today’s major philanthropy

SCF Spring Conference May 2012

Today’s major philanthropy

Cathy Pharoah Professor of Charity Funding Co-Director, CGAP Cass Business School

www.shaw-trust.org.uk

CGAP’s research work in philanthropy The New State of Donation – Trends in household giving 1978-2008

Family Foundation Giving – 5-year series of annual updates

Charity Market Monitor

Briefing Papers – trends in regional giving, generosity

Commentaries on trends in Gift Aid

How do donors choose charities?

Arts and Business Scotland – philanthropy master classes

Entrepreneurial philanthropy

Innovation and the third sector

Philanthropy and building a better society (forthcoming)

Leaders, Intermediaries, Overseers? Exploring the role of community foundations (forthcoming)

Co-producing research – working together or falling apart?


other family trusts

new social finance vehicles

direct giving

donor-advised

funds

community foundations

foundations -

flexible forms

channels for major gifts

Multiple routes for major giving

Challenges for mapping and measuring (eg overlapping)

Challenges for philanthropy management


‘Ebac Ltd owner John Elliott says new foundation will oversee company and boost jobs’ The multi-millionaire owner of a County Durham company is toleave the company to benefit the community rather than his family. Mr Elliot was awarded MBE for Services to Small Business, and on Channel 4's Secret Millionaire. Instead of passing the business on to the family, I have decided to create a structure that will ensure profits are used for long-term manufacturing investment.

[It will] deliver substantial recurring sums for community initiatives and enshrine the business' community ethos for the benefit of all.

The new foundation will have three trustees to oversee the business at a strategic level, and will be joined by a community trustee on a rolling three-year basis.

Trustees are charged with using profits to make the business stronger and use surplus to support local causes.

Mr Elliott said the structure will ensure that the business will not be sold for personal profit, and keep the business in the North East of England …good for the UK economy and NE England."


Individual philanthropy today (estimated) 1.7

1.1

2.0

10.6

££

Very wealthy

Mass affluent*

General public

Legacies

*Higher-rate tax-payers only Sources: (McKenzie and Pharoah, www.cgap.org.uk/uploads/TaxAndGiving.pdf UK Giving 2009 (CAF/NCVO); HMRC Table 10.2, 2009; Legacy Foresight 2009; Sunday Times Rich List, 2008 (what happened to 2009?)

£16.4 billion (ish)

+ £1 billion Gift Aid


Real growth in giving 2005/06-2009/10

-0.4% 27% 7%

Individual Family foundation Corporate

Pharoah, C with Keidan, C and Gordon, J. Family Foundation Giving 2011.


Real growth in giving and assets 06/07- 09/10

22

17

7

-8-6

8

-2

-9

-15

-10

-5

0

5

10

15

20

25

2006/07 2007/08 2008/09 2009/10

%Giving

Assets


Who are today’s donors?- trends in % of income given, by age

0

0.5

1

1.5

2

2.5

3

3.5

26-30 41-45 46-50 61-65 66-70 71-75 >75

Age band

1978-19822003-2008

%


Trends in proportion (%) giving, by age

05

1015202530354045

26-30 41-45 46-50 61-65 66-70 71-75 >75

Age band

1978-19822003-2008

%


How to begin? examples of donor points of departure the ‘consciousness that one should give’ grew clear in late

teens when sent by mother to live in the Blackfriars Settlement..’my interest in philanthropy began right there..’

the way in which religious values were embedded in, and transmitted through, family background …’Maurice Wohl followed the example of his father’, who was actively involved in charitable giving

the route began with experience of the charitable activities of a US friend and colleague… his family then joined his friend’s family in building a house for a poor Mexican family – ‘one of the best experiences he had been able to give his own children’

‘it was experience on a (charity) board which opened the door’

Pharoah, C with Keidan, C and Gordon, J. Family Foundation Giving 2011.


