them in their historical and contemporary context. Yet, our public discourse is all too often framed by what is wrong with philanthropy and what philanthropists are doing wrong.

Vallely argues that philanthropy is in need of enrichment – that will only come when there is a greater generosity of spirit towards those who give.

By Catherine Dovey, Co-Founder, The Beacon Collaborative

Read Paul Vallely’s response here

Read Dr. Beth Breeze’s response here