Was the long-awaited Giving White Paper a cause for celebration? Here Philanthropy UK offers a round-up of reaction to the initiatives in the Paper that aim to create a 'step change' in levels of giving...

The Giving White Paper chimes loudly with Big Society, focussing on empowering people to give time and money in their communities and in ways that ‘goes with the grain’ of their lives.

In launching the Paper at Downing Street on Monday (May 23), Francis Maude, minister for the Cabinet Office, said: “The building of a bigger stronger society will not be done by government but by citizens. However, it will not emerge overnight and government has to play a role in supporting it. That is why, after levels of giving have flat lined for years, this government is taking action, introducing policies to make giving give back, cut red tape and spark innovation. These changes form part of our desire to build a big society, where power is decentralised, public services are opened up and social action is encouraged."

Nick Hurd, minister for Civil Society, said: “We want to help Britain become an even more generous country. It needs a new approach which is all about making it easier to get involved and make a difference.”

The Paper offers a raft of measures, funds and initiatives to stimulate innovation around boosting giving, encourage community giving, build infrastructure to support frontline organisations, reward those who give, increase access to better information and advice, and celebrate giving, as well removing some of the barriers to giving. One of its greatest ambitions is to establish social norms.

The policy plan has been broadly welcomed by the sector as a ‘real commitment’ by the government to create a culture of giving and to highlight its importance in society and one that has ‘listened to’ the 450 responses to the Giving Green Paper.

Cathy Pharoah, co-director of the Centre for Giving and Philanthropy (CGAP), calls it “a great Paper that is full of ideas and examples on giving at all levels”.

“It picks up the best of all we have with the aim of building on it to rejuvenate a culture of giving at all levels. It creates links between giving time and money and sets it in a local context, which we know encourages people to do more. But it does not attempt to be a sticking plaster for government cuts. It recognises that this is a long term initiative and seems to be aiming to join up what already exists to create a coherent giving framework.”

John Low, chief executive of the Charities Aid Foundation (CAF) says: “The government has made tangible progress towards creating a coherent plan to encourage charitable giving in the UK.  While recognising that much of the development must be by charities and social entrepreneurs, government has put its support behind excellent ideas such as improved access to local philanthropy advice and networks, and enabling donations through government websites.”

Sir Stuart Etherington, chief executive of NCVO said: “The giving of time and money is an important expression of our values and beliefs as a society. This Paper draws together a wealth of intelligence on what can be done to stimulate greater levels of giving and participation in the UK.”

Thomas Hughes-Hallett, chairman of the independent Philanthropy Review, said: “The Giving White Paper shows that government is serious about keeping its promise to foster a greater culture of philanthropy, but we still have a long way to go, not least by encouraging leadership by example. Much more needs to be done to simplify giving and to redress the imbalance between the generosity of those who have least and those who have more.”

However, John Nicholls of Arts Quarter, fears that outside of the tax incentives outlined, the Paper may have overlooked the cultural sector. “There are very few mentions of the cultural sector throughout and many of the proposals may be difficult for arts organisations to access without reorganising themselves, such as opening themselves up more to grass-roots volunteering which may not be appropriate to some current business models in the sector. They will have to consider the cost and the benefits of doing so alongside looking at other fundraising opportunities to compensate for subsidy cuts. In an increasingly competitive marketplace of asks in the minds of those members of the public who will respond and indeed give both time and money, there is a danger arts organisations could be squeezed out if they can’t find ways to take advantage of these community funds and small scale giving proposals alongside other causes. The Arts Council may address this in its own anticipated capacity building and matched funding programmes as outlined earlier in the year But the cultural sector is going to have to think carefully about whether the proposals outlined in this White Paper will truly have a significant impact.”

Aside from measures that aim to democratise philanthropy, through innovations such as cashpoint giving which LINK’s member banks have unanimously agreed to enable by 2010, the White Paper offers some specific initiatives aimed at high level donors acknowledging the “significant potential for the better-off to give more”. However, some felt it did not go far enough in encouraging giving among the wealthy, including Plum Lomax of think tank and consultancy New Philanthropy Capital who comments on this in her blog.  

Tax incentives

While the calls for a consultation on  lifetime legacies (Charitable Remainder Trusts) went unanswered, there was a strong commitment to build on incentives announced in the last Budget, the combined effect of which are anticipated to increase funding to charities by £600m over the lifetime of the Parliament.They include:

• Removal of Gift Aid Paperwork for donations up to £5,000 (by April 2013)
• Reduction in rate of inheritance tax for estates that leave 10% or more to charity from 6 April 2012. HM Revenue and Customs will be seeking input to some of the detail on this proposal and will issue a consultation document before the summer.
• The feasibility of encouraging donations of pre-eminent works of art and other historical objects to the nation in return for a tax reduction. The Treasury, HM Revenue and Customs and the Department for Culture, Media and Sport will be conducting a consultation over the summer

Consultant Clive Cutbill, of Withers LLP Charities and Philanthropy Team, says: “We are disappointed that government has not heeded the sector’s call to consult on lifetime legacies, a mainstay of US giving that is currently tax inefficient in the UK.

