Tag: UHNWI

Foundations of Wealth 2025

Posted on by willw

This report takes a closer look at the ‘Foundations of Wealth’ included in our New Trust Update Archive Database.

Foundations of Wealth are trusts and foundations that have been set up by a wealthy individual or family, estimated to have a net wealth of £10m or more. These are new philanthropists creating their own grant-making vehicle to support the organisations and causes they feel passionate about.

Each month we usually see four or five such funders created and featured in the New Trust Update reports we send to our subscribers, and overall, around one in five of the funders in the Archive Database are classified as Foundations of Wealth.

In the last financial year these philanthropists donated over £600m to charitable causes through their foundations. This makes the Archive Database a fantastic resource for identifying new philanthropists, understanding what they want to support and how to approach establishing a relationship with them.

The other main group we classify in the database are corporate foundations, which we will be examining in more detail in a subsequent report. The rest are general trusts and foundations, including other family trusts and specialist funders.

We will take a closer look at the charitable interests of these funders, the level of expenditure and grant sizes and the geographic areas of benefit and examining the trends and insights that can be drawn from the data.

Charitable Interests 

Each funder in the Archive Database is classified based on their philanthropic interests – what they want to fund – and this was covered in detail in a previous report. When we look at Foundations of Wealth specifically, we can gain an insight into the interests of these philanthropists and how they align with and differ from the wider pool of funders in the database.


Overall, the pattern of support in terms of philanthropic areas of interest for the Foundations of Wealth closely follows that of the wider pool of funders in the Archive Database. Apart from those funders with a broad remit and supporting General Charitable Purposes, the most commonly supported philanthropic causes and beneficiaries are Welfare, Education & Training, Health and Children & Youth.

However, there are some notable differences in the proportion of Foundations of Wealth funders interested in certain categories compared to the rest of the funders in the Archive Database. This can be clearly seen when we measure the percentage increase or decrease across the various categories between the two groups:

This highlights a selection of philanthropic causes and beneficiaries that appear to be favoured (and those that, apparently, are not) by the Foundations of Wealth compared to the rest of the funders in the Archive Database. (It should be noted that in some cases the sample sizes are too small to say with confidence that these percentage differences are statistically significant.)

However, two categories with sufficiently large sample pools that stand out as receiving a notably higher proportion of funders from the Foundations of Wealth are Arts and Culture and Environment. Only 11.5% of funders from the broader pool support Arts and Culture, whilst 20.4% (one in five) funders created by a wealthy philanthropist support this area. This suggests that the people creating these Foundations of Wealth place a greater level of importance on the arts as a charitable cause than other general trusts and foundations.

There is also another notable difference between the proportion of Foundations of Wealth supporting environmental causes compared to the other funders, suggesting that this is also an area of particular interest to this demographic.

At the other end of the spectrum, it would appear that Christianity, International Development and Animals are of less interest to wealthy philanthropists than other funders.

Finances 

In this section we can look and see how the finances of these Foundations of Wealth compare against the wider pool of funders in the Archive Database. We will look at total expenditure as recorded for the last financial year, and then at the average grant sizes we hold for these segments in the Archive Database. In the last financial year, the Foundations of Wealth in the Archive Database had a combined total expenditure of £620m.

Expenditure 

Over half of all Foundations of Wealth (51%) had a total annual expenditure in excess of £100,000 in the last financial year. This is compared to only 30% within the wider pool of funders in the New Trust Update Archive Database. There are over 100 philanthropists with foundations showing a total expenditure of over £1m.

However, it should also be noted that over a quarter of the Foundations of Wealth have a total expenditure of under £25,000, demonstrating that some wealthy individuals are not as philanthropically active as others.

Grant sizes 

Using the historical grant data available for the funders in the Archive Database, we can look at the median largest grant sizes and median ‘average’ grant sizes for both the Foundations of Wealth and the other funders. In keeping with the greater proportion of larger funders with larger total annual expenditures, Foundations of Wealth also have a notably higher median largest grant size and average grant size compared to the other funders.

This indicates that the majority of the Foundations of Wealth in the Archive Database have the capacity to give six-figure grants, with one in ten giving individual grants in excess of £1m. The largest grants made by Foundations of Wealth in the Grants module of the Archive Database are as follows:

Geography 

We assign a funder’s geographic area of benefit based on what we can analyse from their charitable objects, annual reports, website or grant history. At the top level, we assign funders a category of National, Overseas, or both if they are unrestricted. Where possible, we then assign regional areas of benefit, either within in the UK or for different continental regions overseas.  

