With the state out of money we have much to learn from the American way of giving
TAKE a walk on Park Avenue or Wall Street and you’ll see countless posters and banners profiling the wide variety of cultural activities on offer in New York. And at the bottom of each you’ll see sponsorship from a large private company – usually a bank, and usually a big one at that. Goldman, Morgan, BNY Mellon – happy and proud to support the development of the arts in their cities.
And, if you paid a visit to a large-scale anti-Aids project in sub-Saharan Africa, the chances are that at least part of the funding will come from any number of US charitable foundations, directly or indirectly linked to major corporations.
Our own financial crisis, precipitated to a large extent by reckless spending, will lead to a large-scale reduction in public sector spending. The UK is facing an unprecedented shrinking of the state, with the expectation that right across society, the private sector will fill the gap.
Why therefore are we not seeing a growth in UK philanthropy similar to US levels? To understand that, we must consider philanthropy’s history. The word originally derives from the Greek for “a love of humanity”, but our modern understanding of the term – doing public good – emerged in the US in the pre- and post-depression era. John D Rockefeller, Henry Ford and Andrew Carnegie donated huge sums in an effort to solve deep-seated social problems.
This modern understanding of philanthropy emerged in a context of the world’s first large-scale free market economy. In the USA of the early 1900s, for the first time in history, monarchical wealth was available to anyone, in theory anyway, who had drive, determination and the right idea. Meanwhile Britain saw the beginning of the welfare state under David Lloyd George. Poverty levels in the USA were similar, but that country’s distance from the First World War and relatively short participation in it meant the support for liberal, welfare state policies in Britain was never replicated across the Atlantic.
The absence of large-scale government welfare support in America until Franklin Delano Roosevelt’s New Deal saw many corporate entities taking up the challenge of providing for the poor. Take a stroll in many UK cities and you’ll see libraries built by the Scottish-American Carnegie. And yes, he’s the same Carnegie who built Carnegie Hall, who started what is now Carnegie Mellon University and who established the Carnegie Corporation of New York to “promote the advancement and diffusion of knowledge and understanding”, which has funded many projects over the years including, among other things, Sesame Street. Carnegie was just one of a number of individuals who all gave away most of their wealth during their lifetime.
Arguably, our early commitment to the welfare state is a principal reason why the UK hasn’t and doesn’t see philanthropy on the same scale as the USA. Given that we now face unprecedented pressure on public finances, and an expected reduction in social welfare payments following the Iain Duncan Smith reforms, it would appear the time has come for large corporate firms here to increase their support for the improvement of society.
The generosity of UK citizens is known at home and abroad. Anyone who has watched Channel 4’s Secret Millionaire cannot fail to be impressed by the energy and generosity many of these self-made millionaires bring to small-scale community projects up and down Britain. The Prince’s Trust Million Makers scheme, where businesses are each given a small amount of support and asked to raise £10,000 is a firm vote of confidence in the ingenuity of the private sector.
Yet we still do not see philanthropic support on an American scale in Britain, and that needs to change. Future competitiveness globally relies on trimmed back public expenditure and a commitment to productivity, both in the private sector and the public sector.
To step into the breach, we need to rethink philanthropy once again. The models of the past relied on individual owners able to decide what they wanted to do with their vast wealth. But some of the most successful philanthropists in the world today started their lives at the helm of listed firms, and we need new models that suit this reality while respecting a firm’s duty to its shareholders. Today, giving can mean donations of a company’s time, expertise and even contacts. And by focusing these donations to specific outcomes, as a business would in any project of its own, this can deliver real results
David Cameron has already discussed the important role that voluntary organisations will play in tackling poverty and a range of other issues. He may have given it a new name, the Big Society, but it still means community and corporations working hand–in-hand. The US defined philanthropy for the twentieth century; it should be the UK which does the same for the twenty-first.
Christopher Moran is an entrepreneur. Besides his business interests, he supports institutions in a wide range of sectors including arts and national heritage, health and wellbeing, and faith and international relations.