'Us-and-them' mentality is limiting donations from multi-millionaires, report says

The report, from Barclays Private Bank, says a lack of understanding between high-net-worth individuals and charities is preventing donations

(Photograph: Getty Images)
(Photograph: Getty Images)

An "us-and-them" mentality between charities and multi-millionaires is limiting the value of major donations, according to a report commissioned by Barclays Private Bank.

The report, Barriers to Giving: Research into the evolving world of philanthropy, produced by the market research company Savanta on behalf of Barclays Private Bank, published on Saturday, says a "lack of faith" between high-net-worth individuals and charities is one of the greatest obstacles to philanthropy in the UK.

According to the report, only 50 per cent of UK multi-millionaires donate 1 per cent or more of their annual income to charitable causes, meaning philanthropic donations currently amount to just 0.5 per cent of national gross domestic product, compared with 2.1 per cent in the US.

"If every multi-millionaire in the UK was to increase donations to 1 per cent of their income, there would be an additional £46.4m in national charity funding each year," the report says.

A survey of 150 people with assets of more than £5m conducted for the report found that 25 per cent of wealthy individuals said a lack of faith in how charities were run was a major reason that prevented them from giving more, while 27 per cent cited a lack of control over how money is used.

Almost three-quarters (74 per cent) of respondents said they believed philanthropy was a responsibility of those wealthier than themselves, 46 per cent that it was the responsibility of the government or state to support charitable organisations’ causes, 35 per cent thought their donations would not have a significant impact and 24 per cent said they lacked the knowledge, experience and contacts with the charity sector to make larger donations.

The report’s authors also spoke to 25 experts "from across sectors connected with philanthropy", including philanthropy authors, academics, consultants and intermediaries, family office professionals and private client lawyers.

These experts said the reason multi-millionaires were not donating more was a lack of understanding between them and charities.

The report says experts "identified that charities can lack an in-depth knowledge of the motivations, lifestyles, interests, challenges and wider skillset of their largest potential donors".

The report says: "Together, misconceptions and assumptions on both sides perpetuate a mismatch in understanding and expectations between the two groups.

"This propagates a negative ‘us-anddthem’ culture, with each side making assumptions about the other instead of encouraging open, frank and tolerant discussion."

For example, the report says, charities often assume that if someone is sufficiently wealthy they can always give more, without realising that the donors might have their money tied up in assets, while donors might have been swayed by media reports that suggest charities are run inefficiently.

The solution to this issue, the report says, is for more communication between the two groups, using intermediaries from the private sector if necessary.

It says charities should take a more holistic approach to wealthy donors and avoid being seen as being interested only in their potential financial contribution by taking into account any skills or knowledge they have to offer too.

And it says donors should take more of a business-investor relations approach to the relationship and get to know the principal people in the organisation.

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