Philanthropy – a challenging donor journey

‘it was not easy – we were rebels without a cause – everyone recommended someone else’

‘I felt I could do something, but it was as if I had set sail without a rudder’

‘we wanted the foundation to be a success and honed its vision carefully…taking time’: there are no ‘quick fixes’

‘I had a very large cheque in the bank.. I had to go and educate myself as the next step….anything I wanted …..’let’s go and find out what the possibilities are’…actively started to learn about philanthropy’

Pharoah, C with Keidan, C and Gordon, J. Family Foundation Giving 2011


How to define entrepreneurialism? Social enterprises

Entrepreneurs

Entrepreneurial approaches and attitudes

Social finance – new products? social and economic returns?

Social investment

Venture philanthropy

 How finance used?

 Innovation?

 Sustainability? – whose?

 Capacity-building?

 Social change?

 Impact


The Social Finance space

 The market-place - £1billion in total? – which space?

 Space still being contested/ configured

 Growing the Social Investment Market: A vision and strategy

 Trust players –Esmee Fairbairn (£20 million)

 Social Impact Bonds (£5 million sold to trusts)

 Pilot bond - prisoner rehabilitation in Peterborough

 Pilot bond development – PEF - NEETs

 Social Bonds – eg Scope (£20 million), Allia (£1.8 million raised through bonds)

 Big Society Capital - £600 million

 Finance-raisers – Social Finance, Zopa, OXFAM (SEIIF)


Example:The Indigo Trust and information technology in tackling inequality With a focus on the power of information technology, the Indigo Trust, one of the eighteen Sainsbury Family Charitable Trusts (SFCT), has developed a totally new programme around the use of computer and mobile phone applications at a grassroots level, to address inequality and development in Africa.

Just 10% of Africa 's population is currently connected to the internet, but this proportion is rapidly expanding. In urban areas, the internet already has the potential to strengthen individuals and communities through increasing their access to information, and encouraging democratic transparency.

The Trust believes that ICT can have a powerful role in stimulating social change and economic growth. It aims to support the development and use of hand-held information and computer technology (ICT) which can help improve adult literacy, and increase access to health, education and welfare services.

Pharoah, C. Global Grant-making. 2011


New kinds of investment The Baring Foundation has made a mission-connected investment in Equity for Africa, a fund which provides ’transition investing’ for small and medium-sized micro-entrepreneurs in Sub-Saharan Africa aiming to build their business to the next level.

The Ashmore Foundation – building primary health care enterprise in Ghana

The Foundation has a strong interest in supporting social enterprise as a sustainable approach to building skills and income in marginalised communities. The AfriKids Medical Centre is one of several of the Foundation’s sustainability initiatives that improves services for the local community while also building an independent revenue stream to reduce reliance on donations.

The Medical Centre provides basic health services to the community of Bolgatanga, with an inpatient capacity of 60 beds and a new maternal health unit. It is planned that by 2015, the Centre will have 80 beds, 8,000 inpatients and 100,000 outpatients each year. The Ashmore Foundation has supported Afrikids with a grant of £70,000 to develop a permanent x-ray suite which will both improve local access to healthcare and provide a sustainable source of revenue.



Case-study: Brian Kennedy Charitable Settlement Successful businessman: wanted to develop his philanthropy on a local basis

He began to see social problems as interlinked, needing holistic mainstream approaches

Joint venture with local constabulary to introduce ‘SHARP’ system to local schools (School Help Advice Reporting Page) - an internet system providing additional links between schools, the community and the police. www.thesharpsystem.com)

The Foundation did not begin with a ‘big vision’; finding its purpose has been developmental

SHARP now being piloted in 6 schools and aiming at 60; negotiating access can be a lengthy process

As a ‘self-made’ businessman without a privileged background, Brian Kennedy’s vision for the future involves bringing his own entrepreneurial skills and experience to develop sustainable social enterprise

BKCS believes many young people are at risk because of their environment, and are not beyond reach

Wants to offer young people with problems the opportunity to earn an income, and come off benefits

The Foundation does not believe in being a sole funder, but in acting as catalyst bringing other agencies and funders together: currently working with a local consortium to look at social enterprise options

A contributing factor to local partnership success - Brian Kennedy is well-known figure in local community.