“We are gratified to see government acknowledge the fact that donors do not give to save tax even if they do want their giving to be tax-efficient to maximise the impact they can achieve. The cynical attitude that sees tax relief on donations as a ‘reward’ to the donor (who has in fact parted with her or his money in the end) acts to undermine the growth of UK giving. Imparting this message effectively to the public will be an important challenge in fostering UK giving."

Cutbill said he was“delighted to see government bringing high-value giving into their strategy to encourage UK giving culture – ATM giving and other micro-giving initiatives are exciting and innovative, but any strategy to increase giving needs to attend as well to high-value gifts and the needs of philanthropists.”

Caron Bradshaw, CEO of The Charity Finance Directors’ Group (CFDG) said she was “encouraged by the way government appears to have taken on board the views of the sector on specific areas and issues covered by the Green Paper. In particular, the recognition of the importance of tax incentives to promote giving and the value of making use of current infrastructure should be welcomed by the sector. By supporting the Funding Commission’s recommendations for an infrastructure fund, the Government is sending out a positive message that it is willing to work with existing structures and take on the expertise and experience from within the sector as it develops these areas.”

Philanthropist and chairman of ENO and a member of the independent Philanthropy Review committee, Sir Vernon Ellis, along with CGAP's Cathy Pharoah, commented that more tax incentives are not necessarily a precursor to more giving.

“It is not greater tax incentives that make the US give more than us, rather it is societal expectation,” says Ellis, “However, there are some tax changes which would be useful, for example relating to giving of assets other than shares and property. Also, lifetime legacies would be a particularly useful tool for encouraging asset-rich/cash poor people to give.”

Pharoah feels that it would be more cost effective to promote existing tax incentives: “There are already a number of tax incentives in place, many of which are underused. We might be better to promote these than go to the huge cost of creating new ones.  But I would like to see further R&D around whether there are any significant gaps in the range of tax-effective giving products on offer in the UK.”

While Hughes-Hallett says: “The question of lifetime legacies and whether they hold the key to unlocking significant contributions from the high net worth community, remains unanswered.”

Pay Roll Giving

Hughes-Hallett was among a number who welcomed the promotion of pay roll giving, particularly as a way to reach potential high-level donors.

The government announced a number of initiatives to promote this tax-effective way to give, including:

• a year-long national profile-raising campaign to be launched in autumn 
• the re-launch the national Payroll Giving Awards on 18 October 2011, including introducing a new Platinum Award for the best national performers and recognition to organisations achieving the biggest percentage uplifts in employee-giving
• an examination of opportunities to re launch a Kitemark scheme for businesses with payroll giving schemes
• support of innovative ideas that have the potential to help in the aim of making payroll giving a social norm
• consideration of new ideas to promote payroll giving such as a simple ‘opt-in/opt-out’ choice for payroll giving and working with organisations, such as Pennies from Heaven, which have innovative schemes that enable employees to ‘round-down’ their salaries

Sir Vernon Ellis and Theresa Lloyd, independent fundraising consultant and author of Why Rich People Give, also pointed to the promotion of pay roll giving as a key initiative: “If just this one initiative really took off so that we saw high earners such as bankers giving 1% or 2% of their salary through payroll giving , as many do in the US, we would really start to see a culture change,” says Lloyd.

However, though government targets pay roll givers in supporting charities, “scant attention” is given to improving charitable giving from Britain’s companies, says the Directory of Social Change's head of policy Jay Kennedy.

The average value of donations from the most generous companies to charity, expressed as a percentage of their pre-tax profits, is only 0.4% (including donations in kind) over the past decade, according to research derived from DSC’s The Guide to UK Company Giving.

Overall, companies provide around 5% of total income for charities and voluntary organisations – far less than the general public or government agencies.

Kennedy said: “Looking at all the sources of support for charities, company contributions probably have the greatest potential for growth.  For companies that do give, there is plenty of scope to give more and to give better. But the even bigger potential lies in getting those companies that currently give nothing to start.”

Kennedy acknowledges that most companies exist to make a profit not to support charity. But he argues that in the modern age, customers, staff and the general public increasingly expect companies to demonstrate social responsibility, and that donating to charity is a widely recognisable way of doing so.

