Can philanthropy save the Big Society? Michael Green discusses the need for a bolder vision, driven by social innovation and the rise of ‘philanthrocapitalism’
The meteor of public spending cuts has hit. As the shockwaves reverberate across the voluntary sector, charity bosses warn of a mass extinction of organisations providing basic services to the needy in our communities. To top it off, they grumble that the government’s green paper on giving is not even going to throw the charity sector the bone of more tax breaks to encourage philanthropy. They would do better to focus on bigger questions about how the sector needs to adapt to the Big Society.
More tax breaks is the default answer by philanthropists and fundraisers whenever promoting giving is discussed. Well, they would say that wouldn’t they? Yet the case for a greater taxpayer subsidy for philanthropy ignores two key facts. First, the evidence that more tax breaks will have that much effect on giving is pretty weak. Second, and more fundamentally, the government is broken.
Make do and mend?
Rather than arguing for a bigger tax subsidy, the real question for the charity sector should be whether that subsidy is being used well. If more mass giving is the goal, maybe simplifying Gift Aid to help ordinary donors would help (although compensating savings would have to be found elsewhere). If we want philanthropy targeted at the areas of greatest need, perhaps we should redirect the taxpayer subsidy to match fund donations in key sectors or communities, rather than subsidising giving of all kinds. If we want the subsidy to better meet the needs of today’s taxpayers, maybe charitable foundations sitting on large endowments should be required to pay out more in grants now, rather than hoarding cash for future generations?
Let’s also face up to the fact that the giving ecosystem is changing. Whether you agree with the government or not, by opting to keep taxation levels as low as possible and shrink the state instead, we are in the process of rewriting Britain’s social contract between the rich and the rest. Under the Big Society banner, David Cameron is signalling to the winners in our society that ‘I pay my taxes’ is no longer an excuse not to give. The nature of wealth in Britain has also been transformed in the past 30 years. The rich are not just richer, they are more entrepreneurial and will apply that business nous to their giving.
These are big opportunities. But you might not believe it if you’re listening to charity sector veterans, who love to complain about interfering donors. They are right that the new generation of ‘philanthrocapitalists’ are looking to do things differently. Many of them do want hard numbers on impact, or to use new models like social business. Start-ups may be more attractive recipients of their giving than what they see as turnarounds. The charity sector is going to have to adapt to these demands, not least because ordinary donors are asking the same questions.
A new dawn
The success stories from online giving in the US, such as Kiva and DonorsChoose, are those that have come up with new and attractive offers to their donors. They welcome engagement, rather than seeing it as an unwelcome transaction cost. They use money from major donors to cover back-office costs, so that smaller givers feel that their money is going directly to the cause rather than administration. It’s not just a matter of putting an appeal on a website and watching the money roll in. The successful new giving platforms will be disruptive technologies, which will transform the business of raising money.
Those who care about the society we live in also need to think beyond charity. Even a new golden age of British philanthropy will not be sufficient to tackle the problems our country faces in the coming years. This is the weak point of the Prime Minister’s Big Society project. Too often, he talks about its success simply in terms of more giving and more volunteering. He needs a bolder vision. If the Big Society does not mean a country where our children are better educated, where our citizens are healthier and where there is less crime, it means nothing.
To achieve those goals, the Big Society needs to launch a wave of social innovation across government and business, as well as the charity sector. Our institutions need to adapt fast to take the opportunities available, rather than waiting for a tax handout that is never going to come.
Michael Green is an economist and writer. www.philanthrocapitalism.net
