The Chair of the Charity Commission of England and Wales, Orlando Fraser, says the UK’s wealthiest people are ‘not covering themselves with glory’ with their giving.
In response to numerous challenges facing charities, Mr. Fraser criticized the wealthy in the UK, whose giving has fallen by about 20% between 2011 and 2019, even though their assets have grown significantly.
In an article in the Third Sector entitled “Giving by the rich ‘verges on shameful’, says commission chair” it also notes:
Fraser said that “not all of the top 1 per cent were rising to the challenge” of philanthropy, adding that the gap between giving by the richest people in the United States and the wealthiest here was equivalent to £19bn a year.
He said: “This is disappointing enough, but it verges on shameful when you consider how vibrant giving and volunteering are amongst the less fortunate of their fellow UK citizens.”
Fraser added: “The sad fact, however, is that some of those in our country with the deepest pockets are not covering themselves with glory in philanthropic terms and this matters.”
He argued that there was a role for “shaming the rich into giving more” but also that wealthy philanthropists should be celebrated in order to encourage others to join in.
I think Mr. Fraser is well-intentioned but really misses a couple of important points. First, giving is voluntary. If you don’t want to give you don’t have to give. The biggest problem with philanthropy is probably the misunderstanding that having a vibrant charity sector is a replacement for adequate taxation. It is not. There are areas we know that philanthropists tend to be excited about and often these are not correlated at all with societal priorities and needs. The answer is not more philanthropy, it is more taxation, especially with the super-wealthy and having governments at different levels be able to provide more basic services to those in need.
By the way, it costs about 1% of funds raised to tax money, but it costs far higher amounts to raise voluntary contributions (fundraising costs of about 10-30% plus tax costs of 40-80%). It is not philanthropists who primarily fund the charity sector in Canada – all donations made to Canadian charities are about 7 or 8% of the revenue of the charity sector – but it is various levels of government in Canada (especially provincial governments) that provide Canadian charities with about 67% of revenue for the charity sector.
The second problem is that he is worried about wealthy people who don’t give. As noted above, having higher taxes solves that problem. I am worried about some philanthropists who give (not mainly the ones who don’t give) and some philanthropists use their power in very unfortunate ways.
While some philanthropists are amazing and do go great work there is lots of examples of some wealthy philanthropists:
- who are extremely controlling
- require groups to switch priorities to match their own priorities (mission drift)
- have a constant fixation on “innovation”
- give short-term grants to keep the charity on a short leash
- insert themselves into all sorts of complicated issues for which they have little knowledge
- use charities to advance their questionable public policy agenda
- use charities to get around campaign finance rules, etc. (dark money)
- give funds to charities, such as their own private foundations, or donor advised funds, and then work hard to not give away any of those funds to actual charities to use in actual programs.
- using charities to obtain inappropriate recognition or benefits
- have terribly burdensome grant processes.
This is not even touching upon other concerns by some philanthropists, including AFP highlighting issues of sexual harassment, racism, etc.
As a regulator of charities, while it is nice that Mr. Orlando encourages the wealthy to donate, it would be even nicer if he ensured that the wealthy are not inappropriately using their power to exert inappropriate influence on charities. That would be a good job for the regulator and quite clearly small and even large charities are not going to be able to easily deal with this problem because of the tremendous imbalance in power between some philanthropists and some charities.