Giving it large: million pound donors

Blog post by Rhodri Davies, Policy Manager at CAF

The Annual Coutts Million Pound Donors report, compiled by Dr Beth Breeze of the University of Kent, was released today. The headline finding is that there has been an increase in the number of donations of £1 million pounds or more, but the overall value of these “million pound donations” is down, from £1.3bn in the 2011 report to £1.2bn this year. The number of different donors giving such donations has also risen: 130 separate “million pound donors” were identified in this year’s report, a marked increase on the 73 identified last year.

The analysis of these figures suggests there are reasons to be both encouraged and concerned: there are more million pound donors, but they are giving less on average than was the case in the past. The cause for concern is that at the same time as regular charitable donations are down (as shown by this year’s UK Giving), the mega-donations that in many years drag up the overall total are down as well. This goes to show what a difficult situation charities are facing at the moment in terms of fundraising, both from the general public and from the super-rich. The encouraging thing, with an eye on the longer term, is that there appear to be more people who have ‘caught the philanthropy bug’, and the hope is that they will continue this generosity through to better economic times when the amounts they are able to give will hopefully rise.

There are a couple of things it is worth noting about this report. The first is that the total value of million pound donations includes not just donations from individuals, but donations from corporates and ‘professional foundations’ (those which are no longer controlled by the settlor or their family). It is important to bear this in mind when relating the figures to those in UK Giving, as the figures in the latter relate solely to individual charitable donations.

The other thing that is worth taking into account is the huge difference in the profile of causes that million pound donations go to, compared to mainstream donations. The top three causes identified in the Million Pound Donor report (excluding foundations) were higher education, arts & culture and international development. By contrast, the three most popular charitable causes identified by UK Giving were medical research, hospital and children. This suggests that even if million pound donations had remained flat this year, this would more than likely not have benefited most of the charities bearing the brunt of the 20 per cent real terms drop in donations reported in UK Giving, as they are not the sort of causes favoured by major philanthropists.

I thought a couple of other aspects of the report were interesting, although not necessarily relevant to the wider question of the drop in charitable giving. The first is that the majority of million pound donations made this year were given directly to front-line charities, rather than being put into foundations for future distribution. I would be interested to know what lies behind this trend. Perhaps donors recognise the need to get money straight out to beneficiaries in the current climate; perhaps there are many new million pound donors who want to put their money in a ‘a safe pair of hands’ for their first gift of this size; or perhaps it suggests more donors taking a ‘selfless’ approach to philanthropy (in the same way as Warren Buffett when he decided to hand over his philanthropic money to the Gates Foundation to distribute for him).

The other interesting question is what explains the sharp rise in number of million pound donations. The report has always existed with the caveat that it can only capture million pound donations that are identifiable from publicly available sources of information (charity financial reports, media stories etc), so it has never pretended that it was representing all of the £1m+ donations made in a year. The question, then, is: has the number of million pound donations actually increased, or is it just that there is a greater number of identifiable million pound donations? Whichever is the case, there are positives: if it is the former, then there is more money coming into charities,which is clearly good. If it is the latter, then it may suggest that wealthy people are becoming more open about their giving, or that the media are giving more coverage to philanthropy. Both of these would be positive if they strengthened a social norm around charitable giving in the longer term.

The Million Pound Donors report is always worth reading in its own right. However, this year it is particularly interesting because of its relevance to the findings in UK Giving, and the additional insight it gives into what is happening to charitable giving in the UK at the moment. The bottom line is that the situation is tough for many charities, which is why we need wealthy philanthropists, mainstream donors, companies and the Government to come together to Back Britain’s Charities.

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