‘Making Giving More Effective’: Kurt Hoffman’s comment on the UK Government’s latest giving paper

Kurt Hoffman

In late June, the government published an update to its Giving White paper of one year ago. Unlike the Treasury’s more recent attempts to meddle with taxation and charitable giving, the update failed to generate major headlines but it’s a telling reminder of what government thinks must be done to swell the contribution of the charitable sector.

The overarching aim of the White Paper is to make giving a social norm among people from all walks of life. Alongside an expanding menu of measures to boost voluntarism, the thrust of the government’s initiative is to boost overall financial giving to something like US levels by making donating to charity easier and more compelling.

So taking the US as its cue, the government reiterated its commitment to encouraging more payroll giving and legacy gifts, both of which are an order of magnitude higher across the Atlantic. It’s estimated that if leaving 10% of one’s estate to charity became the UK social norm, a further £1 billion a year could be channelled to good causes.

But just as the Treasury mistakenly assumed its tax relief reduction proposals wouldn’t reduce charitable giving, there’s a danger the government is equating more giving with a de facto equivalent improvement in measurable impact.

This assumption ignores an inherent contradiction in the way society gives, as well as mounting evidence that the effectiveness of charities and philanthropy can vary widely. Asked if we want our donations to do as much good as possible, we nod our heads in unison. In reality, we primarily support charities we know of personally or whose marketing message we find compelling. So despite instinctively wanting our giving to have maximum impact, we rarely try to uncover the most effective charity working on the issue that concerns us. By the same token, there’s no incentive for cash hungry charities to proactively tell us how much better their rivals are at tackling the same issue.

Similar disconnects also mar relationships between major donors and big charities. Understandably, but at great ultimate cost to needy beneficiaries and society, there are no market-based or regulatory drivers to marshall donations towards the most effective charities and delivery methods.

This explains the likelihood (based on lessons from the better studied US charity sector) of there being great variation in both the quality of UK grant making and the comparative performance of recipients. So although £51 billion passes through the coffers of 180,000+ UK registered charities each year, what guarantee is there that any new money triggered by the government’s Agenda for Giving will achieve the greatest impact if it doesn’t reach the best charities?

Thankfully, we do know that a proportion of UK philanthropic funding does achieve maximum impact. For the past ten years, the Institute for Philanthropy has worked with philanthropists across three continents to help them systematically ensure their contributions work as hard as possible. We call this “strategic philanthropy” and among our UK alumni we can point to examples of a philanthropic intervention catalysing unexpected solutions to social problems involving unforeseen partnerships, breakthrough innovations and scalable delivery models.

This is philanthropy at its very best – and rarest. It’s the stuff of risk-taking, leveraged collaboration and unearthing the best solutions. And given the declining state of public finances and the enduring backdrop of economic crisis, we urgently need more of it. But taking this rarified form of philanthropy to scale won’t come from government simply asking society to be more generous. Nor will it happen simply by asking charities to individually measure and report on their impacts.

Creating the preconditions for catalytic philanthropy to emerge as the dominant feature of the third sector will only happen if policymakers, analysts and philanthropists themselves make it a strategic objective.

To do this, debate must first move beyond a dominant concern with how much people give. In its place, a rigourous programme of economic research and comparative case study analysis is required to uncover exactly how the most impactful examples of philanthropy actually work and why.

Unlocking this potential is perhaps the greatest prize in philanthropy. As such, a forward thinking vanguard of donors must make it their mission to challenge traditional philanthropic practice with new and disruptive patterns of giving that will ultimately lead the entire third sector to improve its performance and fulfil its true potential.

It will involve seeding new intermediaries and platforms capable of aggregating donors funds and dispensing catalytic thinking that – unlike trying to raise levels of giving – cannot be rolled be out and measured in a single electoral term. Yet it is government, alongside the neediest groups in society, that would be the biggest winner. Solving our most pressing social problems demands nothing less.

This post first appeared on the Huffington Post’s Politics page: http://huff.to/KVOn7O 

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