Charities missed out on £2bn in donations as the rich cut back giving despite soaring incomes

The findings from the Law Family Commission on Civil Society show average income among the UK's top earners was up 10 per cent between 2011/12 and 2018/19 but donations fell by 21 per cent

Charities missed out on about £2bn in donations in the years preceding the pandemic as the UK’s richest people cut back on their giving despite soaring incomes, latest figures show.

The findings were released as part of a new study by the Law Family Commission on Civil Society, a two-year initiative launched by Pro Bono Economics in December last year to examine how the potential of civil society can be unleashed in the UK.

The report reveals a significant decline in declared donations from the nation’s top one per cent of earners, identified as those with annual pre-tax personal incomes of £175,000 or more.

Mind the Giving Gap: Unleashing the Potential of UK Philanthropy identified that typical donations from the UK’s top earners dropped by 21 per cent in real terms between 2011/12 and 2018/19, despite the typical annual income among this group rising by 10 per cent over the same period.

Typical annual earnings in this group jumped from £247,000 to £271,000, but the typical charitable donation declared on their tax returns fell from £680 a year to £538 a year, or £45 a month.

This means that charities missed out on £2.1bn in extra income if donations had risen in line with income growth, according to researchers.

Among the richest fifth of the top one per cent, those with annual incomes averaging £722,000, the typical declared donation rises to £113 a month, or 0.16 per cent of income.

The analysis reveals that although those earners in the top one per cent, totalling about 344,000 people, earn 14 per cent of pre-tax income in the UK, their declared donations equate to just six per cent of the total donations to charity from the public.

Researchers said this amounts to a “generosity gap” within the super-rich worth a potential £1.4bn a year to UK charities.

Nearly two-thirds of the total value of money donated by the UK’s top one per cent comes from less than 0.5 per cent of the group – equivalent to just 1,700 individuals.

An earlier study from March this year also found that large-scale giving by the super-rich had done almost nothing to redistribute wealth from rich to poor people and could be perpetuating social inequalities.

Positively, the overall value of charitable giving from the public as a whole has increased.

In real terms, giving to charities – including donations, legacies and fundraising – has increased from £14.8bn in 2011/12 to £19.6bn in 2018/19.

Across the wider UK population, typical donations among those who support charities stand at about £20 a month.

Chaired by Lord Gus O’Donnell, the commission is calling for action to help close the “generosity gap” among the UK’s highest earners.

He said: “The British public has a rich tradition when it comes to charity, epitomised by the millions of acts of kindness and support we saw at the height of the pandemic.

“But this new research shows that those with the deepest pockets can afford to reach a little further.

“Among the top one per cent there is a generosity gap between a handful who give very significant amounts and the majority who give substantially less.

“The commission is calling for a collaborative effort between philanthropists, the government, business and the charity sector to help close this gap.

“We support proposals for a government-appointed philanthropy commissioner to drive this agenda and would like to see a lead civil servant in the treasury devoted to philanthropy.

“At a local level, the nomination of philanthropy champions working with Metro Mayors could help to ensure philanthropy is directed to the communities that need it the most.”

The commission originally floated the idea of a philanthropy commissioner in October as it urged the government to create a funding pot to run civil society infrastructure pilots in levelling up priority areas.

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