Giving Giving A Chance

“In the past, the left focused on the state and the right focused on the market. We’re harnessing that space in between – society – the ‘hidden wealth’ of our nation.” Given the parlous state of Britain’s finances, it is perhaps unsurprising that David Cameron is looking to hidden wealth to solve the country’s problems. In his speech on May 23rd, the Prime Minister relaunched, yet again, his Big Society with the release of a new White Paper on Giving. But is he trying to tap into a crock of gold, or merely scrabbling around the back of the sofa looking for loose change?

Government’s usual weapon to influence citizens is the tax system, which can be used to make people pay more to do bad things (like smoke) and pay less to do good things (like give). Yet, with Mr Cameron’s Coalition Government leading a national austerity drive there is precious little cash to go around to promote giving. (That may be no bad thing: there is little evidence that increasing Britain’s already generous tax breaks for giving would have much effect.)

With no money to announce, the White Paper was sexed up instead with a few gimmicks, such as a commitment that Government Ministers will volunteer one day a year. The paper also proposes lots of behavioural “nudging”, as advocated by Mr Cameron’s favourite economist Richard Thaler. Hence much of the focus is on making it easier to give, via ATMs, and making it easier to navigate the complexity of the Gift Aid tax deduction system – both of which are sensible ideas. (We are less thrilled, however, by more blatant attempts to incentivise giving, such as linking philanthropy to honours, which surely would at best merely formalise something that has always happened informally.)

The White Paper also provides a useful survey of new platforms to encourage giving and volunteering by making it easier and more fun, and announces a new initiative called Regalo, to be run by the quasi-governmental Big Society Network to get new ideas up and running. Yet it is unclear what are the implications of this for government – surely the rough and tumble of the market is the best way to figure out which of these innovations captures the public imagination, not Prime Ministerial patronage or public funds?

The fine line between encouraging and distorting the market is illustrated well by two specific announcements in the White Paper. One is that Mr Cameron will convene a major conference on philanthropy in the autumn, to bring together government, donors and charities. As a way to keep up the momentum and create the culture of philanthropy, this is a sensible way to use government’s convening power. Contrast that with the frankly peculiar announcement that £700,000 of public money will be provided to subsidise Philanthropy UK, an initiative run by the Association of Charitable Foundations and the Community Foundation Network to promote philanthropy. If an organisation representing philanthropists and promoting philanthropy cannot get cash out of its own supporters and has to rely on the taxpayer, isn’t that a tad alarming?

Sadly, the Government chickened out of a cost-free way to boost giving that was mooted in its original Green Paper: a payout rule to prevent some grantmaking foundations sitting on piles of cash. We are not surprised that this proposal, which we championed, did not make it into policy, given the strength of the foundation lobby against it. Yet we do take a crumb of comfort from the White Paper’s conclusion that this proposal is deemed not appropriate at “the current time”. Is that a word of warning to the most tight-fisted foundations, some of which pay out as little as 1% of the value of their endowments each year (compared to the mandatory 5% in the US)? Here’s hoping.

The White Paper is not going to revolutionise giving overnight. Nor is it going to win the British public over to Mr Cameron’s Big Society idea. (Indeed, there seems to be more enthusiasm for the Prime Minister’s big idea on the other side of the Pond.) Yet, as we argue in The Road From Ruin, there is the potential for the Big Society to be the basis of a much-needed reinvention of how Britain solves social and environmental problems. Philanthropy can never take the place of government – it has to be society’s risk capital, doing things that government cannot. Part of the challenge for the Big Society is therefore to reinvent government to work better in partnership with philanthropists and social entrepreneurs. Business has a role too, though principally through responsible investment, employment and procurement rather than corporate donations. The Giving White Paper was never going to take on these big issues. So, what will? Watch this space.