Frank Field MP
Your MP for Birkenhead
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Towards a Modern Philanthropy


14 May 2008
A couple of months ago I gave the Allen Lane Foundation Lecture. Here I recalled the disappointment Mrs T once expressed to me that here radical tax-cutting strategy had not lead to a rebirth of a giving culture her in Britain. Her hope was that the spread of such a culture would ricochet through British society and, in so doing, change it in a most fundamental way. The lecture suggested how the Thatcher dream might be made more of a reality. Its main proposal was for the introduction of acceptable behaviour contracts for the super-rich. A future radical government would introduce a new higher rate of tax on the super rich. This tax could be totally off-set against charitable giving. The hope was that the responsibility of giving would take root as the super rich helped existing charitable bodies, set up their own foundations, or back foundations of friends or people they admired, rather like Warren Buffet's support for the Gates Foundation.

Let me stress this point. While this paper makes a number of further suggestions that governments and, to a lesser extent, foundations might follow to kick start the giving habit, I see a fundamental difference between a government regulated state on the one hand, and a self-governing society on the other. The aim must be for Britain to recapture the status of a self-governing community which was so characteristic of our way of life until fairly recently. State-driven action is a poor substitute for the nobility of a natural instinct to do good by one's fellow creatures. But when habits have been lost, as the giving habit has to some extent, law has a role to set standards of behaviour which then themselves, hopefully, become, once again, an affair of the heart.

Why is action important?

Why is it important to see a renaissance in charitable giving and serious philanthropy in this country? There are a number of answers including the obvious ones.

A transfer of money from rich to poor will in all probability increase the amount of human happiness: happiness for the least rich as some of their material needs are met, happiness that someone is better placed and moved to improve their circumstances, and happiness for the rich in the pleasure they gain in making a real difference to the lives of some of their fellow citizens. There are other reasons too, which hint at how big giving needs to be so that a culture takes root again in which we look more often to each other rather than the state to tackle the deep-seated crises in our society.

In saying this I am not trying to peddle that simplistic view that we can somehow do away with the state. But after seeing the Government very substantially increase public expenditure I would be surprised if there was much support anywhere for yet higher taxation and more government spending.

Who believes the following key failures in British society are going to be addressed by spending yet more taxpayers' money.

• The mass of near innumeracy and illiteracy amongst school leavers after 12 years of public investment in their education;
• A dependency culture whereby benefit claimants, and in particular those under 25, remain long-term claimants even though they live in the economy where three million jobs have been produced over the last ten years and the Government has spent £9bn of our money of its welfare to work and make work pay strategies;
• The desperately low skill base of our workforce which will make it more difficult over time to compete with India, China, and other Far Eastern economies;
• To provide more adequate pensions from funded sources and so underpin future retirement incomes of the mass of the population;
• The rising tide of incivility that is engulfing increasing parts of our social life;
• The destruction of the world's rainforests that so pre-determine our climatic conditions.

Does anyone seriously believe that illiteracy and innumeracy, or our appallingly low skill level, will be eradicated by more of the same education provision? Likewise how many more young claimants will beat immigrants to jobs that are there and for the taking only if yet more public money is pumped into the Government's welfare to work strategy? Likewise is any sensible person going to trust any Government with the stewardship of a funded pension's scheme? And who could believe that shovelling yet more taxpayers' money through the World Bank will save more than the odd tree in any of the world's fast disappearing tranches of rainforest?

What is now desperately needed is a discovery of far better ways of spending the huge existing publicly financed budgets and then seeing a growing proportion of these very same public budgets being spent by individuals and groups themselves. In meeting this challenge philanthropy and the non-state sector have to become the model army driving through change.

Actions since Mark I 
 
a) The Foundation's world

Since giving the Allen Lane Foundation Lecture I have come across a number of positive activities. The Foundation itself has begun to review how it sees the Foundation playing a key role in social change. The Foundation has up until now concentrated in giving small grants. It has now decided to liquidise part of its capital in order to back what will be flag ship projects that will themselves hopefully be catalysts for widespread change. The Allen Lane Foundation has thrown down a challenge to other foundations.

I know see the role of foundations in a different light. Until quite recently the accepted view was that foundations should not simply fill the gaps in the welfare state and, as far as medical research went, for example, add to the government's rich provision. The role of their grant-giving activities was to show what works and encourage the government to universalise the innovations and, in so doing, see that the taxpayers picked up the tab.

The aim now must be much more ambitious. The goal should be nothing less than the encouragement of experiments which lead to individuals and groups claiming sovereignty over their share of public expenditure, to spend it when they wish to and in a way of their own choosing.

