Beacon Forum: “Philanthropy in the City”
held on 31st May2006

Summary of Debate

City bonuses

The debate on Philanthropy in the City was very timely with the UK Labour Party’s Deputy Leadership candidates discussing increasing City bonuses. “Should the City show a lead with more proactive open style philanthropy in order to prevent greater regulation or changes in taxation?” Mr. Lewis asked the audience, or “would a curb on bonuses would be damaging for the City and its status as a global player?” After all during 2006 the City contributed 12% of Britain’s tax receipts, which helped to build and maintain all the key services such as hospitals, roads, and schools. Whatever your opinion, “individual philanthropists, especially those from the City, can play an increasingly important role in bridging the ever-increasing divide, the division between those two categories of people with their very different views”, according to the Beacon Chairman.

Role models

The Blackstone Group's John Studzinski CBE, who recently captured the headlines by donating a £5 million donation to the Tate Modern, emphasized the importance of role models in inspiring new philanthropists and chance happen: "It's hard to explain to people who don't give money that charity is not about money; but that it's about a way of life and a way of looking at your commitment to humanity." He referred to philanthropy as a "permanent asset" to explain what inspires him: "When I see the market and asset values go up and down, when I see life changes and friendship changes, the one thing that no-one can take away from me are the things I've already given away to others."

Tax incentives are key

Mr. Studzinski CBE also compared the culture of giving in the UK to the US: “I have two passports, I have an American passport and I have a British passport. As an American we talk a lot about Americans being so generous, they're very generous, and I think the statistics are for last year, the top 60 donors, (…) the top 60 donors in the United States gave $51 billion. In this country the top 30 donors gave £1.2 billion, a big difference, but in the UK it’s actually tripled in the last year, it tells you a lot about the (direction). But what most people don’t give this country credit for in terms of giving is the other side of philanthropy, which has to do with initiative.”

Blackstone’s Senior Managing Director continued to say that besides the individual, the government also has a role to play. Mr. Studzinski had two requests for the new Prime Minister who, according to him, understands how important individual effort and resource allocation is: “He’s been very strong about volunteering, he’s been strong about high level strategic philanthropy and he’s been the vanguard of a campaign to maximise individual commitment and involvement in our society.” He hoped that the new Prime Minister would regard art not only as entertainment, but also as education and heritage and he also hoped that Brown would pick up the idea of tax reform to provide a system to support philanthropy.

Proactive philanthropy

Central to the work of The Genesis Foundation, a UK-based charity created by Mr. Studzinski in January 2001, is ongoing engagement: “we partner organisations, we create a three to five year commitment, we use their infrastructure, we don’t have an infrastructure, but we get people involved with these projects one on one and we stay involved. So it is what I call proactive and ongoing philanthropy. And I think for that reason one has to be focused on getting more individuals involved in actual individual philanthropy and individual projects.”

Making people comfortable with giving

In response to a question from Coco Ferguson, Associate Director at the Institute for Philanthropy, what people could do to make philanthropy grow in the UK, Mr. Studzinski replied that we should make people comfortable with giving and “knowing that it’s a project, (…) that it’s fun and that it actually not only enhances the self esteem of the recipient, but it also enhances the self esteem of the donor, if you create the right environment.” He added that: “(…) for those of you who can work on creating the environments for these young wealthy people, so that they know that it’s not a risk, it’s a wonderful experience, and you can learn a lot, you can be nurtured yourself. Many people need to reinvent themselves two or three times in life, and what they don’t realise is they can reinvent themselves in their own lives through philanthropy.”

Unlocking wasted assets

Claire Mackintosh, founder and chief executive of ShareGift, talked about the leverage the charity offers its founders and supporters. ShareGift is a charitable solution to the disposal of small share holdings that would cost more to sell than they are worth. The mechanism has already generated over £11m for charity, and is being replicated around the globe: “I've always had a very clear idea of what I was trying to achieve with Share Gift (…) creating this pool of money from unwanted shares and then the process by which it’s given to other charities. This process has taken me in directions, into places that I could never have imagined. And it was by now means an easy option as a choice of what to do with my life, for many more reasons than the obvious one of giving up a fairly well paid career in finance to tackle this challenge.”

But what was Claire's drive to set up ShareGift? “I suppose for me I was grabbed by an all consuming idea and was burning to put it into practice. (…) my personal philanthropic path was to find a charitable mechanism to harness wasted assets. This also had major business benefits, and this is what lies behind Share Gift and appealed to me very deeply as my business background. I knew that this for me was a better use of my time and talents, than charitable fund raising of a more conventional type.”

Philanthropy should be fun

Ms Mackintosh agreed with Mr. Studzinski that that philanthropy ought to be fun: (What I) think is that, whatever the reason, and it’s not a question of a right a wrong reason, (…) the more people think about what they want to do and why they want to do it, the more likely they are to be satisfied. I personally couldn't not have done ShareGift once I had the idea, because, rather to my surprise it turned out as I seem to be an entrepreneur (…) It’s been hard work, but I don’t regret a moment of it. (…) the feeling that my life has been enhanced is absolutely fundamental for me, and I've spent 11 years working very hard on this now and, believe me, I wouldn't be doing it if I didn’t feel this way still. (…) And that’s what I'd like to see other people get out of their philanthropic choices, whatever they are.”