He suggests norms should be established for company donations: “One way to get companies to do more could be to harness their natural competitive tendencies to drive up their giving. Government could clearly play a role by encouraging companies to give at least 1% of pre-tax profits, and by recognising the most generous, perhaps through the Big Society Awards. Government could also help ensure that company reporting of giving to charity is more transparent and meaningful."

Better information and data

Lloyd, who founded Philanthropy UK in 2001, said she was ‘delighted’ the government saw the importance of providing access to better information and advice for givers through the organisation. It will be providing more than £700,000 over the next three years to the Association of Charitable Foundations (ACF) and the Community Foundation Network to develop the Philanthropy UK service in England, among other priorities.

The government is keen to support other initiatives to improve information for philanthropists, such as private banks providing access to high-quality philanthropy advice to more of their clients. Coutts Wealth Institute is due to launch a web-based advice platform for its clients soon.

The government also gave its support to an initiative led by New Philanthropy Capital (NPC) to engage with private banks on this topic, and Nick Hurd will be attending a roundtable with the major private banks hosted by NPC in June 2011.

NPC's Plum Lomax says: "There wasn’t enough about  encouraging the provision of philanthropy advice by private client advisors (bankers and laywers) to their wealthy clients."

The paper mentioned that minister for Civil Society, Nick Hurd MP, has agreed to attend the next Philanthropy Advice Forum in June. "This is good news. But I’d hoped to see more and government has a role to play in pushing this higher up on the agenda of banks and law firms," says Lomax. 

Clive Cutbill of Withers LLP said that if private banks are to promote philanthropy, government will need to support them in creating new vehicles: “From our experience in the US and the UK, if the Government wishes to encourage private banks’ involvement in philanthropy, they will have to work with HMRC and the Charity Commission to support the acceptance of banks’ in-house donor advised funds as well as encouraging the development their philanthropy advice offerings.”

The promise of greater access to government data and ways to make better use of it has been welcomed. Government is currently working across government to achieve this, including with HM Revenue and Customs and the Department for Culture, Media and Sport, and is also engaging with the voluntary sector and social enterprises to better understand how and where government data can be most useful to them. Currently the main streams of data on giving are provided by CAF and NCVO in their annual UK Giving Survey, CGAP’s Household Expenditure Survey and Coutts Milllion Pound Donors report.

Sir Vernon Ellis says it is an area the Philanthropy Review is focussed on: “I very much welcome the recognition that the government can help in producing better data on giving.  If we are to have better focused initiatives, particularly those aimed at the more wealthy, we need much more accurate and focused data than we have at present.”

Cathy Pharoah of CGAP says: “We are particularly pleased to see a commitment to exploring potential sharing of government data related to giving: we hope this means tax-related data, in particular around major gifts where the biggest knowledge gap exists.”

Social Norms

While the government makes it clear it is not its role to set rules around levels of giving, as responses to the Green Paper confirmed, it has committed to continue to work in partnership with charities, community groups and social enterprises to support ideas that aim to encourage social action from the ‘bottom-up’.

Celebrating giving through the honours system and other awards, investing in the next generation of donors, incentivising higher levels of legacy giving, and leading by example are some the ways the White Paper aims to establish social norms around giving.

Ministers are signed up to volunteer for a One Day Challenge to give a day a year to a good cause; a new philanthropy committee to review candidates for honours will be convened; and core funding and match funding for schools- based programmes to build a culture of giving have been established.

However CAF’s John Low felt the government could have gone further in its leadership. “As well as providing support and investment, the government can, and should, be leading by example.  While the move to encourage ministers to volunteer is a step in the right direction, government could have encouraged them to pledge money as well as time, helping to shape social norms around giving.”

5% payout for foundations

The Giving Green Paper considered a minimum 5% payout for foundations, but the strength of response - 17% of all those received addressed payout, which was the fifth highest response across all of the issues raised in the Paper -  has placed the issue on the back burner for now. However there were overtures in the White Paper towards future regulation of payouts “to ensure that their mission is aligned with their investment and spending,” it says.

In rejecting for now the 5% payout, the Paper says, “The consultation responses, including the majority of responses from foundations, were against a minimum payout. People felt that this would compromise the independence of foundations and could, over time, risk eroding the long-term value of foundations’ assets. We have listened to the consultation responses and will not be introducing a minimum payout for foundations at the current time.”

David Emerson, CEO of the Association of Charitable Foundations (ACF), cautiously welcomed the news: “The decision of government not to introduce a minimum payout for the current time reflects a sustained five-month campaign from ACF and from our members who made the case as to why such a requirement would have been wholly inappropriate to the UK's legal and regulatory landscape. The removal of this immediate threat to endowed foundations and to their ability to engage in considered, distinctive and sustainable contributions for public benefit is a sensible outcome.