Thirty years ago almost to the day I edited a book for the Gulbenkian Foundation which included the proposal that we should in this country experiment with the Little Danish School model. In Denmark 300 parents can as a group request to spend state money setting up small private schools for their children, the budget for which would otherwise be spent in the Danish state sector. Currently 12 per cent of children in Denmark are educated in Little Danish Schools. Will a foundation be willing to back 300 parents a couple of times over with a budget to establish their own Little British School for their children and show thereby that this is a model that can be offered across the country?

b) Foundation bonds

A member of the public wrote in with another suggestion after reading the Allen Lane Lecture. He accepted the role that more of the very rich should adopt, but he was anxious for the ordinary citizen to have a part in the expansion of the new philanthropy. His suggestion was that some of those people and institutions that have the public's confidence, should float bonds or initiatives to support the growth of new foundation. These new bodies, like New Philanthropy Capital, consider what ‘returns' an investment might make if there philanthropic activities were viewed in ordinary business terms. Might part of the new philanthropy be the organisation of philanthropic bonds so that a much wider public could transfer some of their wealth to bodies like Philanthropy Capital who have built up an expertise in investing in new social experiments?

c) Making the market work

What other ways might the giving instinct be further nurtured? Markets work only if individuals have extensive knowledge. What role is there for extending the knowledge of would-be donors? Better educating lawyers in the drawing up of individual and family wills could pay a very substantial dividend, not least in the short term.

Over a single week I kept cuttings from the Court Page from The Times, that is what it used to be called, of all the wills, The Times choose to publish. I admit that my choice was of a week to support the case I wished to advance. But even so the results were stunning.

Over those six days £115 million was left in total, yet only £572 thousand was left to charity - equivalent to 0.5 per cent. Most of the wills however made no mention of charitable giving, while a few only offered a £500 donation.

How might this information be interpreted? One, admittedly crude, interpretation would be to argue how reluctant the wealthy are in spreading their assets at death outside their immediate family. Another interpretation would be that many individuals draw up their wills decades before they die and become unaware of how asset inflation has made them into quite wealthy individuals.

Let us yet again look on the bright side of things and assume the latter interpretation plays at least an important role in the failure of individuals at death to support the role philanthropy could and should play in our society.

Here is a role for an existing foundation interested in spreading the giving habit. Individuals make wills usually with a lawyer, and once they are made put the matter out of their minds. Isn't there here a role for lawyers regularly at a decade or so interval to invite their clients to review the provisions they have made in their will? And doesn't the legal profession have a responsibility for those who have substantial assets to suggest that some of the assets, well in excess of those £500 donations out of wills of many millions, become part of the new philanthropy?

Two campaigns are necessary. There is the immediate one that can be conducted in the legal press both by advertisements and the placing of articles. There must also be an opportunity in trying to shape the curriculum by which aspiring lawyers are taught their profession. Couldn't the Law Society take on this role to ensure that all courses have a very small part of dealing with the art of giving? Might not the Law Society's task be extended regularly to engage with local law societies in projects aimed at registering in the legal mind the opportunity to review regularly provisions in live wills?

d) A Chancellor's Endowment Fund

Early on in the life of the Government I suggested it might establish a Chancellor's Endowment Fund. The idea was for the Chancellor to commit annually £50m of taxpayers' money and to announce that the scheme would initially run for 50 years. The chances are that once it was established no future Chancellor would veto the scheme. £50m a year is a large endowment to endow on a body but it is, in truth, lost within the petty cash of the Government's annual budget.

The proposal was to establish a panel of very generous donors of their own money, combined with the country's best social entrepreneurs, to decide a rolling programme of to whom the £50m endowment programme might be given.

I emphasise the endowment aspect of this idea. If civil society is to be significantly strengthened in relation to the central state and global capitalism then such independent will be gained from a growing number of organisations that have a sufficient capital base to finance their own activities irrespective of what government might wish to see happen or political correctness might regiment should happen.

The £50m annual endowment fund would not only help in achieving this objective, but it would also, hopefully, ensure that some other new big givers saw their task as one of building up philanthropic endowments as well as meeting the revenue needs of the non state sector.

Conclusion

Here then are a few more suggestions to help kick-start the giving habit across our society. Governments have a lead role in this process, but the aim over the longer-term is not to strengthen the position of the centre. Anything but. The aim is nothing less than a revolution in our society. Over the past twenty years in particular massive fortunes have been amassed, and on many, many counts these fortunes are of a size beyond the dreams of avarice. Despite some very notable examples, and a tendency of some of the new rich to hide their giving activities under a bushel, a new giving culture that Mrs T thought would automatically follow the amassing of great fortunes has not occurred.

Here I have given some examples of how a government might nurture a new giving culture. While Governments have a key role in kick-starting a giving habit, the aim is for the new philanthropy to become a habit which is socially prized. It is a plea for moving from regulation to once again of making giving on the widest possible scale an affair of the heart.

Smith Institute Seminar, 11 Downing Street, 14 May 2008


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