Coutts, Piketty and the Golden Age of Philanthropy

Yesterday, Coutts and the Centre for Philanthropy at the University of Kent, unveiled their annual report on £1m donations in the UK. Good news first, the number of million pound donors has risen over the past few years from 130 in 2010/11 to 166 in 2013 (the last year for which figures are available). However, on the down side despite the upturn in the economy, the value of donations has not increased significantly rising from only £1.24bn in 2010/11 to £1.36bn, below pre-recession peaks.

Where is the second ‘Golden Age of Philanthropy’?

While the widening base of million pound donors signals potential for growth in large scale philanthropy, there is a question implicit in these reports: why are we not in the midst of a second Golden Age of Philanthropy?

The rich are certainly getting richer at a phenomenal rate. According to the Sunday Times Rich List 2014, the wealth of the richest 1,000 individuals, couples and families rose by 15% compared with 2013. Their combined fortune stood at almost £520bn, a third of the UK’s GDP and well above pre-recession levels.

However, this isn’t just a short term phenomenon. As Thomas Piketty demonstrated in Capital in the 21st Century, private wealth has been growing at rapid rates in Europe and the United States since the 1970s. In fact, levels of private wealth in the UK have reached a scale last seen shortly before the First World War. Yet, it doesn’t feel as if philanthropy has reached the same levels.

On my way to work, I pass homes built by the Peabody Trust, a body that was endowed by American-British banker George Peabody – perhaps the first ‘modern’ philanthropists. In my work, I read reports carried out by institutions such as the Joseph Rowntree Foundation or the Carnegie UK Trust. All around us, we can see the effects of the 19th century(and early 20th) century boom in philanthropy.

The changing face of philanthropy

In part this is probably due to the changing nature of philanthropy, rather than leaving legacies in bricks and mortar, many organisations are funding services or organisations directly to carry out their work. CAF’s Sunday Times Giving List of top donors indicates that giving by the mega-rich has increased over the past few years, standing at around £2.4bn in 2013.

Another factor is that although private wealth has increased, it is not as concentrated as it was at the turn of the century. The Top 1%’s wealth share in Britain is only around the levels of the 1950s, with the richest holding just under 30% of the country’s total wealth. However, in 1910 (its peak), the Top 1% held 70% of the country’s total wealth. Obviously, the larger the concentration of wealth, the larger the scale of private philanthropy and the ‘bigger’ its impact appears. Everyone knows about the Bill and Melinda Gates Foundation’s work because of the scale of the Gates’ donation, but the average person on the street probably doesn’t recognise the important contributions of the Muriel Jones Foundation.

What does the future hold for ‘mega-philanthropy’?

Yet we might be reaching conditions where a second ‘Golden Age of Philanthropy’ could take place. The Giving Pledge bears witness to the increasing social pressure on the richest to demonstrate their giving and to share the proceeds of their success with those less fortunate than themselves. In economic terms, the rising levels of private wealth and the slow creep in its concentration may create the conditions for ‘mega-philanthropy’ to thrive.

However, there is another couple of interesting notes for philanthropists from Mr Piketty’s analysis. One of the trends that he identifies is that the portion of national income going to capital in rising across the world, due to a slower growth rates. With the Great Recession leaving significant scars on the global economy, growth in Europe and the US looks likely to remain low for many years to come.

Now appears the perfect time, therefore, for philanthropists to invest their capital in charitable endowments (however counterintuitive this may seem in a world of low interest rates and volatile markets). Over the long run, funds seeded today could become major actors if capital growth continues at current trends. At a time when the future of grant funding for the voluntary sector appears uncertain, there may be an opportunity to build up a significant asset base to support sector’s work in the second half of the 21st century.

Secondly, Mr Piketty notes that concentration of assets tends to lead to higher returns. As he notes with university endowments, the largest endowments tend to get the best returns. Although this goes against personal instincts, in the long run the pooling of assets may increase the impact of philanthropic donations and creating a much larger stream of income for good causes. Of course, this has to be balanced with the benefits from diversity and smaller, more nimble, foundations which do excellent work across the country.

So are we on the cusp of a second Golden Age of Philanthropy? Only time will tell…


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Andrew was NCVO’s senior policy officer. He covered issues around funding, social investment, tax and the impact of the economy on the voluntary sector. Andrew has left NCVO, but his posts are kept here for reference purposes.

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