Tag Archives: New Trust Update

The Future of Philanthropy, in 1 Question

You are at a board meeting of your charity. Board member Jane mentions her friend Peter, and says he might be interested in making a donation. Peter, she says, is the owner of a large software company.

Peter, to be clear, is NOT A CURRENT DONOR. He has not opted in or opted out or opted for anything at your charity.

Back at the office you put Peter’s name into Google. It’s in your legitimate interests to do so, and Peter would expect you to do this.

Turns out that Peter’s business is based in Newcastle.

You are in London, so there is time and travel cost to consider if you are to visit him. You use Companies House to find out about Peter’s shareholding and the company’s profits. These figures help you estimate Peter’s gift capacity. Again, it’s legitimate for a charity to estimate the size of a potential donation before it decides to spend money on a visit to Newcastle.

At an invitation-only event on the 21st of February, the Information Commissioner’s staff will tell charities and the Fundraising Regulator whether or not they can do this search.

The future of philanthropy in the UK hangs on the ICO’s reply to this one question.

Can a prospect researcher do the search outlined above?

If the answer to the question is “No”, then high-value philanthropy in the UK will change dramatically.

It will no longer be possible to use public-domain information to identify or understand potential donors. Charities, universities, museums, hospitals and theatres will have to stop, immediately, all proactive forms of reaching out to new high-value supporters.

How will high-value philanthropists react? They will give less. When charities stop asking, people of wealth will stop giving, or give less and less often.This is not just an assertion – it is demonstrated by research. In “Richer Lives: why rich people give”, Theresa Lloyd and Beth Breeze report that 69% of rich donors give ‘If I am asked by someone I know and respect.’ Charities, from cancer research to the lifeboats, will have to adapt to a dramatic cut in their income.

Some philanthropists will respond by setting up their own foundations. We know from Factary’s New Trust Update that they are already doing this in some numbers. They will manage their own projects via these foundations, meaning less money for mainstream charities.

If the answer to the question is “No”, then the ICO is taking on not just the charity sector, but pretty much every business in the UK. Because every day hundreds of thousands of secretaries, assistants and marketing people do this exact search to check up on potential customers. Can that really be the ICO’s intent?

If the answer is “Yes”, then the ICO is affirming prospect research. We CAN continue to research, understand, and evaluate potential donors and, with permission, actual donors.

We will know the future of philanthropy in the UK on the 21st of February.


Chris Carnie is the author of “How Philanthropy is Changing in Europe”, published by Policy Press. He writes in a personal capacity.


Foundations of Wealth Revisited: A Story of Growing Potential…

For three years Factary produced a ‘Foundations of Wealth’ report focused on the Ultra High Net Worth Individuals (UHNWIs) and High Net Worth Individuals (HNWIs) (minimum estimated wealth of £10m) that founded grant-making trusts and foundations, featured in Factary’s New Trust Update during 2012, 2013 and 2014. We have now revisited these trusts and foundations to see how they are performing financially and what this means for hopeful beneficiaries.

 

These three reports, all available for free to New Trust Update subscribers via the new online archive service, contain profiles of 104 philanthropists and their grant-making trusts and foundations, of which nearly half are not on Trustfunding.org. Top of the list in terms of estimated wealth is Mrs Usha Mittal (£9.2bn) with other billionaires including the Swire family, the Fleming family, Ian Livingstone and Spiro Latsis. Together they have a combined estimated wealth of £34.36bn – the question is, how much of their wealth are they giving to charitable causes?

 

Based on financial information from the last financial year 98 trusts and foundations (six are still yet to submit their first set of accounts to the Charity Commission) had a total expenditure of £26.17m. Only seven had a total expenditure of over £1m in the last financial year whilst over one in 10 had an expenditure of £0 despite some having been registered for three years now. This is somewhat disappointing, especially when compared to their estimated wealth which shows that the average expenditure as a percentage of estimated wealth is a meagre 0.08%! Only seven individuals gave over 1% of their estimated wealth to other organisations in the last financial year, with the most generous person giving just under 3% of their estimated wealth as grants. This is well under the ‘5% of total assets’ figure that is often used as the basis for estimating gift capacity for major donors…

 

The biggest giver in terms of charitable expenditure was Sir Peter Harrison – former Chairman and Chief Executive Officer of computer network company Chernikeeff. The Peter Harrison Heritage Foundation had a total expenditure of £4.5m in 2013/14 which included a grant of £2m to the Clarence House Restoration Project and £1.75m to the Imperial War Museum.

