Richer Lives:why rich people give

Presented by Theresa Lloyd

Curated by Chapel & York Limited

What we’ll look at today

• The changing nature of philanthropy – in the UK and elsewhere

• Characteristics of “new” philanthropists

• A review of motivations

• Giving to a specific cause

• How requests are filtered

• What donors think of fundraisers

• What is a major gift

• Implications and recommendations

Which Rich - the data set

• over 80 wealthy UK donors, divided equally between a

cohort who were first interviewed by Theresa Lloyd in 2002,

for Why Rich People Give (“established”), and a set of

younger donors, some relatively new to philanthropy

(“emerging”).

• 12 philanthropy advisers

• 16 fundraisers and other experts.

Changes in the UK Philanthropy

scene

We identify 6 main themes

• Growth in giving by the rich, in a context of increasing wealth disparity

• The development of the UK philanthropy infrastructure,

including the provision of advice and the development of philanthropy

as an academic study

• The growing government interest and investment in

encouraging charitable giving, including matched funding

initiatives, and wider sector initiatives to promote and recognise philanthropy

• The development of new ways of philanthropic engagement, including venture philanthropy and various forms of social investment

• The transformations triggered by technology

• The rise of ‘enrichment’ as a key driver of philanthropic activity,

including The Giving Pledge.

More trends

We also note

• Shift in source of wealth

• Increase in overall wealth levels

• Global inter-generational transfer of wealth

• An increasingly educated donor constituency, with high

expectation

A changing marketplace

• A number of people developing new models and products

• New sources of information

• Increasing interest in measuring the impact of donor intervention

• Untapped market of wealthier people

• Increasing interest in donor education

• Role models who are willing to stand up and be counted

• Improving research base

• Developments in the tax regime, particularly for higher net worth individuals

• Wealth managers and advisers seeing philanthropy advice as an opportunity to add value to their service, and more people seeking advice

Philanthropy matters more to

donors and society

80% - personal commitment to philanthropy has increased

78% - profile of philanthropy in the UK has improved

67% - public opinion is more positive

55% - political climate is more conducive to encouraging

philanthropy

.

Key messages about donors

• Philanthropy is a very important aspect of the lives of both

younger and older donors

• Donors give because it enriches their lives

• Philanthropists change they way they give over time

• The end of the armchair philanthropist

• Fundraising is improving but there is no room for complacency

and it needs the input of donors as askers

What is different about new

philanthropists?

• Level of wealth

• Attitudes

– Entrepreneurial and risk taking

– More strategic and engaged

– Interest in impact, accountability and transparency

– Leverage and collaboration

New ways of supporting

charities

• New types of financing

• Targeting gaps in current services

• Venture philanthropy

• The rise of the social investor

Venture philanthropy

• High engagement

• Tailored financing

• Multi-year support

• Non-financial support

• Organisational capacity-building

• Performance measurement

• http://evpa.eu.com

Social investment

• Use of capital to generate social as well as financial returns

• Vision for its use

• Sits in an investment portfolio between philanthropy and

commercial investments

• Critical component of a commitment to impact investment

Types of social investment

products

• Social impact bonds

• Performance related investments

• Directly into social enterprises or

• Indirectly into intermediary funds

What has this to do with me?

• This is the marketplace in which philanthropists and those seeking their engagement are operating!

• Donors have a choice of causes and a choice of investment models

• Donors like the concept because

– They believe it incentivises impact

– It provides a return which they can reinvest

– It provides a hand-up rather than a hand-out

What makes a donor?

• Values

• Motivations

Influences on values

• Faith

• Family and community

• The immigrant experience

Why do rich people give?

• Because they believe in the cause

• Because they want to be a catalyst for change

• Because philanthropy helps them to

develop as a person

• Because they feel a duty and responsibility to share their wealth

• Because they enjoy the relationships that develop with the charity leadership, with fellow donors and with the beneficiaries

Also...

• Because they believe philanthropy is the right use of surplus money.

• Because they are clear about the complementary roles of government and philanthropy.

• Because they believe philanthropy is a good parenting tool.

• Because they appreciate appropriate recognition

• Because they get joy out of giving.

Giving to specific causes

• They have an existing interest in the issues or the cause

• They are confident that their money really will – be spent effectively, by a well-managed organisation that has a robust

business plan and a culture of accountability and transparency

– make a real difference to/have an impact on the lives of people about whom they care, and be of public benefit

• also (in 2012/13)

• It fits in with their predetermined giving objectives

“I conduct research trips to seek out funding opportunities – approaching charities that are of interest. If the meetings go well I will ask the charities to submit proposals”.

So what else matters when they

decide what requests to consider?

• if asked by an existing donor who is someone they know

and respect

How do they filter requests?

- I really feel my money will make a difference

- I am already interested in the cause

- It fits in well with my pre-determined giving aims

- I am asked by someone I know and respect

- I like the approach made by the fundraiser

74%

74%

73%

69%

31%

Other factors?