Speed-dating for philanthropists

Fred Mulder, founding chair of giving circle The Funding Network (TFN), talked about how TFN members pool resources from many smaller, individual donations to achieve a much greater impact by giving as a group. TFN's London group has raised over £1m for charity to date. Mulder also highlighted the benefit of shared learning: "I learned very early on that it was good to have a peer group of givers. And it saved me from a lot of problems and made my giving a lot more interesting and a lot more fun."

Mr. Mulder explained the concept of TFN and how it brings together donors and charities at several fundraising or ‘auction’ events each year, perhaps best described as a as a ‘marketplace’ to which individuals can bring in projects, give a presentation and donors can pledge anything from £100 to £10,000: “(…) we regularly have more than 100 people come to each of our events. We have four events a year, two day events and two evening events. And we’ve given to more than 200 small social change organisations. (…) I sometimes call ourselves the people’s philanthropists. We’ve also been called speed-dating for philanthropists (because) five projects get to present at a funding evening, each of them has been sponsored by one of our members and anyone can become a member. We give each project six minutes to present and six minutes to answer questions (…) (At the end of the evening) we write up the pledges on flipcharts, people call out their pledges, we encourage people to do it that way, but if they want they can hand write them on and hand them in on a bit of paper. We’ve even started a facility for people texting during the meeting. (…) The sponsor has to kick in the first 250 quid as a minimum and then people call out whatever they want. And it’s kind of fast and furious. And I’m an art dealer so I’m used to going to auctions, and it has some of the dynamic of an auction.”

Benefits for donors and charities

Mr. Mulder identified five reasons for potential donors to come to the TFN events:

Education: you learn a lot about different organisations and causes;
Choice: there is no obligation to give and you have the chance to make a decision from a very wide and diverse range of charities;
Membership network: sponsors have to become a member of TFN, which gives people ownership. In addition you can introduce your choice of charities to other donors;
Joined forces: whatever you can afford, you become a part of a much larger pot of funding, which is very exiting.

The key benefit for charities is that you have the chance to reach a large group of people in one evening: “(…) the advantages are that we give a platform for a whole class of charities that would actually find it very difficult to get the chance to speak to 100+ people (…) And they get to tell their stories to real people instead of sending paper applications to people that they’ll probably never meet. Charities often tell us how satisfying it is to actually have the chance to talk to, to stand up and pitch to a group of people that are there because they want to hear what they have to say, instead of sending out long applications to trusts. (In addition) they get the money within a month, that’s the other thing, that they get paid very very quickly after each funding event.”

Addictive

On the other end of the grant-giving scale, Jamie Cooper-Hohn, chief executive of The Children's Investment Fund Foundation (CIFF), explained that her £50m foundation is seeking a very large degree of change: “The Children’s Investment Fund Foundation is one of what is known as The New Philanthropists, those of us trying to blend the city sensibilities and skills with philanthropy and hopefully make a very big difference for people or issues that we care a lot about.

Mrs. Cooper-Hohn briefly explained how the funding of CIFF was linked to a London-based hedge fund TCI, providing a guaranteed stream of income for at least five years: (…) it was very important to me that I had some stability of income. I really believe in long term strategic funding and so this was a mechanism to be able to do that and to have some certainty about that. And finally, despite the fact that I do hate press and I do hate all of this, we made a decision to go public, and we did call the fund and the foundation the same thing very deliberately, because we do believe this is something that’s important, (…) and we do want to set an example.” After the Forum Debate it emerged that Mrs. Cooper-Hohn’s husband Christopher Hohn donated £230m to the foundation linked to his multibillion-pound hedge fund. His donation is thought to be the largest ever made by a Briton in a single year.

Research and investment

Central to the way CIFF operates is to thoroughly research an area of work, before an investment is made: “(…) the first thing that we do very parallel to I think a good hedge fund manager, is we spend an enormous amount of time trying to find our strategic niche and whether this is a smart investment for us.” The second element of the CIFF’s strategy is to seek measurable returns on investment: “I think one of the things that we do (is) to decide, depending on how much you’re giving, how important the attention you’re going to spend on what the measurable returns are. But one of the things that stunned us when we found out that we were going to be quite a large foundation was we did research into other large foundations that had a very good reputation for impact or being well managed. And what really surprised me was how many couldn’t give me an example of the impact that they were having.”

Engagement

Finally, Mrs. Mrs. Cooper-Hohn agreed that philanthropy is addictive: “I think what’s really addictive about it is when you know you’ve really changed a life or made something happen, and if you want to know that something’s happened you need to be engaged. I think also you can do things to alleviate your conscience, but there is a quality to getting things done, and for those of us who come out of this world or this sector, you’re used to that perfection, and you’re used to, if I work hard at something, this happens. And there is no reason to have a lower standard, but you don’t write a cheque and then get the quality that you get when you work 14 hours a day at an investment bank and the project happens. So I’m not saying that everybody is going to be personally engaged, but you do need to find your conduit, I think if you’re going to give something that’s significant to you and know that it has meaning in the way that you like. And we also talked about corruption, and it happens, and it particularly happens if you’re not watching and you’re not looking, you need to be specific about where your money’s going and you need to track it and trace it.”

Background information

Beacon Fellowship
www.beaconfellowship.org.uk

The Genesis Foundation
www.genesisfoundation.org.uk

ShareGift
www.sharegift.org.uk

The Funding Network
www.thefundingnetwork.org.uk

The Children's Investment Fund Foundation
www.ciff.org

For more information or full transcript of the debate email you can contact Tijs Broeke,
Head of Policy and Fellowship: tijs.broeke@beaconfellowship.org.uk
Tel.: +44 (0)20 7203 8296