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In Tough Economic Times, We Need the Wealthy to Give

Posted: 28/12/11 00:00

A recent report published by Coutts and the University of Kent has shown that private individuals gave away a total of £782m in the financial year 2009-10. The report is a fascinating insight into why and the way people give in these turbulent economic times, offering important lessons for those who want to encourage the growth of philanthropy in the UK.

As is traditionally the case, universities, museums and other cultural organisations received a large proportion of the year's philanthropic giving. This has always been the way for the very wealthy to make their mark on the world, and as a result the lobbies of museums and galleries in London, New York and other major cities are plastered with plaques honouring many generous donors. Every wing and every room bears the hallmark of a worthy family foundation, and named scholarships preserve an individual's legacy for decades to come.

These organisations touched long ago on the key to securing major donors: allow them to make a tangible impact; to put their name to something real. The names Guggenheim and Carnegie are still synonymous with philanthropy, many years after their deaths.

Over recent years this model has been adapted as new ways of engaging with giving and obtaining value and satisfaction from it have appeared. Donors are motivated by having a personal relationship with the cause, and a feeling of involvement and interaction. They want to know exactly where the money is going and the difference it is making. The wealthy in this period of economic woes have been looking beyond their alma maters and the world's prestigious art galleries, and extending these same principles to wider giving.

This is reflected in the Coutts report, which demonstrates significant increases in local and active giving. This phenomenon has a name: 'venture philanthropy'. By applying a strategic and business minded approach to funding - long term investment and seed funding alongside personal involvement of the donor - the wealthy are extending their giving to numerous new causes and making more of an impact.

This means channelling their giving into something that will generate results and allow them to have a relationship with the cause, whether that is by funding a specific programme, scaling an existing charity, or an individual job role. There's a marked difference between this and a generic donation to a charity, which will be split up and spent on vital but far less measurable activities. More and more foundations and charities are beginning to introduce this model, with incredible success. For example Impetus Trust uses a venture philanthropy approach. Along with Sutton Trust they have been backed by a £125m grant from the department of education to establish and manage the new Education Endowment Foundation (EEF)

Rosetrees, the foundation my parents established in the early 1980s, applies a strategic and business like approach to the field of medical research, providing seed corn funding and developing close working relationships with individual researchers. £1.9 m of Rosetrees funding has led to in excess of £57m in follow on grants from major funders who want to support the cutting edge medical research that Rosetrees help get off the ground. Co-donors come to us with a scientific area they are particularly interested in, and we identify outstanding researchers who have the potential to become the leaders in their fields. The donors are able to receive regular progress reports and even to meet with the researchers. They truly feel that their money has made an impact. Rosetrees supports Prof Molly Stevens whose tissue engineering work has led to clinical products that enable the body to produce new bone tissue to repair bony defects.

This trend of strategic giving is being seen at every level of giving, with more and more charities hooking onto the public's desire for tangibility through 'good giving' websites, such as Oxfam Unwrapped.

In these tough economic times we need to convince the wealthy that they have a responsibility to give. This country is seeing a growing divide where the rich are getting richer and the poor are getting poorer. The professors I meet don't earn as much as a banker's secretary and yet they are passionate, committed and totally immersed in their journey of discovery. I want to change the rich's mentality toward philanthropy so that they give more. Perhaps new models of giving such as venture philanthropy are a way of convincing the wealthy to give more.