 

The most generous philanthropist, giving away the greatest percentage of his estimated wealth as charitable expenditure, was Sir Mick Davis – former Chief Executive Officer of the mining company Xstrata plc from 2001 until its merger with Glencore in 2013. The Davis Foundation had a total expenditure of £2.2m in 2014/15 which equates to 2.95% of his estimated wealth. Grant recipients were not disclosed.

 

Other significant grants awarded by these new philanthropists in the last couple of years include £6m from The Dorothy & Spiro Latsis Benevolent Trust to Great Ormond Street Children’s Hospital and £1m to Boston Children’s Hospital (both in 2013 and hence excluded from this analysis of activity in the last financial year), £2m to the UBS Optimus Foundation by The Holroyd Foundation, £1m to the Royal Shakespeare Company by Lady Sainsbury’s Backstage Trust and £770,125 to  Clinton Health Access Initiative by the Surgo Foundation UK.

 

Notable names that have been less than generous with their charitable giving via their foundations to date include Michael Lemos (son of Greek shipping tycoon Constantinos Lemos) whose CML Family Foundation donated £3,406 which is 0.001% of his estimated wealth of £605m and Richard Higham (Group Chief Executive of Acteon Group Ltd) whose Higham Family Trust had an expenditure of just over £6,000 in 2014/15, which represents 0.004% of his estimated £150m wealth. Some of those whose trusts and foundations have shown no financial activity include former CEO of wealth management company Towry Andrew Fisher, Conservative Party donor and Domino’s Pizza franchise owner Moonpal Singh Grewal and Abhisheck Lodha, Managing Director of global real estate developer Lodha Group.

 

Of course there will be a number of possible reasons why these figures are so low – not all their charitable giving is directed through their foundation; this is not their primary foundation; the nature of their wealth means they do not have high levels of liquid assets; or they are still in the process of building up reserves.

 

It is this last point that is perhaps of most interest when we look at the figures. Whilst the total expenditure was only £26.17m in the last financial year, the total assets of the 79 trusts and foundations for which data was available was over five times this amount at £148.7m. 25 of these have assets in excess of £1m and 10 have assets in excess of £5m. This equates to an average of 0.62% of the philanthropists’ estimated wealth, with 15 building up assets of over 5% of their estimated wealth.

 

The foundation showing the largest asset amount is The Christie Foundation founded by Iain Abrahams, the former Executive Vice Chairman of Barclays Capital. The foundation has assets of over £21m for 2014/15 which represents over 40% of his estimated wealth, making him the also most generous benefactor. So far the only identified donation made by his foundation is of £150,000 to the Elton John Aids Foundation, of which he is also a Trustee.

 

What this shows is the considerable potential these trusts and foundations have for the sector. Whilst they may not yet be giving at a level in keeping with their vast wealth, these UHNWIs and HNWIs are ear-marking significant amounts of their wealth to be given away to charitable causes over the course of their lifetime and beyond, sustaining the charitable sector for years to come.

 

The financial data for these 104 trusts and foundations, along with the three Foundations of Wealth reports and all the past issues of New Trust Update dating back to 2005, is available online to NTU subscribers. If you want further information about New Trust Update and our searchable archive please contact Nicola Williams.


Milan x 2

I have been to Milan twice this month. This is not just because I am a lover of Italy’s food, fashion and people (I am) but because both the Festival del Fundraising and the European Foundation Centre Conference were held in, or near, Milan.

This was like a Barcelona-Real Madrid match, with each team playing solo, two weeks apart. Two of the most significant stakeholder groups in the non-profit sector, the fundraisers and the philanthropists, each with their own view of how to change the world.

Amongst the differences there were common themes. Both sectors are growing. This year’s Festival del Fundraising was the largest ever, and the EFC Conference was a sell-out too. The rate of foundation growth is astonishing – two new German foundations are created each day, and we know from Factary’s New Trust Update that 214 new grant-makers were registered in 2014 in the UK. The same growth story emerged at EFC from all over Europe.

Both foundations and fundraisers are becoming more professional. Foundation staff are training at centres such as the Erasmus Centre for Strategic Philanthropy, while fundraisers are going to back to school at universities across the continent, including Italy’s University of Bologna, and the course I teach on, the Postgraduate Certificate in Fundraising at the University of Barcelona.

While both teams are training, there is a remarkable demographic similarity between them. Women lead both teams. The population at the Festival, and at EFC reflected this, whether we were talking about the all-women fundraising team at Save the Children in Rome or the Chair and key staff of Turkey’s Vehbi Koç Foundation. The future of our increasingly interconnected sector will be shaped by women.

