US VS. UK GIVING
CHARITY GIVING HIGHLIGHTS THE ATLANTIC DIVIDE
This article, by Ken Hoffman, originally appeared in Third Sector on September 22, 2004.
The general charity lament in the UK, most publicly uttered by Lord Joffe, is that the rich don't give enough. In the US, donations in 2003 totalled $241bn (£135bn), four-fifths of it from individuals. Could the UK achieve a step change in private financial support for the voluntary sector?
There is basis for optimism. The draft Charities Bill seems poised to broaden the class of charitable endeavour, and more resembles US generosity in granting charitable status.
Tax incentives to donors are increasing in the UK. A key element should be favourable treatment of shares with appreciated value. In the US, this is a major incentive for charitable giving by the wealthy. There, a donor receives a tax reduction based on the full market value of donated shares, even when the donor has never paid any tax on the increase in value (the 'appreciation').
Another encouraging change is the slow evolution in behaviour by UK boards of trustees. With my UK clients, at least I now hear polite approval for the concept of the board taking responsibility for successful fundraising.
I wish I could say these signs were sufficient to the task, but I believe that fundamental differences between our societies make it unlikely the UK can follow the US model. The UK exacts high taxation in exchange for medical care and education. Americans pay less and expect less, and philanthropy is left in private hands, not to the church or state.
While tax incentives play a role, they are only a subtle influence on US giving. Instead, contributions from the wealthiest reflect the health of the economy. More gifts are made when there is confidence.
The British predicament is made worse by the proliferation of quangos, all competing for money with charities but, above all, the culture of philanthropy - Anita Roddick excepted - differs between the two countries.
In the UK, with its zeal for privacy, people don't even put a return address on their letters! So where the US philanthropic world is driven by visible leadership from an elite with commitment and resources, the UK, in seeking to emulate the US, is playing against type. I anticipate fundraising success for those UK charities able to embrace a different culture of philanthropy, especially in board leadership. For the others, a holding action is more likely.