Within the current pool of 774 Foundations of Wealth, the vast majority will fund work across the UK, but over two thirds also say they will fund work overseas or are non-restrictive in their geographical area of benefit. 20% have a specific UK regional focus. This broadly mirrors the pattern we see in the wider pool of funders in the Archive Database.

Within the UK, the areas with the strongest concentration of Foundations of Wealth with a specific regional focus are Greater London closely followed by the North West, with the South East and South West both well represented. This mirrors past research that found that London and Manchester are the top two UK cities in terms of numbers of millionaires. Scotland, Wales and the West Midlands Region are the least represented in terms of having philanthropists explicitly wanting to support charitable causes and beneficiaries in their regions.

Applications 

Finally, we look at how many of the Foundations of Wealth are open to unsolicited applications and how many state that they do not accept such applications. All funders are classified as accepting unsolicited applications unless they explicitly state otherwise in their annual reports, websites or other sources.

We see a higher percentage of Foundations of Wealth funders not accepting unsolicited applications compared to the wider pool of funders. This would suggest that many of these wealthy philanthropists have a clear idea of what they want to fund and take a proactive approach to identifying and working with their chosen charitable partners. However, as with the wider pool of funders in the Archive Database, the vast majority of them are theoretically open to receiving applications.

Conclusions 

This report shows that every month wealthy philanthropists are setting up new philanthropic vehicles to support the causes and beneficiaries they care about. Each year we see 50 or more new trusts and foundations created by a wealthy individual or their family, and they are giving away hundreds of millions of pounds in grants each year. Many are proactive philanthropists, creating their foundations to support the causes and organisations they care about. But many are more general, with broad or unspecified interests and open to applications from charities across the UK and working across the world.

With a subscription to Factary’s New Trust Update you receive monthly reports that contain detailed information on these new philanthropists, as soon as they create their trust or foundation. The Archive Database allows you to search through the wealth of biographical information on these philanthropists, and see who and what they are supporting. This allows you to identify networks and connections to your organisation, plan cultivation strategies and help build your pipelines with new potential major donors.

If you would like to learn more about Factary’s New Trust Update service and how it could help your organisation then contact Will Whitefield on 0117 916 6740 or at will@factary.com.

The Factary Screening Revolution

Posted on by NicolaW

In early 2017 Factary took the bold step to revolutionise the way we undertake Wealth Screenings. We launched our new Screening product in December 2017 and now, 16 months later, we have been able to reflect on the highs and lows of this process, and analyse the pros and cons of our new system. We thought we’d share our experiences here as they may prove useful to those who may be thinking of undertaking a Screening now or in the future.

Why did we change our approach to Screening?

To carry out our Screenings we used to hold a dataset of wealthy and philanthropic individuals (including data such as name, address, wealth analysis and data on professional / philanthropic interests for each individual). In 2017, in preparation for GDPR, like most other organisations we undertook full Privacy Impact Assessments (PIAs) on all of our products and services that made use of personal data. The PIA for Screening identified that, as the individuals held on our database were not aware that we were processing their data, and as some of the data would be deemed ‘intrusive’ (e.g. wealth analysis), our Screening posed clear risks to the individuals on the dataset (and, also, to us as an organisation and to our clients).

Ultimately, the PIA showed we had three choices: contact the individuals to ask for consent; attempt to justify the use of data under legitimate interests (and provide privacy notices to all the individuals on th/e dataset), or; stop Screening using this dataset entirely. We did not feel the first two options fully mitigated the risks involved to individuals, to Factary or to our clients, so (with the knowledge of the ICO) we decided to delete our dataset of wealthy and philanthropic individuals and start from scratch with a new Screening method.

Our new method

Full details on our new approach can be obtained by contacting us directly or reading more on Factary Screenings elsewhere on our website, but essentially we now make use of a number of data points to analyse a client dataset and identify those individuals likely to be major gift prospects. These data points include socio and geo-demographic data pertaining to 1.3m UK postcodes, bespoke and anonymised in-house wealth data points compiled from past Factary research, philanthropy data (to identify potential links to grant-makers & charities), and professional / business data (to identify links to top companies). None of this data is classified as personal data. We also make use of some datasets which hold names only, such as data from Factary Phi and some data from published Rich Lists. Alongside this, we make use of client data denoting connection or affinity (such as donation history, membership details, event attendance, ongoing relationships and much more) as our Screening approach doesn’t just focus on identifying the wealthiest amongst a support base but also those prospects likely to be warm to the cause or organisation.

