Over the past thirty years, successive British governments have improved the tax incentives to giving to almost US levels. Yet British givers are still much less generous than Americans (Britons give away about 0.7% of national income, Americans 1.7%). One of the proposals we made in our Philanthrocapitalist Manifesto was that offering the incentive of match funding might be a way to lever new giving, so we are excited to report on a new partnership between The Big Give and Arts and Business to test this idea.
The Big Give is the brainchild of Alec Reed, a millionaire who made his money through his eponymous employment agencies and has given a 20% share in the company to his foundation. The Big Give website was initially set up as a database of unsolicited charity requests that Reed had received, which he thought he would make available to other philanthropists. Adding a one-click function to the site so that donors large and small could give directly to the projects they liked was a natural next step. In this way, the Big Give is very much just a shopfront for charities – any registered charity can join and there’s no attempt to measure their impact or get user feedback. What is unique is its use of match funding.
The big leap came in December 2008 when Reed put up £1 million to match online donations to see if he could create some excitement about giving. The entire sum was spent in 45 minutes. In December 2009 Reed repeated the experiment but wanted to increase The Big Give’s leverage. This time he put up £1.5 million but asked for charities to match his donation two to one with gifts from their trustees and major donors to create a total pot of £4.5 million to match public donations. Charities leaped at the chance because it was a great way to get their wealthy supporters to actually put their hands in their pockets (fundraisers bemoan the sometimes very long gap between major donors expressing support and coughing up the cash) on the basis that every pound given would lever 50p from Alec Reed and another pound from the public.
This, of course, is all well and good from the Big Give’s perspective – Reed’s gift in 2009 eventually levered £3m from charities’ major donors and a further £4 million from the public – but does it actually stimulate more giving overall? Charities certainly report that the Big Give has boosted their income. WWF, for example, reports that the Big Give let it recruit 500 new donors and got existing donors who participated in the challenge to give 60% more. This anecdotal evidence is also supported by more rigorous research (subscription to NBER required, sadly) from the US, which shows that matching increases the probability that donors will give and the amount they give.
Perhaps the real test of whether matching really brings in donations is going to come this year, when Reed tries to raise £20 million. To do that he is looking to find sponsors to add to the matching pool, the first of which is Arts and Business. These are frightening times for the arts in Britain – public funding is going to be slashed and there is a fear that private and corporate giving will be weakened by the recession. To reverse this trend Arts and Business are putting up £0.5 million, which will be combined with another £0.5 million from Reed in an effort to leverage another £3 million from others.
The really interesting thing about this new partnership is that Arts and Business gets a lot of public funding (from the National Lottery as well as central government), some of which is going into this matching pot. We think that more government money could be used in this way to lever private giving. Universities, for example, are feeling the fiscal pinch as badly as the arts. There’s already a government sponsored match-funding scheme to attract donors into higher education but it’s pretty low-profile and university fundraising in Britain is still decades behind America. This needs to change urgently. Private donations are going to have take more of the strain for maintaining standards of excellence at Britain’s universities in the years. Maybe a dollop of government cash to sponsor gifts to the universities in this year’s Big Give could help to drive that change?
Correction: Just had clarification from the Big Give that Alec Reed and Arts and Business are jointly putting up £0.5 million, rather than £0.5 million each, to lever £3 million of additional giving. Apologies.