• Taking time to develop the relationship

• Matched funding – more of an incentive than the tax break

• Giving collaboratively

Most satisfying donations

• Support of individuals – making a difference to individual lives

• Making something happen (that wouldn’t otherwise have happened)

• Effective relationship management

• Support of local community, or other community with whom have strong affinity

Why people don’t give

• A lack of understanding of the real level of wealth, coupled with

feelings of insecurity

• Absence of a tradition or expectation that they would give

• Uncertainty about the level at which to give

• Not being asked effectively

• Lack of peer pressure, or pressure from someone they wish to

impress

Some more reasons why

people don’t give

• Fear of donations being mishandled, or not spent effectively

• Living in a social cocoon

• Have not seen or experienced a cause or issue about which they care passionately

• Have not seen how they could make a difference

• Haven’t experienced the buzz and fun of giving

• Perceived complexity

• Lack of time to devote to the issue

But what about fundraisers?

• Fundraisers are seen to have become more professional in their approach

– better research before donors are approached

– better understanding of how donors wish to engage with causes.

• But not so good at

– explaining tax breaks

– offering appropriate recognition

Some important questions

• Does the approach of the fundraiser matter?

• What kind of relationship do donors expect and whom do they

expect to deal with?

• How do you and your organisation define a major donor?

How do donors see it?

• Being alert to reciprocity!

• Getting it wrong

Implications

• The role of peer ambassadors is hugely important

It will then be up to the charity to

• persuade the prospect that the cause is consistent with their own values and predetermined objectives, and

• to be able to show how donor investment will be effectively spent and make a real difference to the lives of people about whom they care, and

• make the experience as rewarding and enriching as possible so that that they want to repeat it!

What does this mean for

charities

I think people respond really well when you’ve got

a really crystal clear idea and you’ve really defined

what the proposition is and they can see clearly where

the money will go and what it will achieve.

I think the more precise you can be, and the more

you can engage people emotionally in whatever

it is you want them to give the money to, and

they can see the professionalism in how the money

will be spent, I think those are things that really get

people willing to say yes

An experienced donor-asker

“

”

Recommendations

1) Charities must become far better at asking.

2) Experiences of serious giving must be positive and reinforcing.

3) Integrate legacy promotion with other forms of relationship development.

4) Consider matched funding schemes.

5) Charities must address the lack of confidence in their competence and efficiency.

Being philanthropic enriches

the lives of donors

“Philanthropy makes you feel good, and I don’t mean

goody-goody two shoes, righteously good, but it just makes you

feel good inside. You get a buzz.”

“I do it because it’s such fun, it’s selfish, I get such enjoyment.

I am privileged to be able to do it.”

“Giving and running my trust has taken the role in my life that

was previously occupied by my job. I hope it gives meaning to

my life for the next 20 years or so.”

“Seeing these projects develop and bring major benefits to

people has been a life-enhancing experience”

“It’s a really high privilege… It moves me to tears, it lifts the

spirits”

Some UK-based sources of

informationNewspapers and regular publications

• Financial Times

• Economist

• Spears wealth management magazine: http://www.spearswms.com/

• Local papers

• http://www.alliancemagazine.org/

Websites/newsletters/articles

• New Philanthropy Capital: http://www.thinknpc.org/

• Philanthropy Impact: http://www.philanthropy-impact.org/

Merger of EAPG, PUK and Phil Adviser Forum, in particular:

http://www.philanthropy-impact.org/expert-opinion/philanthropic-fundraisingwhat-can-we-learn-wealthy-donors

• Institute for Philanthropy: http://www.instituteforphilanthropy.org/

and

• All “competitors” for the investment

More sources of information

Research

• Million Pound Donor reports: http://www.kent.ac.uk/sspssr/cphsj/research/couttsmilliondonor.html

• Factary research http://factary.com/

Government funded reports

• http://www.hefce.ac.uk/pubs/rereports/year/2012/philanthropyreview/

On venture philanthropy and social investment

• http://evpa.eu.com

• http://www.cityoflondon.gov.uk/business/supporting-local-communities/Documents/a-brief-handbook-on-social-investment.pdf

Books

• Richer Lives www.richerlives.org

• Why Rich People Give

• Giving is Good for You – John Nickson

Your opportunity – turning dreams into

reality

“Giving is a way of life, it is part of the reason I think I exist. The likelihood of an increase [in my giving] is not a function of how much I have. I will give more if the projects that I believe in are present or a good opportunity exists”.

An interviewee for Richer lives

“There is no such thing as a shortage of major donors. There is only a shortage of great ideas to raise money. A desperate need for visions and dreams… Mega givers are captivated by the opportunity, the challenge, the magic of being able to do something special”

Jerold Panas (1984) Mega Gifts: Who gives them, who gets them?

“A dream doesn't become reality through magic; it takes sweat, determination and hard work.”

Colin Powell

Thank you!

• For participating

• For reading the book

• For helping to build a stronger culture of philanthropy in

the UK and elsewhere

Contact informationFor more information go to http://www.richerlives.org/

To order go to www.dsc.org.uk/rl

Theresa Lloyd

The Philanthropy Advisory ServiceLondon office: +44 (0) 20 7569 8740Bath office: +44 (0) 1225 321850Mobile: +44 7740 512456Skype: theresaslloydtheresa@theresalloyd.co.ukwww.theresalloyd.co.uk

Dr Beth BreezeDirector, Centre for PhilanthropySchool of Social Policy, Sociology and Social ResearchUniversity of KentCanterbury CT2 7NF01227 824 30307932 745 989b.breeze@kent.ac.ukwww.kent.ac.uk/sspssr/cphsjBlogging at https://blogs.kent.ac.uk/philanthropy/Tweeting @UKCPhilanthropy