Case-study: self-confessed entrepreneur Tom Hunter

A successful entrepreneur and philanthropist whose personal wealth derives from creating, growing and selling his sports retail business ‘Sports Division’ in 1998.

After selling business Sir Tom established the Hunter Foundation as a formal vehicle through which to manage his philanthropy.

Passionate about creating a more entrepreneurial Scotland, supporting the development of young people through education and leadership.

Examples of current partnerships in the UK include Children in Need and Cash for Kids in the West of Scotland that aim to target the NEET agenda (young people not in education, employment or training).

The positive destination programme undertaken in partnership with Children in Need comprises of £1.7 million grant that funds five projects across the UK.

The projects are focused on improving outcomes for children and young people in the NEET category.

Each project focuses on a different aspect of the NEET agenda, and takes a unique and innovative approach to tackling it.



Major preventive programmes Children’s Investment Fund Foundation

Few independent funders, apart from the giant US Bill and Melinda Gates Foundation, have the resources to undertake large-scale public health and education programmes, working in partnership with governments and international agencies. In the UK CIFF has placed a strong emphasis on taking this route, investing more than £18 million in child survival in 2009/2010, with a particular focus on risks due to malaria and AIDS, and £3 million on educational development.

It has set itself ambitious targets, based on an analytical approach to assessing need and the potential for impact. It aims to help eliminate paediatric HIV/AIDS in Zimbabwe, supporting the government’s work through a major grant to the Elizabeth Glaser Paediatric Aids Foundation. Through a ‘Teacher-Community Assistant Initiative (TCAI) in Ghana, the Foundation is working with the government to improve education outcomes for primary school children, aiming to rollout TCAI across 13,000 schools.



Partnership example – sustainable economic and agricultural development Gatsby Charitable Foundation and Wood Family Trust Two foundations with a similar interest in improving the incomes of the poor through promoting sustainable enterprise in Sub-Saharan Africa, the Gatsby Charitable Foundation and the Wood Family Trust Africa, have partnered with tea industry stakeholders in Tanzania to launch the Chai Project.

Its aims are to double smallholder production, increase productivity and incomes, and enhance the overall competitiveness of the sector. While the target beneficiary is the smallholder tea farmer, the Chai Project is also comprehensively reviewing the whole process from input supply to end market.

Key research activities have been carried out, including a comprehensive and detailed audit of all existing and potential tea growing areas, clarifying exactly what opportunities exist for expanding production and increasing productivity, plus an industry benchmarking of costs, comparing the competitiveness and cost structure of Tanzania’s tea sector with other major producers in East Africa.

Support will be provided through a variety of mechanisms including technical assistance, matching grants, loans, equity and any other commercially viable intervention.



Cathy Pharoah: Heed the case of Linda Kirk who tried and failed to get local social investment Third Sector, 1 May 2012

Cathy Pharoah

Set aside the romance and grasp the harsh realities of social enterprise, says our columnist The demystification of the idea of social enterprise is long overdue. The cult of enterprise has held iconic status in the sector over the past decade or so. But the fact is that in a sector where income is under pressure on all fronts, entrepreneurialism is no longer just an aspiration; it's a necessary condition of survival. So it is time to get real about it.


Today’s major donors?

 investors - in futures (not necessarily financial products!)

 education, international development, culture

 big money – use for big projects

 capital investments as much as social investments

 partnerships – many reasons

 networkers

 sometimes beginners – learning curve

 often more specific, operational, engaged

 business-’like’/ used to success/ want to be good at whatever they do

 many different routes to entrepreneurial philanthropy

today’s major philanthropy

Documents