Philanthropy – is everyone on board?
30 October 2023
Philanthropy is a term that is being used with increasing frequency both in the third sector and more widely.
In 2021 the global philanthropy market was estimated to be worth £182 billion. Given the potential sums of money involved, it is little wonder that philanthropy has caught the attention of many people including individuals, those in the third sector, those in government and businesses. The Chief Executive of the Charities Aid Foundation, Neil Hislop, is reported to have called on the Government to develop a national strategy for philanthropy and charitable giving. There has also been a suggestion from Conservative MP, Jo Gideon, that the Government should consider creating a new role: Minister for Philanthropy.
But what is philanthropy, why is it important and is everyone on board?
The Charities Aid Foundation states on its website that philanthropy is defined as “the desire to promote the welfare of others, normally through generous donation of money to good causes”. Few can argue against that as a means of applying someone’s time or wealth.
Philanthropy can often be the route by which those with substantial resources are able to contribute towards pressing social needs by supporting the acceleration and development of plans and projects that promote the welfare of people, communities and countries. We are all aware of well-known, high-profile examples of this, such as the support provided by the Bill and Melinda Gates Foundation in working towards the eradication of malaria.
However, philanthropic giving is, perhaps surprisingly, not a notion that is universally welcomed.
Has the time come for us to truly reconsider what it means to be philanthropic and how to achieve a positive long-lasting impact on the intended beneficiaries?
Philanthropy as a “function of colonial capitalism”?
Earlier this year it was reported that Julian Corner, the CEO of Lankelly Chase, a major UK-based grant-making charitable foundation, described philanthropy in somewhat controversial terms: “Philanthropy is a function of colonial capitalism, it has been shaped by it, is being driven by it, and yet philosophically it tries to position itself as somehow a cure for the ills of colonial capitalism, and that contradiction needs to stop”.
The charity has a £130m endowment and makes grants to organisations tackling issues of social, racial and climate justice. Those grants total in the region of £13m each year. Lankelly Chase reported that its trustee board had become increasingly concerned that the charity’s source of income was investment in global capital markets which they felt had strong links with racial and colonial exploitation. For the trustees of Lankelly Chase, the answer to the apparent conflict between how it generates incomes and the people it seeks to benefit, is to dissolve the charity and distribute the endowment fund to other charities over a period of five years. Whilst this might resolve the conflicts that the trustees of Lankelly Chase may have felt, it is unclear without further detail on their plans how dissolving the charity addresses the issues identified by the trustees or provides a long-term positive impact on the charity’s intended beneficiaries.
The Birketts view
Many charities have endowment funds that need to be invested to generate income to be used in furtherance of the charity’s objects. There are of course several ways to approach investment decisions to ensure that investments are compatible with the charity’s objects, including the power to engage in ‘social investment’ (which is where the investment is intended to both achieve a financial return and also achieve direct charitable impact). The Charity Commission has recently published revised guidance for charity trustees on investing charity money (see our recent webinar for more detail about what has changed).
There is also the argument that in dissolving Lankelly Chase and transferring the funds to other charities, the trustees have just nudged any issues on to other trustees to deal with rather than dealing with those issues directly. For example, if the concern was that the board of trustees was not diverse enough to fully understand the social issues that the charity sought to address, this will not necessarily be resolved by transferring funds to another charity. An alternative solution would have been to seek to diversify the Lankelly Chase board itself.
There are also several ways in which philanthropic giving can be approached. For example, earlier this year New Philanthropy Capital called for philanthropy to be more open. The idea behind ‘open philanthropy’ is that each step of the process is designed to be as open and transparent as possible. That might mean, for example, ensuring that people with relevant lived experience are invited to be part of the decision-making process. Or acting more collectively with others to share knowledge and experience.
There is also a growing movement of philanthropists looking to impact and improve the lives of people by investing in large rewilding projects, seeking to acquire land and return it to nature as a way of positively impacting people and communities. So, we are starting to see some really innovative and modern approaches to philanthropy, which do not involve simply investing in traditional capital markets.
Whatever your personal view on the position taken by Lankelly Chase, there is a myriad of ways to approach philanthropy. Whichever approach you take, what is important is that ultimately those decisions are made in the best interest of the people and communities upon which you are aiming to have a positive and long-lasting impact.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at October 2023.