So, does our new approach work?

We admit that this whole process was a bit of a gamble – it was a bit of a scary leap into the unknown and we had no real idea as to whether or not it would work (and we are very thankful to the small number of clients who helped us run pilot Screenings on their data in 2017 to allow us to review the outputs and efficacy of the new approach).

Thankfully, we are happy to report that the new process not only works, but is proving to be even more effective than our old approach. There are a number of reasons for this. Firstly, we are no longer relying on a static database of well-known individuals. We are now drawing from a variety of in-house datasets which has massively broadened the potential pool from which we can identify prospects and has naturally resulted in an increase in identified major donor potential.

Example output from Factary's new Screening report
Example output from Factary’s new Screening report (showing results by ‘Capacity’)

Secondly, due to the new focus on demographic and occupational analysis we are able to identify wealthy individuals that would have previously been difficult to identify. This expanded focus, which is not reliant on prospects who are likely to be identified from static sources such as Companies House, has shown that we also now have a higher chance of being able to identify the very wealthiest prospects from professional sectors that were hugely underrepresented in our old approach (e.g. prospects with affiliations to investment firms or hedge funds).

Ultimately, this new approach to identifying prospects is more rounded and multi-layered which, when coupled with our bespoke analysis of giving history and affinity data, identifies a much wider range of wealthy and philanthropic individuals who can be prioritised not only by capacity to give but also by warmth/motivation towards the organisation or cause.

Example output from Factary's new Screening report
Example output from Factary’s new Screening report (showing potential philanthropy matches against Factary Phi)

The cons

Of course, as with any process, it’s not fool proof. The new approach has its cons, too. For example, as one of the main drivers of our Screening is postcode data we are very reliant on clean address information in order to achieve successful results. Clients with out of date address data are unlikely to obtain the same results as those with clean data. That said, under GDPR we have found that many organisations have worked hard to ensure the data they hold is clean and accurate, so this is less of an issue than it might have been a few years ago.

Another slight downside is that not all individuals indicated as wealthy at the initial Screening stage can subsequently be identified from manual research in the public domain at the reporting stage, and for some we cannot confirm wealth. This means that a small percentage (around 17%) of identified prospects can ultimately not be included in the final reports. This does, however, highlight that our Screening involves a very careful process whereby an individual researcher reviews the results to ensure only relevant and verified major gift level prospects are included in the eventual pool (from a GDPR perspective this is important due to the process of justifying the type of individual that might ‘reasonably expect’ to be researched).

So, what are the typical results you can expect?

Given the pros and cons listed above, what are the typical results you can expect from the new Screening process?

The overall breakdown of results (by wealth band) so far is shown below. This includes the percentage of prospects we have researched and verified at various wealth levels, after removing those prospects who cannot be identified in the public domain or who are not relevant for a major donor programme.

As can be seen, the results show a spread across levels of estimated wealth, with £1m-£5m being the most predominant (as expected) and then a more or less equal split between those with wealth of £5m-£10m, and those HNWIs at £10m+. As can be seen, our new approach also includes prospects with wealth of £500k-£1m (as, according to research, these prospects would have an annual gift capacity in the region of £5k-£10k, which easily puts them into a major giving category for the majority of our clients).

Unfortunately, it is difficult to use the data we have so far to provide an estimated breakdown of likely major donor potential (by wealth category) that can be identified from a ‘typical’ dataset as, predictably, the results do depend on the type of organisation we are working with, and the quality of the data we receive. For example, for one independent school we identified that 41% of the database had major donor potential (wealth >£1m), but as these types of datasets are likely to have an unusually high percentage of wealthy individuals it is not indicative of potential results more broadly.

However, results from numerous other charities (working in health, international development, arts etc.) so far show that the identification rate for >£1m prospects has been typically 3% – 5%. This is heartening as research undertaken in 2017 by Boston Consulting Group (BCG) showed that approximately 3% of UK households are millionaires. This indicates that our results mirror the wealth demographic in the UK but are also reflective of the fact that our clients typically segment their datasets to send us those prospects who are most likely to ‘reasonably expect’ to be researched (so their segmentations are likely to include a higher percentage of wealthy and philanthropic individuals than their wider datasets as a whole, meaning we may often identify >3% with major gift potential). Alongside this, because we also identify a relatively robust number of prospects at £500k – £1m, the eventual pool of potential prospects is typically quite broad for all of our clients.