“However there is a note of caution: 'at the current time' suggests that ACF should continue to analyse and explain current rates and modes of payout to demonstrate more clearly the critical role foundations are already playing in support of civil society, with the likelihood that government will put greater pressure on all charities around impact reporting.”

Clive Cutbill, of Withers LLP, said he was “delighted” to see that no minimum payout for ‘foundations’ is to be introduced: “This possibility would have been wholly inappropriate to the UK’s legal and regulatory landscape, and would have been a short-term fix with potential long-term consequences.”

Impact Reporting

As part of its modernising giving agenda, the White Paper emphasises the need to facilitate the better reporting of impact by charities to help donors to give. “Donors need to be able to decide which opportunities are right for them, and where they feel their money (and time) will be best spent.” Acknowledging that impact reporting can seem “daunting and expensive for many organisations”, the government says it is aware that organisations want to articulate the benefits of their activities in “a clear, comparable, numerically robust way.”

Over the summer, it will work with its strategic partners, charities, voluntary organisations, social enterprises, trusts and foundations, the private sector, investors and public service commissioners to identify what would help make impact reporting simpler, easier and cheaper for organisations, and more accessible to philanthropists, donors, investors and commissioners. Impact reporting will also be on the agenda of the autumn Giving Summit, also announced in the Paper.

The Charity Finance Directors Group (CFDG) said it was “particularly pleased that there is a continued emphasis on impact reporting in the Giving White Paper which acknowledges the barriers and limitations for many organisations”.

CEO Caron Bradshaw added: “The Giving White Paper has remained solid in its commitment to impact reporting but appears to have taken on board that there needs to be more support for charities if they are to develop in this area. CFDG is passionate about developing impact reporting, transparency and accountability within the sector, but we feel that it is important for government both as an advocate and audience to this information, to understand the barriers and that it needs to be proportionate. There is much more to be done here and we are pleased that the government wants to open discussions with the sector on this area as part of their Giving Summit.” 

NCVO’s Sir Stuart Etherington also welcomes the agenda item: “The proposal to prioritise impact reporting is also very promising; this echoes our Funding Commission’s first recommendation and will be key to building a sustainable voluntary sector.”

NPC, who is championing impact and evaluation in the sector, would have liked to have seen more detail about impact reporting. Plum Lomax says: "Interestingly, of the 400 or so responses to the green paper, the question around social impact reporting solicited the second highest number of responses – so people do care about impact. But the white paper focused (and only very briefly at that) on what charities could do to report their impact better. There was no mention of how institutional funders (grant-making trusts & foundations) could better share their knowledge of effective organisations. Nor was there any reference to how private donors could be encouraged to think more about impact in their funding decisions – a theme being picked up in an excellent new book Give Smart: Philanthropy that gets results, and an accompanying website."

Giving Summit

In bringing people together the Paper announces a Giving Summit this autumn.

It says it will be a platform for ideas generation, networking and decision-making, bringing together leaders and innovators from business, social enterprises, charities, community groups, academia and government. The hope says government, is it will “enable more social innovators to build the connections they need to make their ideas a reality”.

Theresa Lloyd suggests the idea of the summit might be more effective as a recurring event: “A regular summit might also be a means to monitor the impact of the measures proposed in the White Paper. What will be important is how the ideas in the White Paper are carried forward and supported. It would be very useful to have a forum that enables people to share best practice and focus on what works. It would also provide a public arena for government to receive feedback from practitioners. As the government says, this is about a long term approach.”

Next steps

“The White Paper marks the beginning of a process of engagement on giving, not the end of one,” it says. “We want to continue to explore, develop and experiment with new models to increase giving by working with others across society – charities, foundations, social enterprises, philanthropists, businesses, communities and individuals.

“We want to continue to hear ideas for increasing the giving of time and money.”

It is encouraging those people with ideas to apply to the Social Action Fund or to make suggestions for, and submit entries to, the Challenge Prizes once these funds open for applications.

The government will also be sharing more details about the Giving Summit over the coming months, and are keen to engage with people to develop the agenda for the summit, and to secure widespread participation in the event this autumn.

And it will continue to discuss particular proposals, including:

• consultations on tax reliefs for gifts of pre-eminent works of art to the nation and input on the detail of our inheritance tax proposals

• our investigation into the barriers to offering payroll giving in SMEs, through the Every Business Commits forum

• the use of the government web-estate to support giving.

It concludes: “We recognise that the goal of significantly increasing giving in this country is a long-term ambition, and one that requires all parts of society to work together. We look forward to continuing to work together over the coming months and years to build an even more generous society.”

The Giving White Paper can be downloaded from the Cabinet Office Website.