Report says 5% payout rule for foundations would give sector an extra billion

Government should investigate introducing quota, says Cass Business School research

The charitable sector could receive up to £1bn more in grants each year if a rule was introduced forcing grant-making foundations to give away at least 5 per cent of their wealth each year, a report has claimed. 

The study, Philanthropy in the 21st Century, prepared by the Cass Business School for the Honorary Treasurers Forum, was based on research involving 21 large charitable foundations. 

It suggests that the Government should look into implementing a distribution quota similar to those that already exist in the US and Canada, and suggests that the percentage payout be calculated on a rolling five-year basis.

According to the report, if the 21 funders examined for the report were representative of the wider grant-giving sector, a 5 per cent minimum payout rule could increase the funding distributed by foundations by 31.5 per cent or about £1bn a year.

David Emerson, chief executive of the Association for Charitable Foundations, said a 5 per cent rule would not result in additional money for the sector in the long term.

"It isn't a debate about payout," he said.  "It is a debate that asks if present beneficiaries need the money more than future beneficiaries." 

A Cabinet Office spokeswoman welcomed the report.

"We are currently working with the Association of Charitable Foundations to encourage information sharing between foundations and other government departments in order to ensure they meet the needs of their clients," she said. 



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