Nick Venning, co-founder of Thrive, considers whether charities would benefit from the establishment of a “social norm” for charitable giving.
Imagine … You have just enjoyed a sumptuous meal at one of our city’s fine dining establishments. The bill arrives. Service has been good. How much tip will you leave?
In the UK, the ‘social norm’ is you add 10 per cent … slightly more in London perhaps.
There is no similar rule of thumb for charitable giving and, possibly as a result, giving in the UK tends to be low. In fact, we give about 0.7 per cent of GDP and, if anything, this proportion of national income is falling. This compares to almost 1.7 per cent in the US and, according to research from Johns Hopkins University, Canada, Ireland, Israel and Spain give more than we do.
Having said this, I hasten to add, to their great credit, in certain ethnic minority religious circles there is a social norm and it is often an order of magnitude higher than any figure stated.
Although most of us would consider charitable giving a good thing, those that do give regularly are clearly heading towards becoming a minority. The Home Office Individual Giving Survey 2006/07 reports 54 per cent of the UK population gave to charity, but this had fallen from 57 the previous year. This is not an encouraging trend.
Almost half charitable giving comes from just seven per cent of the population. Statisticians may tell us this is a typical Pareto ratio but, staggeringly, a recent study commissioned by the Charities Aid Foundation and National Council for Voluntary Organisations (NCVO) revealed three-fifths of the UK’s most generous donors (defined as giving more than £100 per month) were people with gross incomes less than £26,000 a year. This suggests some of these donors give at least four per cent of their income. It also shows charity relies on a generous minority; a generous minority in the ordinary citizenry.
What else distinguishes generous givers from the rest of us?
According to not-for-profit research consultancy and lobby group nfpSynergy, most generous supporters usually have a personal connection with the charity they support. Typically, supporters of those engaged in disease research will have known a sufferer or victim. But, interestingly, this work also shows that those who are more “socially engaged” – belong to a club, support local school activities, know their neighbours by first names, regularly entertain at home, vote in elections etc – are more likely to give to charity.
Why are Americans so generous?
Despite spending quite a lot of time in the United States over the years, I’m not entirely sure. It’s partially due to higher levels of disposable wealth spread over wider populations and it’s partially due to a lower welfare net. Amongst the wealthiest Americans, it may even be about not wanting to spoil their kids by leaving an excessive inheritance!
But, it’s also about social recognition and, following the Gates example, planned philanthropy is definitely becoming the “done thing” in the highest echelons of corporate wealth.
So, what do we need to change?
Suppose that we were to be successful in establishing a minimum “social norm” for charitable giving at, say, one per cent of personal income. What would be the impact on the voluntary sector?
A crude calculation based on GDP indicates that, assuming that the generous minority continue to give at their higher levels, this would add something like £4 billion a year to charity incomes.
The risk of course is that the generous minority downscale to this level. Personally, because these people are so engaged, I doubt this would happen. Furthermore, if the really big donors donate out of a desire for social recognition (as I have suggested is the case in the US) or “putting something back” – and don’t tell me you’ve never heard anyone say that – at least this element will be preserved. I believe a social norm would be economically favourable to the voluntary sector.
However, there’s another benefit. If charitable giving is often born out of personal experience, perhaps this is a two-way street? The nfpSynergy findings certainly make this link. Then we can also surmise that enhanced giving will lead to more engagement with the voluntary sector. Ultimately, this will lead to greater understanding and a more cohesive society; and don’t tell me that we don’t have something to fix here!
At a straw poll taken at a recent networking event in Birmingham, the concept of a social norm for charitable giving was met by some scepticism and quizzical looks but that shouldn’t deter us. One thing is for certain; if we don’t talk about it, it won’t happen.
By the way, if you’re dining in New York this year, you’ll need to add 20 per cent tip to the bill!