UK charities rely too heavily on public sector funding, City of London Festival chair Michael Hoffman says

At an Institute of Fundraising convention panel, he says there should be more tax incentives for philanthropists and initiatives to redistribute funding to the most needy communities

Michael Hoffman
Michael Hoffman

Charities rely too heavily on the public sector for their funding, creating an unhealthy dynamic that has gone on for too long, the chair of the City of London Festival has said.

Michael Hoffman, who is also co-founder and chair of the private equity firm Palamon Capital Partners and chair of the Philharmonia Orchestra, was speaking as part of a panel discussion at the Institute of Fundraising's convention in London on Wednesday about the challenges fundraisers will encounter under the new Conservative government.

Hoffman, who has US and Austrian dual nationality but has spent the past 40 years in the UK, said there should be a debate in this country about the role of government funding.

"There is far, far too much reliance on the public sector for charitable work in this country, and even more so on the continent," Hoffman told delegates. "There is an unhealthy reliance on public funding and it has gone on way too long.

"A discussion needs to take place about what the real role of public support is. Is it to become such a large factor that it actually discourages other forms of giving and support? Or is it a catalyst to try and encourage additional support from other audiences? I personally think it is the latter."

Hoffman said he was not opposed to government support, but it was more appropriate for this to come in the form of increased tax incentives for philanthropists and government initiatives that helped to redistribute funding to the most needy communities and the most effective initiatives. "But that should be the limit," he said.

He added that the UK did a "damn good job at supporting charities" compared with what he had seen in Europe and the US.

Hoffman said charities should increase their efforts to encourage donations from high-net-worth individuals and philanthropists in the UK. Peer-group pressure worked effectively in the US at persuading wealthy individuals to contribute to their communities, he said.

"People who earn a lot are ostracised if they don’t," he said.

Carole Souter, chief executive of the Heritage Lottery Fund, who was also on the panel, said charities that wanted to campaign against public funding cuts needed to consider the implications of doing so.

She said charities that positioned themselves against government policy were taking a political risk if they did not think this through beforehand. They should be prepared to receive criticism if they did not identify themselves as complementary to the government’s agenda, she said.

Souter said that charities did not always make enough effort to get politicians to understand what they did, but it was vital that they did this. "My instinct is that you must be proud and vocal about your impact in a politically neutral but unarguable way," she said.

She said charities needed to exploit any government initiative set up to assist the sector, such as the Conservative pledge for three days of volunteering leave for employees. "Charities can take full advantage of that and tell people what opportunities are available to them," she said.

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