These typical results also represent an increase in identified major gift potential when compared to our previous Screening results, which would, on average, identify 2.88% of a donor dataset (as was outlined in our ‘Guide to a Compliant Wealth Screening’ which can be accessed here).

TL;DR? It does work!

Ultimately, what this data has shown us is that our new process does actually work in identifying a broad range of potential major donor prospects for our clients, which is something of a relief for us! To have taken the bold move to stop using our in-house dataset was a daunting prospect for us, but to have found that not only could we continue to provide clients with a GDPR-compliant service to identify major donor prospects, but that it was actually even more effective than our old system has been very exciting. We are not resting on our laurels though – we are constantly reviewing and revising our processes to tighten up results so, hopefully, our Screenings will continue to improve in the coming months. Do please get in touch if you’d like to talk about the average results from your particular sector so you can see what the ROI from a Screening might be when translated into major gift potential for your organisation.

The GDPR bit…

…because what blog post about Screening would be complete without a GDPR section?

There are still a number of organisations in the sector who still ask if wealth screening is legal. The short answer is yes, it is. The longer answer is yes…as long as your organisation has met a number of requirements, which include:

Identify a condition for processing

You need to choose whether to rely on ‘consent‘ or ‘legitimate interests‘ to process data for wealth screening (you may find our previous papers on Legitimate Interest and Prospect Research and Factary’s Guide to a GDPR Compliant Screening useful in this regard).

Analyse your legitimate interests

If relying on legitimate interest (as, for example, 97% of higher education institutions are reported to be doing), the ICO outline that there are three elements to review, which are:

1. Identify a legitimate interest – what are the purposes for processing the data?

  • Your organisation will need to be able to identify and demonstrate the reasons or purpose of undertaking a Screening. For example, you may outline that Screenings are used to identify those individuals from amongst a wider existing supporter base who may be able to offer financial support at a significantly higher level and to prioritise those who should be approached for a major giving programme
  • It may also help to review the results of this academic study which provides evidence to support the use of research as an integral process in fundraising. For example, the paper shows that:
    • 95% of fundraisers state that research enables them to identify relevant prospects
    • 100% state that research is necessary for understanding prospects’ capacity to give
    • 100% state prospect research enables their organisations to prioritise the prospect pool
  • Of course, Screening also ensures that individuals who are not able to support you at a significant level do not receive irrelevant approaches from your organisation, which is another clear purpose of doing it. As evidence for this, the study cited above shows that 82% of fundraisers agree that research processes minimise the chance that inappropriate approaches are made to potential donors.

2. Show that the processing is necessary to achieve the purposes identified

  • The ICO outline that data processing must be necessary and further state that if you can reasonably achieve the same results in a way that does not use personal data, then legitimate interests will not apply. Whilst our Screening does not use personal data we would still be processing the personal data held by your organisation, so this aspect of GDPR still needs to be analysed before a Screening is undertaken.
  • The necessity of Screening can be evidenced by understanding how important major gift fundraising is to the continued success and operation of your organisation, including that major donors not only provide financial support but also contribute in other, less tangible ways, such as bringing expertise, skills and their professional or personal networks to provide support and guidance to non-profits (Eberhardt S & Madden M (2017) Major Donor Giving Research Report. London: NPC).
  • Screening is typically the first step in major gift fundraising as it enables you to identify relevant prospects for a programme in an efficient, cost-effective and accurate way.
  • Other methods for identifying relevant major gift prospects were reviewed in the academic study outlined above, including data mining / segmentation (such as analysing a donor or alumni database to identify those who are making abnormally large or out-of-pattern gifts, or from modelling their dataset to identify individuals with similar characteristic to their major donors), or from sending questionnaires to constituents on a database and asking for details on salary / professional info etc. Results from the study (see page 22 onwards) showed that the vast majority of fundraisers felt that, even if organisations undertake other methods then prospect research processes would still be required in order to, for example, identify sufficient numbers of major gift prospects.
  • Using the type of evidence and arguments outlined above, you can prove that Screening is necessary and that the results from Screenings cannot be achieved by using other methods.

3. Balance the processing against the individual’s interests, rights and freedoms

The ICO state that you must balance your need to undertake processes such as Screening against individuals’ interests. If the individuals would not reasonably expect the processing, or if it would cause unjustified harm, their interests are likely to override your legitimate interests.

