Cathy Pharoah: Are the rich giving less - or more?

The available data cannot provide accurate annual tracking and needs to be improved, says our columnist

Cathy Pharoah
Cathy Pharoah

The annual Sunday Times Rich List has become an indispensable guide to wealth, to fortunes made (or lost) and the people making new ones today. It is seductive reading, especially for charities, but did anyone hear my howl of protest on turning to this year's ST Giving List? It claims that the wealth of millionaires has gone up while their giving has gone down, leaving an £818m charitable shortfall. The protest, however, was not provoked by the mean millionaires, but by the confusing statistics.

This announcement of a major fall in giving has come only four months after the key sponsor of the Giving List claimed there had been an increase in real terms of £400m. What are we to believe? That individual giving is on a huge see-saw? It isn't, in fact, and there is no need to panic yet. A closer look at the figures shows that most of the shortfall can be explained by three major donors who had already given away large parts of their fortunes last year - Chris Cooper-Hohn (£531m last year, £75.5m this), Anurag Dikshit (£294.2m and £172.4m) and Lord Sainsbury, who has been disbursing large gifts for several years (£276m and £165m).

If these are taken out of the picture, things look much less cataclysmic. Lists provide invaluable information, but they cannot provide accurate annual tracking. They exclude the giving of those who don't provide the information. Moreover, in the bumpy landscape of major giving, one or two large gifts can skew the figures inordinately. Charities that receive exceptional gifts or legacies, of a scale they have never seen before and are unlikely to see again any time soon, do not regard this income as the new normality or complain subsequently of shortfalls.

The lack of reliable data on major giving is a huge gap in our understanding of giving. We still know little about whether the wealth generated over the past few decades has led to more giving or generosity. Unless things improve, we will not know if the big society prompts more philanthropy. The annual Cass/Pears Family Foundation survey is one attempt to capture data in a consistent sample of major givers who report their finances mandatorily every year. It covers only a limited area, though findings suggest giving grew in times of increased wealth. A similar result is indicated in the recent study of 30 years of giving by the Centre for Market and Public Organisation and the Centre for Charitable Giving and Philanthropy. Among donors, growing incomes have brought higher giving, almost trebling in real value and doubling in generosity. The link between wealth and charitable giving constantly tantalises us, yet charities know remarkably little about it. We need a collective sector, government and research effort to tackle this poor data. It's hard to imagine that any of the successful entrepreneurs who make it to the Rich List go about their business without good market information.

Cathy Pharoah is professor of charity funding at Cass Business School

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