Both conferences dealt with social change, in slightly different ways. At the Festival we heard about social change brought about by donations through non-profits. At the EFC we heard about social change through collaboration. Yes, collaboration. Not grant-making, or at least not centrally grant-making. An excellent workshop led by Nicky McIntyre of Mama Cash showed how Oak Foundation was focusing on changing the situation of women by collaborating with companies. Katharina Samara-Wickram from Oak Foundation described the organisation’s evolving Theory of Change. The foundation had initially focused all its women’s rights efforts on women’s rights organisations. But it had also commissioned research, from AWID amongst others, and had discovered that it might get more rights for its dollar (or Swiss Franc) if it instead worked on the millions of companies employing hundreds of millions of women around the globe. As a result Oak has developed an 8-point Business Case for women’s rights aimed at employers and using them as the vehicle for winning rights for women. This was one example amongst many of collaborations between foundations, NGOs and business to effect change in society.

I discussed this with a team from a leading UN organisation. The implications for fundraising are important, with the role of the fundraiser changing from being simply a grant-chaser to becoming the central relationship point for a complex web linking her own organisation with foundations, companies and other stakeholder groups.

The significant divergence between the two conferences came when we talked about investment. Fundraising team leaders in Italy complained about a lack of investment. Salaries in the sector are still modest and few organisations are willing to take the brave step of dramatically increasing investment in fundraising. By contrast the foundation sector spent a lot of time on investment, and appears to be ready to take on risk, so long as it has a social end. Thus the Italian majors, Fondazione Cariplo and Fondazione CRT both have programmes for investing their endowment in activities with a social as well as a financial purpose. There was some talk of divestment – with foundations encouraged to divest from the fossil fuel industry. But the bigger theme was Mission Related Investment. This was talked about across the EFC conference, with foundations making substantial investments in the social housing sector, and as venture philanthropy in social enterprises. Mission Related Investment opens up a substantial new line of funding for social purpose organisations – another challenge for traditional fundraising teams in Europe.

With only a little hindsight, both conferences felt like a revolution. Just ten years ago the Italian fundraising sector was tiny – a handful of visionaries in a few risk-ready organisations. At that time most European foundations were a closed shop – few published an annual report or had a website or could be induced to talk about their work. Their boards and management were older and dominated by men. Since then we have had a wave of transparency legislation running across Europe accompanied by a push for the same by the EFC itself – so now we can see what’s happening in foundations in Switzerland, the Netherlands and Spain (ironically, Italy remains somewhere behind the pack on transparency.) The feeling that a revolution is taking place in the sector ran through both conferences.

It is great to be living in revolutionary times.


Soliciting Gifts: top law firms give £50m

A report published today by Factary shows that the top 10 UK law firms donate £50m per year to non-profits (charities, arts organisations, universities…)

Key findings in the 130-page report include:

The top 10 UK law firms donated more than £5m in cash to charitable causes in the last year; firms give eight times as much in pro bono work as they give in cash.

Causes

Law firms stated CR themes are, in order of preference, Education & Training, Housing & Employment, and Rights/Law & Conflict. By contrast, we found that publicly reported donations are focused on Health, Children/Youth and Arts. We analyse these differences and suggest reasons in our report

Fundraising

Crisis UK appears to enjoy the widest support from UK law firms, reporting donations from 9 of the 20 leading firms. Amongst Universities, the University of Sheffield leads the field, reporting donations from 5 of the top 20 firms.

Recognition

The recognition won by some law firms for their donations far exceeds that of others. Slaughter and May achieve more public recognition for their donations than any other law firm. Clifford Chance, Hogan Lovells and Freshfields win little recognition for their generosity. Comparing amounts donated by the firms and public recognition, we report that DLA Piper achieve the highest level of public recognition per £1 donated.

The report – Soliciting Gifts: Donations by Leading Law Firms in the UK – is published as a special supplement to Factary’s New Trust Update report. It is published by Factary at £125 per copy, with a discounted price – £100 – for subscribers to Factary’s New Trust Update or Factary Phi.

To order a copy contact Shaun Gardiner.


The End of the New Trusts Recession

New research from Factary reveals that during 2009-10 there was a “New Trusts Recession” – four consecutive quarters in which the numbers of newly registered grant-making trusts declined.

That recession is now over. Our latest research paper reveals some of the patterns of grant-making by new trusts.

The research is based on cross-analysis between our New Trust Update database and our Factary Phi database.

Download the report here