  • It is important, therefore, to be able to explain / evidence that activities such as Screening do not have a disproportionate impact on individuals. Our paper on Legitimate Interest and Prospect Research contains an overview of the type of processes to go through, the questions to ask and the evidence that can ultimately be gathered in order to do this (see page 15 onwards).
  • Additionally, we recently conducted a study into privacy notices which can be accessed via our blog. This provided very clear evidence that, when individuals are contacted to be informed that organisations are undertaking Screening (by receiving a privacy notice), very (very) few of them react negatively. For example, as the blog shows, only 0.0000411% of (almost 2.5m) individuals chose to opt out of their data being used in prospect research when given the opportunity. This, as we outline in the blog, “…provides an evidence base that can be used to argue that the balancing exercise carried out by non-profit organisations to review individuals’ interests, rights and freedoms was fairly judged because, if it hadn’t been, then presumably the number of individuals complaining about or opting out of prospect research would be significantly higher”.

4. Transparency:

One of the 7 principles of the GDPR is ‘lawfulness, fairness and transparency’. Some of the processes outlined above will ensure you are meeting the standards of lawfulness and fairness required for this principle, but adhering to ‘transparency’ is vital – particularly when it comes to Screening as a lack of transparency formed the basis of the ICO fines to charities for Screening in 2016.

  • Transparency is achieved through the provision of a clear and concise privacy notice. Plenty has been written about how to write a good privacy notice and what to include but there are now some great examples of privacy notices which include Screening in their scope (see here and here).
  • If you do not provide individuals with a privacy notice your organisation cannot claim that it has upheld the rights of individuals (as required under the GDPR), specifically those such as the right to be informed, the right to restrict processing or the right to object to processing.
  • Incidentally, this principle formed the basis of Factary’s decision to delete our database of wealthy individuals that we used to hold for Screening as our PIA showed that we did not allow individuals to exercise their rights (as they had not received a privacy notice from us outlining the reasons for which we used their personal data).

The four elements described above that need to be reviewed/worked through in order to undertake a compliant Screening may feel slightly onerous, but they are imperative if your organisation wants to move forward with any type of data processing for fundraising.

Further discussion

If you’d like to chat about Screenings, or how to approach undertaking a DPIA or analysing the GDPR requirements around Screening then please do get in touch.

The Future of Philanthropy, in 1 Question

Posted on by Chris

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.

Have I Mentioned…?

Posted on by Chris

Have I mentioned my new book? (It’s the vain author’s constant refrain.)

Yes, I know I have. But that was pre-publication. Now I have an actual copy in my hands, so that means that the orders have started shipping from Policy Press.

This is a book for practical people. It’s about how high-value philanthropy is evolving across Europe, so practical people in fundraising, in prospect research, in social investment, in policy making and in education will all find – I hope – useful information here.

If you are a major donor fundraiser interested in why your donors keep asking about impact, you’ll find an answer here.

If you are a private banker or wealth adviser who wants to understand why your clients keep on asking about foundations in France, you’ll find out why, here.

If you are a policy maker wondering whether to recommend further tax relief for donations, then you’ll find the arguments here.

If you are a prospect researcher, wondering where to look for potential supporters in Switzerland, you’ll find some answers here.

And if you are the director of an NGO, wondering what your strategic priorities should be, you’ll find some suggestions here.

The book includes case studies, detailed research, some how-to, and a bibliography of more than 300 sources and references in (count ’em, ladies and gentlemen) seven languages. Its focus is Europe, meaning that this is not about the UK + the Continent + Ireland – it’s about the Continent + Ireland, plus the UK.

I hope you find it useful.

 

Order “How Philanthropy is Changing in Europe” directly from Policy Press, here.

Divided Rules

Posted on by Chris

Prospect researchers are at the nexus of a storm between five government agencies. Thanks to the monetary penalties imposed by the Information Commissioner in December 2016 on two leading charities we can now see the extent of the battlefield.

In one corner is the Information Commissioner’s Office, ICO. In its press release announcing fines for the RSPCA and the British Heart Foundation, ICO condemned the use of “information from publically[sic]-available sources to investigate income, property values, lifestyle and even friendship circles.”

This appears to put the ICO in direct opposition to the Charity Commission. In a series of papers entitled ‘The Compliance Toolkit’ the Commission reminds charities that they have a duty to check on donors and potential donors. Tool 6 in the suite is called ‘Know Your Donor’, and here the Charity Commission asks;

“Have any public concerns been raised about the donors or their activities? If so, what was the nature of the concerns and how long ago were they raised? Did the police or a regulator investigate the concerns? What was the outcome?”

