Cathy Pharoah: hectoring the wealthy won't inspire a culture of philanthropy

Ministers insist the rich must play their part in the big society but few incentives are on offer, says our columnist

Cathy Pharoah
Cathy Pharoah

Opening sallies in creating the big society look more like the clash of the Titans than the tender shoots of people power. The Department for Culture, Media and Sport has moved quickly to signal that the wealthy are expected to play their part in cutting spending and creating the big society.

Jeremy Hunt, the culture secretary, made it clear in an interview with The Daily Telegraph that "people who have made money are part of the big society vision". Leading major philanthropists have quickly responded from their South Bank fastnesses that it is not their job to plug holes in public spending - or in museum roofs, come to that.

So much for the mutual trust that will encourage more people to give more, and on which the success of the big society will depend. Major donors assert their right to give voluntarily where they believe they can add value, but the minister has spelt out that actually they "have a responsibility to give something back" - adding for good measure that in the US "it is normal for people to give serious sums of money".

UK philanthropists are not being hectored only by the government. They have received short shrift from powerful sections of the charity sector advocating the removal, or redirection to charities, of the direct tax breaks to donors that are available to higher-rate taxpayers. Government-funded research has looked closely at these options.

All of this adds up to an approach in which charitable giving is seen more as a form of voluntary taxation than an act of philanthropy, its value and use increasingly disconnected from the donor. Serious giving is expected, yet philanthropists are not taken seriously.

The high levels of philanthropy in the US exist in a low-tax environment that trusts the wealthy will give something back, and in a public arena that rewards major donors with recognition, respect, influence and economic incentives. Some of the most wealthy US citizens give away 20 per cent or more of their annual income. Why would a UK donor be this generous?

Assuming that major donors will not be motivated by reduced tax breaks and high-level sermons about responsibilities, privileges and obligations, here are my suggestions: protect and enhance donor tax breaks; launch a website to highlight, discuss, appraise and ask for major philanthropic contributions; and promote philanthropic values (what about a caring campaign?). Above all, make sure that the big society does not miss out on the big intellectual, social and economic resources that major philanthropists can bring.

- Cathy Pharoah is professor of charity funding at Cass Business School


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