Will disruption, windfalls and changing attitudes increase philanthropy in 2021?

Cathy Pharoah is Visiting Professor of Charity Funding and co-Director of the Centre for Giving and Philanthropy at Cass Business School. Expanded author information below.

With crystal balls still shrouded in the dust thrown up by 2020’s unprecedented global health crisis, it’s very difficult to determine the scale and shape of philanthropic giving in 2021 and beyond.

Will it retract in line with the economy, or will there be a counter-cyclical lift? There are certainly reasons to be pessimistic. Major charities have been reporting significant hits to fundraising income, and wide-scale redundancies are taking place. Economic growth fell by around 11% in the UK last year, and the history of giving suggests that falls in employment, income and wealth have a negative impact on charitable donations.

This also means that when the economy picks up we are very likely to see donations increase again. The predicted growth for the economy (GDP) in 2021 is 5.5%, which is an encouraging indicator for an increase in giving. It is salutary to remember, however, that such growth in GDP or giving would only represent an increase on the lower levels of 2020, and would not bring us back to, let alone exceed, the immediate pre-COVID levels.

Covid-19 has shifted giving patterns dramatically.

An alternative possibility is that the huge disruption to traditional giving routes, causes and amounts in 2020 has changed patterns of giving irrevocably. This could lead us to remain more engaged in philanthropy throughout the year, continuing to give more widely and generously than before the pandemic.

Notwithstanding the dire news we are hearing from many major charities, Charities Aid Foundation (CAF) reported an increase in giving of £800 million in the first half of 2020. In addition, Beacon’s own research indicates that high-net-worth philanthropy rose throughout the year. In the face of many charities’ experience, the CAF report was greeted with some derision, but in practice the varying findings are not necessarily incompatible. Surveys are suggesting that giving patterns have changed.

So, why is this?

Lockdown meant face-to-face fundraising was outlawed or cancelled, but this caused new giving avenues to open up. Notably, the innovative combination of Captain Tom Moore’s high media profile fundraising campaign with direct online giving techniques saw an almost unprecedented £39 million (with Gift Aid) raised for the NHS.

Newer online mechanisms such as adding donation supplements to restaurant, grocery, and supermarket bills to provide meals and PPE for key workers have also mushroomed. Other suppliers pursued social initiatives, such as specifically hiring people experiencing Covid-related unemployment (e.g. those in the performing arts). Many charities speedily re-launched or revamped their online giving facilities, and coupled them with marketing campaigns, thus widening the scope for online donations.

Captain Sir Tom Moore, completing the 100th length of his back garden. Photograph: Vickie Flores/EPA via The Guardian.

A quick search of the Charity Commission’s Register reveals that multiple new local and national coronavirus-related charitable activities were launched last year, addressing the need for protective clothing, food, and counselling for frontline workers. Needs exacerbated by the pandemic including mental health, domestic abuse, homelessness, loneliness and bereavement services attracted raised profiles and donations.

The crucial role played by local food banks leapt into public awareness, attracting increased monetary donations as well as in-kind giving at a wide range of new collection points. Some causes received a special high profile boost, such as the Duke and Duchess of Cambridge’s £1.8 million bespoke Covid-19 fund. 

The daily media focus on the problems generated by the pandemic, as well as widespread personal experience, clearly inspired a huge philanthropic response. We know that immediate evidence of need is a key motivation for giving, and the pandemic experience has reinforced this in spades. However, this may temporarily displace more traditional charitable giving; data from other crisis events has indicated that total annual giving in the year of the crisis did not change. We might also expect giving to begin to revert to traditional patterns as the specific needs of the pandemic recede.

But there is some evidence to suggest that the harsh light which the pandemic has thrown onto the persisting injustices in our society may be shifting philanthropic attitudes and behaviours. We have seen Covid-19 clearly having its greatest impact on women, black and minority ethnic people and the most deprived communities. The £3 billion gift of MacKenzie Scott is a dramatic example of major HNW philanthropy shifting its focus to immediate welfare alleviation. It’s a call-to-action targeted at the daily life experience of those most in need:

“This pandemic has been the wrecking ball in the lives of Americans already struggling. […] Economic losses and health outcomes alike have been worse for women, for people of colour and for people living in poverty.” – MacKenzie Scott

Scott’s gift is an inspiring example to all those motivated by their experience of the pandemic to make an immediate difference to their communities. Many of the new causes, organisations, volunteer forces and ways of giving will take on a life of their own after the crisis. This may bring in new donors, as well as attracting ongoing support from existing donors who are helping to prop-up causes they have always treasured. 

MacKenzie Scott was celebrated for the speed and scale of her philanthropy during Covid. Photograph: Forbes, 7 Lessons Donors Can Learn…

We can afford an increase in philanthropy. Previous experience of recessions suggests that consumers will end up compensating for the short-falls in charitable giving as we come out of restrictions and regain confidence in the economy. Giving has been deferred, not cancelled. On top of this, the pandemic has left many in a position to increase their philanthropy. For some donors, life under lockdown has brought savings. These could be regarded partly as windfall gains, which research has shown are often a source of donations.

The Office for National Statistics has calculated that one-fifth of average spending has not been possible since March, and the Bank of England estimates that people in Britain saved more than £150 billion of spending last year on commuting, holidays and leisure. It is anticipated that these savings will lead to a huge spending spree post-lockdown, which is likely to include £19.2 billion more spent on holidays, and £17.7 billion more on food and eating out than in 2020.

Philanthropic giving is like a luxury good – we spend more on it when we have more. As we reclaim our lives with a renewed understanding of public need, surely there is a bigger slice of the cake for philanthropy?

More about the author

Cathy Pharoah is Visiting Professor of Charity Funding and co-Director of the Centre for Giving and Philanthropy at Cass Business School. She has specialised in monitoring trends in giving and fundraising for many years, with a strong focus on how we can grow philanthropy. Cathy works nationally and internationally, and recent projects include an analysis of the impact of Lockdown on UK fundraising, an exploration of Muslim philanthropy in the context of UK foundations, as well as the flagship annual UK Foundation Giving Trends with ACF, funded by the Pears Foundation.  She was formerly Research Director at the Charities Aid Foundation (CAF) for 11 years, a founder and (former) Policy Editor of Voluntary Sector Review, board member of the Barrow Cadbury Trust, and member of the research advisory group of Power to Change.