How would you find out whether “public concerns” have been raised, if you did not use “publically-available sources”?

You simply have to use newspapers, government sources, and a search engine if you are to find out whether public concerns have been raised. There is no other way. And of course the Charity Commission says so, recommending that “full use should be made of internet websites” to check donors.

Your duty

The Commission goes further, and reminds trustees that “…if the trustees have reasonable cause to suspect that a donation is related to terrorist financing, they are under specific legal duties under the Counter-Terrorism Act to report the matter to the police. In the case of money laundering, reports can be made to the police, a customs officer (HMRC), or an officer of the National Crime Agency.” The Commission suggests a threshold for reporting – donations of £25,000 or more.

But we are not done yet. Because if you have the slightest suspicion that the donor may be a bit iffy, the Charity Commission requires you to “…check the donor against the consolidated lists of financial sanctions targets and proscribed organisations.”

Gosh.

That means this list.

The list contains 8,885 names of individuals who are under sanctions. It includes their date and place of birth, their passport or ID number, and a biographic note such as “Manager of the branch of Syrian Scientific Studies and research Centre.”

That is personal information held in the public domain, that the Charity Commission requires us to review.

The Libya Connection

Why are four government agencies – the Police, HMRC, the National Crime Agency and the Charity Commission – interested in these checks?

In part, the story is linked to the London School of Economics, and the controversy over a gift from Libya. The result of the controversy was the Woolf Inquiry, which published its report in October 2011.

After a detailed study of the history of this gift, Lord Woolf made a series of recommendations on accepting funds from “less well known” high-value philanthropists including an inquiry into the sources of their funds (p. 69) and a thorough due diligence assessment (p. 22).

These searches are only possible with public domain information.

Catch-22

Under questioning at last year’s CASE conference, ICO spokesperson Richard Marbrow did allow that we could use public domain information for due diligence purposes. But he went on to say that this same information could not be used for assessing gift capacity because that would be an “incompatible purpose” for the use of data.

But that leaves us prospect researchers in Catch-22.

I cannot carry out full due diligence on all my prospects. To do so would be a scandalous waste of charity resources. The Charity Commission suggests that the threshold should be £25,000. So if I am to decide that Mrs A or Mr B must be checked via due diligence…I have to assess their gift capacity.

To do that, I need the help of a fifth government agency, Companies House.

Open for Business

Mr Marbrow cited Companies House various times during 2016, telling fundraisers and prospect researchers that because the information in Companies House was collected for one purpose – regulation – it could not be used for another – prospect research.

What does Companies House say? Here is their July 2014 press release*

“Companies House is to make all of its digital data available free of charge. This will make the UK the first country to establish a truly open register of business information.
As a result, it will be easier for businesses and members of the public to research and scrutinise the activities and ownership of companies and connected individuals. … This is a considerable step forward in improving corporate transparency…

It will also open up opportunities for entrepreneurs to come up with innovative ways of using the information.”

So, Companies House wants us to “research and scrutinise the activities and ownership of companies and connected individuals,” and to find “innovative ways of using the information.”

The Battle for Philanthropy

Prospect researchers are caught in the centre of a battlefield between government agencies, between “innovative ways” of using information, terrorism legislation, due diligence and privacy.

We must defend our corner of this bloody battlefield.

We need our friends in fundraising and philanthropy, in Parliament and in civil society, to support the sensible, ethical, managed use of public domain information in the search for philanthropists.

 

 

*I am grateful to a colleague at a leading University for pointing this out.

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

In Defence of the Public Domain

Posted on by Chris

A university, a museum, or a charity does not raise £10m or £50m or more by accident. An alumna did not wake up one morning thinking “I must give £1m to my alma mater.”

This happened because a dedicated group of professionals managed a process that led to the alumna being asked for a very large philanthropic gift.

At the heart of that process was, and is, the prospect research team. The team used – like we all do – public domain information to identify and understand potential supporters.

But now one government agency, the Information Commissioner’s Office, wants to stop us using public domain information. In the emotionally-worded press release that accompanied the penalties for the British Heart Foundation and RSPCA, the ICO says that “companies used other information from publically [sic]-available sources to investigate income, property values, lifestyle and even friendship circles.” ICO staff members at fundraising and research conferences throughout 2016 told us that the information on directors held by Companies House is compiled for one purpose (regulation of business) and therefore cannot be used for another (prospect research.)

