Mind the Giving Gap
Unleashing the potential of UK philanthropy
The wealthiest people in Britain cut their typical donation to charity by more than a fifth in the years preceding the pandemic, despite enjoying a 10% increase in income over the same period.
A new study for the Law Family Commission on Civil Society has revealed a significant decline in declared donations from the nation’s top 1% of earners – those with pre-tax personal incomes of £175,000-a-year or more – despite soaring incomes in recent years.
The study found that typical donations from the UK’s top earners dropped by 21% in real terms between 2011/12 and 2018/19, despite the typical annual income among this group rising by 10% over the same period.
While typical annual earnings in this group jumped from £247,000 to £271,000 over this period, the typical charitable donation declared on their tax returns fell from £680 a year to £538 a year, or £45 a month.
The analysis reveals that although those earners in the top 1%, who total around 344,000, earn 14% of pre-tax income in the UK, their declared donations equate to just 6% of the total donations to charity from the public.
Chaired by former Cabinet Secretary Lord Gus O’Donnell, the Commission is calling for action to help close the “generosity gap” among the UK’s highest earners. Nationally, the Commission is recommending the government appoint a Philanthropy Commissioner. At the local level, it is calling for Philanthropy Champions to work alongside Metro Mayors across the country.
Among its key findings, the latest report carried out by Pro Bono Economics for the two-year Commission, titled Mind the Giving Gap: Unleashing the potential of UK philanthropy, identified that:
According to the research, those members of the top 1% with annual incomes of around £187,000 typically declare donations of around £33 a month, equivalent to just 0.21% of their income. Among the richest fifth of the top 1%, those with annual incomes averaging £722,000, the typical declared donation rises to £113 a month – or 0.16% of income. Across the wider UK population, typical donations among those who support charities stand at around £20 a month.
To tackle this decline in philanthropy, the Law Family Commission on Civil Society is calling for a collaborative effort between the charity sector, central and local government, philanthropists and business.
The Commission is supporting proposals that the government appoint a Philanthropy Commissioner to coordinate action across Whitehall in this area. It notes that the Treasury lacks any resource dedicated to supporting or growing the £20bn the public gives through philanthropy each year and is therefore also calling for the appointment of a lead civil servant in the Treasury to work on philanthropy.
And with the study revealing that people living in the wealthiest areas of the UK declare seven times as many donations to charity as those in the most deprived areas, the Commission is further recommending that action be taken to drive up place-based philanthropy in areas which need it most.
This would include the nomination of Philanthropy Champions working with Metro Mayors across the country to encourage their peers to give to good causes, and a place-based matching scheme linking government funds to public donations.
Lord Gus O’Donnell, Chair of the Law Family Commission on Civil Society, said:
“The British public has a rich tradition when it comes to charity, epitomised by the millions of acts of kindness and support we saw at the height of the pandemic. It also shows in the £20bn the public gives through philanthropy each year.
“But this new research for the Law Family Commission on Civil Society shows that those with the deepest pockets can afford to reach a little further. Among the top 1% in Britain, there is a generosity gap between a handful who give very significant amounts and the majority who give substantially less.
“The Commission is calling for a collaborative effort between philanthropists, the government, business and the charity sector to help close this gap.
“There is a leadership role for the government in this. We support proposals for a government-appointed Philanthropy Commissioner to drive this agenda and would like to see a lead civil servant in the Treasury devoted to philanthropy.
“At a local level, the nomination of Philanthropy Champions working with Metro Mayors could help to ensure philanthropy is directed to the communities that need it the most.”