Top 10 trends in British Philanthropy

Philanthropy trend

There has been much activity in British philanthropy since Philanthropy UK was founded in 2001: budding interest by individuals has been matched by a growing philanthropy infrastructure to support their giving. There also is more media coverage  of philanthropy, and in 2005 Government renewed its commitment to supporting charitable giving, laying out its vision and priorities in A Generous Society.

Here we look at some emerging trends in British philanthropy.

1. Private wealth is increasing

There has been a dramatic increase in the number of wealthy individuals as well as a shift in source of wealth in Britain: 15 years ago, 75% of the Sunday Times Rich List had inherited their wealth and 25% were self-made. Today that ratio is reversed. Meanwhile, the number of billionaires in the Rich List grew by 25% to 68 in 2007, while the country’s richest 1,000 increased their fortunes by 20% to almost £350 billion.

2. A new type of donor is emerging, altering the giving landscape

Changes in amount and source of wealth are giving rise to a new type of donor – one who is younger, typically (but not necessarily) self-made and socially conscious. The new philanthropists want to be engaged in their giving, using their business experience and expertise to support the charity more closely. They also are willing to invest a significant amount of capital – including funding core costs – and take significant risks to test innovative ideas. Importantly, because they are private individuals, they are able to take risks that government and many foundations, who are accountable to other stakeholders, simply cannot.

3. More people are giving during their lifetime

More people are choosing to give during their lifetime, rather than through a one-off legacy bequest. They want to experience the joy of giving and of the relationships they develop – with charity staff, beneficiaries and other donors. More people are talking publicly about their giving, providing role models to new givers.

4. Views on the amount of wealth parents should pass on to their children is changing

Especially among the self-made, more individuals are choosing to give much of their wealth ‘back to society’, through either legacies or lifetime giving. They will provide for their children, but charity is also important. A 2000 Lloyds TSB survey revealed that over half of people with liquid assets of £250,000 or more would prefer to either spend their money or give it to charity rather than to their children.

5. Givers increasingly want to see the impact of their donations

As they become more sophisticated and strategic in their giving, donors increasingly want to see the impact of their support. This goes beyond outputs, such as the number of people helped, to address the longer-term outcomes and impacts on beneficiaries, such as improved health or self-esteem. Donors are also demanding increased accountability and transparency from charities. They want to be confident that their money is being used both effectively and efficiently.

6. More donors are giving together

More donors are joining together to leverage their funding and to share learning. These include ‘giving circles’ such as The Funding Network, as well as funding vehicles such as ARK and the Private Equity Foundation. See The Philanthropy Directory for a full list.

7. Innovation in charity financing is growing

Philanthropists are embracing new ways of giving, such as venture philanthropy. They also are utilising new types of charity financing – including loans and equity – to support charities and social enterprises, filling a gap in the funding market. Meanwhile, charitable banks have been established, enabling social investors to help disadvantaged communities to achieve sustainable economic growth. See The Philanthropy Directory for a full list of new funding and financing vehicles.

8. There is a growing range of charitable services that help donors to give effectively

There is a growing infrastructure of charities and professional service firms to support and promote effective giving, and to help new and existing donors to take a more informed and strategic approach to giving. Meanwhile, private banks are expanding philanthropy services to their high net-worth clients. See The Philanthropy Directory for a full list of donor support services.

9. Information flows are improving

Publicly available information on charities generally has been wanting. However, this is changing with improved quantity and quality of information flows in the sector. These include online resources, such as the Charity Commission's Register of Charities, GuideStar UK and Intelligent Giving, as well as research into different areas of charitable activity and tailored advisory services for donors from NPC and Geneva Global.

10. Individual giving is becoming increasingly important to third sector organisations

The recent growth in the number of newly wealthy individuals represents a new and potentially significant income source. Importantly, private individuals provide charities with unrestricted, sustainable and predictable income. They also play a critical role in maintaining the independence of the voluntary sector, especially as more charities are delivering public services on behalf of government.