So perhaps we cannot use public domain information to identify and understand potential supporters.

Purposes

But think for a moment.

Why do I have my profile in LinkedIn? What is my ‘purpose’? Is it just a marketing tool, showing potential clients what a clever chap I am? No! I had all sorts of purposes in mind when I created my profile in LinkedIn. I wanted to reassure clients that I was, and am, a decent person. I am proud of what I have done and wanted – sorry folks, this gets personal – to boast a wee bit about setting up Factary, about the books I have written and the languages I speak. I wanted access to the profiles of other people with whom I might work or even play. I wanted to explain who I am and how I got here – it’s cathartic. And I wanted a useful depository for my lifeline – to remind me of exactly when I went to school or which year I started in fundraising.

I had a whole variety of ‘purposes.’

Expectations

As a result, I have a very wide variety of ‘expectations.’ This word is important, because the ICO believes that “millions of people who give their time and money to benefit good causes will be saddened” by the news that charities targeted them for more money; in other words, this is about what people expect. With my profile in LinkedIn I expected that people would look at my personal story. I expected that Southampton Uni, my alma mater, would contact me about a donation (they did.) I expected that I would be networked to, and with (and indeed welcomed that opportunity.)

The person who has her biography in Who’s Who, or who gives a personal interview in the Times, or who is listed as the director of a company, or as the trustee of a charitable foundation has the same wide range of expectations.

The ‘purpose’ of a personal interview in the Times is to sell advertising space on the facing page of the newspaper; “All the papers that matter live off their advertisements,” said George Orwell, in Why I Write*.

But that is not the ‘purpose’ that the interviewee had in mind when she was approached by the journalist. Nor is it the ‘expectation’ of the interviewee. She knows, when she agrees to give the interview, that her warts-and-all will be exposed to public view. She expects that she will receive praise, opprobrium, investor pitches, car sales teams and an approach from a headhunter as the result of her interview.

The Public Domain

Information on company directors in Companies House – the Registrar of Companies for England and Wales – is made public for various purposes. The Registrar was created by The Joint Stock Companies Act of 1844. In the debate of the Bill that would create the Act (3rd July 1844), Mr Gladstone said “The principal object of the Bill was, that there should be established a public office, to which all parties soliciting to take part in Joint Stock Companies might repair, in order to know the real history of these companies.” Mr Gladstone was talking very clearly about corruption; “…it was most important that the Legislature should put a stop to the system that had been so long carried on of attaching the names of hon. Members, and men of importance and property, to schemes in order to entrap the unwary.”

So here again, at Companies House, we have a variety of purposes for information in the public domain. It is right and proper that prospect researchers use Companies House information to establish the “real history” of “men of importance and property”, and, 172 years after Mr Gladstone’s speech, of women of importance and property too.

All the universities that are engaged in raising funds, along with our theatres, museums and charities, manage a process that results in high-value philanthropy. At the heart of that managed process is prospect research. And alongside every prospect researcher is public domain information.

People in the public domain – in Who’s Who, or LinkedIn, the Times or Companies House – are there for a variety of ‘purposes.’ They expect that the information will be used in a variety of ways – including, yes, by people who will lead them into great philanthropic acts.

We prospect researchers do great works with public domain information. It is wholly legitimate that we use public domain information for this purpose. We must defend our right to do so.

Chris Carnie is the author of “How Philanthropy is Changing in Europe”, published by Policy Press in January 2017. He writes in a personal capacity.

*The fuller quote, given here is:

“Is the English press honest or dishonest? At normal times it is deeply dishonest. All the papers that matter live off their advertisements, and the advertisers exercise an indirect censorship over news.”

How Much Can She Give? Some maths, from Spain

Posted on by Chris

Prospect research in continental Europe is tough. You spend your life saying ‘if only we had [fill in name of favourite source]’.

There are rays of light, as Europe gradually opens up to transparency, but they are rarely truly illuminating.

The hardest part is to try to estimate Gift Capacity. At Factary we define Gift Capacity as ‘the largest gift that an individual could give to any cause in ideal circumstances, over three years.’ By defining it that way we are saying, as objectively as one can in the murky world of money, that this is the best of the best, the biggest possible gift. Not ‘how much she will give to my charity‘, but how much she can give. And not ‘how much can she give this year?‘, but an amount spread over a period of three years.

How much she actually donates to your cause depends on many factors, including the strength of the connection to her, her positive and negative feelings about your organisation and, of course, how much you ask for.

