News analysis: Wealthy donors offer rich dividends

Charities are profiting from a boom in self-made millionaires eager to give their money away

Salvatore LaSpada, chief executive of the Institute for Philanthropy
Salvatore LaSpada, chief executive of the Institute for Philanthropy

Last week's Daily Mail readers could have been forgiven for believing that the UK's rich are not interested in donating to charity. "Why does Britain produce so few philanthropists?" its comment pages sighed.

But new figures suggest the opposite. The US may have Bill Gates and Warren Buffett, but British philanthropy is on the increase - new benchmarking statistics from the Institute of Fundraising indicate an explosion in major donor giving.

The institute's latest Fundratios report claims voluntary income from major donors has risen by 185.7 per cent in the past year and by 300 per cent since 2003. It keeps the exact value confidential, but the institute believes major donor giving accounts for almost 2 per cent of charities' income.

Grooming the super-rich

What's more, the UK's buoyant economy is producing more and more super-rich individuals. According to Merrill Lynch's 2005 World Wealth Report, there are 418,000 high net worth individuals in the UK - a rise of 8.9 per cent on the previous year. But to groom the wealthy as potential donors, charities must first find them. So who are the new British rich?

"Their profile is changing," says Theresa Lloyd, fundraising consultant and author of Why Rich People Give. "In 1989, about 75 per cent of people on the Sunday Times Rich List had inherited their wealth. Today, there has been a complete switch - 75 per cent have made their own money.

"This change means there is a huge difference in their capacity to give. Inherited money is likely to be on paper only, but if you've made your own you can spend it how you like."

Like Buffett, the self-made are not believers in dynasties of wealth - which leaves all the more for charitable giving. "They don't want to leave their children millions because they want them to experience the fun and achievement of making money that they had," says Lloyd.

Salvatore LaSpada, chief executive of the Institute for Philanthropy, agrees that the newly wealthy are keen to give their cash to charitable causes. "People with self-made fortunes are hard workers," he says. "And they are keen to create opportunities for others to allow them to create wealth."

LaSpada, whose organisation advises wealthy people on how to donate, says there is anecdotal evidence that the UK rich are now more likely to make large, well-publicised donations than to offer anonymous gifts - a trend of conspicuous philanthropy may be emerging. He suggests this is because donors are interested in drawing attention to the good work of the charities that they support.

"Business people understand that to attract capital into markets - and a charity is a market - you need a savvy communications strategy," he says.

So do charities know how to target major donors? Most agree there is room for improvement. "Many are not investing what it takes to nurture and involve them," says Lloyd. She believes 'investment' can mean anything from hiring an account manager to encouraging trustees and chief executives to communicate with their major donors. But she fears that the prospect is too daunting for many charities. "It can mean a change in culture, because the chief executive's time costs money," she says.

Major donors did, however, play an integral part in the NSPCC's Full Stop campaign. Tim Hunter, the charity's deputy director of fundraising, says the charity decided to copy the way arts charities use wealthy supporters to court new major donors. "We recruited highly influential and wealthy volunteers to a national appeal board, which at one time had 50 members," he says. "Each took on a fundraising target of £10m."

The board's members raised funds largely through individual giving. Donors who gave more than £100,000 were made patrons of the appeal.

"Because of their contacts, the board members achieved things that fundraising staff would have been unable to do by themselves," says Hunter. "Before Full Stop, we could count on one hand the number of major donors. We now have nearly 200, who between them have raised tens of millions."

It's not just the large charities that are catching on. Emma Halls, chair of the Institute of Fundraising's special interest group on major donor fundraising, reports a surge of interest in recent months. In February, it laid on an 'idiot's guide to major donor fundraising' event that attracted 70 delegates. The group's email discussion forum has 290 members this month - up from 30 this time last year.

But isn't all this high-profile philanthropy a bit un-British? Surely we're coy when it comes to talking about money, let alone making conspicuous donations. LaSpada - an American - laughs. "Maybe in the 19th century, but not in the 21st," he says.

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