But here in Catalonia and Spain, even the starting point for Gift Capacity research is difficult. So it is a Red Letter Day when some data on wealth appears.

The annual publication on directors’ salaries by the Stock Exchange Control Committee (CNMV, www.cnmv.es) is just such a day. The 2015 report was published last week.

In part the interest is vicarious. Learning that the Executive Chairs of Ibex-35 companies are now earning an average of €3.45 million is galling when you are a prospect researcher in Spain (average salary unknown but unlikely to be more than €25,000, and mostly under €20k); those Chairs earn more in three days than you earn in a year of labour.

But the data – the full report is here – does help us. Non-Exec directors are now earning an average of €763,000, up a staggering 48% on the previous year (clearly these are hard-working men and women), and the average across all quoted company directors is €344,000, up a mere 8.2% on the previous year.

So now you have an idea of how much she is earning, can you reliably calculate gift capacity?

Unfortunately, there is very little data to help you do that.

A 2006 study of tax returns [1] showed that people earning more than €600,000 per annum were giving an average of €3,268 – meaning 0.54% of their income. This was their declared giving on their declared income, and both figures are likely to be conservative.

So at your most cautious you could say that the Executive Chair of an Ibex-35 company might give 0.54% of €3.45 million, which would be €18,760.

That’s a start!

1. Sánchez Pérez, Elisa. ‘Evolución y situación actual de la filantropía en España’. In La Filantropía: Tendencias y Perspectivas, 125–46. Papeles de la Fundación de Estudios Financieros 26. Madrid, 2008. http://www.fef.es/new/publicaciones/papeles-de-la-fundacion/item/189-26-la-filantrop%C3%ADa-tendencias-y-perspectivas.html.

The Newest Philanthropists

Posted on by Chris

Thirty of the UK’s newest philanthropists are featured in a report published today by Factary.

The report is focused on the Ultra High Net Worth Individuals (UHNWIs) and High Net Worth Individuals (HNWIs) who have founded grant-making trusts and foundations during 2013.

We profile 30 of the richest people in the country who have created grant-making bodies, and analyse their wealth, philanthropic interests and biographical information to create a picture of the UK newest philanthropists. With a combined estimated wealth of £5.7 billion, these individuals represent a significant source of funding for UK non-profit organisations in the years to come.

The report includes:

  • Detailed profiles of thirty new philanthropists
  • Updated information on their trusts and foundations
  • Note that, with one exception, none of these trusts is listed in any other directory of grant-making trusts
  • Our analysis of the biographic, philanthropic and financial data on these philanthropists
  • Networking Index to identify the links between philanthropists, companies and the new trusts.

HOW TO ORDER
To order the report email Nicola Williams, nicolaw@factary.com

The report is priced at £135. New or existing subscribers to Factary Phi or Factary’s New Trust Update get a discounted price of £95.

From Bookmaking to Billionaires
Included in the report is a scion of a billionaire family, a Duchess, a Viscount and two Knights of the Realm. There are eight representatives from the financial services industry including two hedge fund managers and four investment bankers, along with philanthropists with other sources of wealth including landownership, art galleries, bookmaking and football.

London, and International
There is a strong geographic concentration on London and the Home Counties but also a continuing international flavour to the new philanthropists in the UK with seven of the thirty UHNWIs and HNWIs having nationalities other than British, and global connections identified to a wide range of countries including Zambia, South Africa, Italy, Nigeria and St Vincent and the Grenadines.

Oxbridge
There is a strong Oxbridge connection – a third of these new philanthropists went to either Oxford or Cambridge, with over 25% going to Oxford. Other UK universities attended include the University of Bristol, the London School of Economics, Leeds University and the University of Birmingham. Three of the people featured also went to the same public school; Charterhouse.

UK Philanthropy, Goes on Growing
During 2013 Factary’s New Trust Update reported on a total of 217 newly-registered grant-making trusts and foundations in the UK. This report shows that people of significant wealth are continuing to create foundations and grant-making trusts to support philanthropic organisations in the UK and abroad, creating a positive picture of philanthropy in the UK.

Venture Philanthropy in the UK Shows Similar Characteristics
The findings in this new report reflect the new philanthropists that we identified in our 2013 report on The Venture Philanthropists. In that report we found that 39% of UK venture philanthropists come from the financial services industry. We also found many people of wealth – £38 billion in combined personal assets.

Research:
This report was researched and edited by Will Whitefield, Senior Researcher at Factary. It is published as a special supplement to Factary’s New Trust Update.