Modern philanthropists prepared to give more – in the right circumstances

In recent decades there has been a noticeable shift in the sources of philanthropy. Before the general ascent of business activity and the rise of social mobility, most wealthy donors to charity were those who had largely inherited their money and really didn’t think to ask too many questions about the charities concerned and the impact of their donations.
From: Baker Tilly
June 17th, 2013 | 0 Comments

In recent decades there has been a noticeable shift in the sources of philanthropy. Before the general ascent of business activity and the rise of social mobility, most wealthy donors to charity were those who had largely inherited their money and really didn’t think to ask too many questions about the charities concerned and the impact of their donations. Just in the last 10 years, the proportion of such people has fallen from 50 % of major donors to only 25 %.

Today’s philanthropists are much more likely to have come by their money the hard way, perhaps by building up a profitable company or practising day and night to achieve success in sport or show business. Although they may have worked hard for their fortunes, most of them still regard themselves as being lucky in having the necessary talent in the first place. Millions of people work hard every day but are never going to be entrepreneurial tycoons.

The reason all this is important to individual charities is that today’s philanthropist is starting to adopt a much more savvy approach to his or her donations. Unlike the old days which saw wealthy donors sending off cheques to charities with no questions asked, their modern counterparts are much more likely to want to know exactly what their money is going to be spent on and the impact it is going to have. The last thing they want to see is an unreasonable amount being spent on administration or even replenishing the directors’ wine cellar. Having earned their money the hard way, they are not going to adopt an “easy come, easy go” attitude.

According to a survey by the think tank, New Philanthropy Capital, a third of known wealthy donors would donate greater amounts if they were more convinced as to how the funds were going to be put to effective use.

Charities could reasonably assume that, if this is what high profile donors think, much the same thought process is likely to be found amongst the millions of more modest donors in the ranks of the general public.

All this presumably explains why so many charities are now turning to a leading charity accountant who can present a client’s financial picture in a totally transparent light and detail clearly and simply where every penny goes. Some of the top ones have also developed models for measuring the social impact of each charity’s efforts. This means that donors, both large and small, can compare the efficacy of individual charities operating in the same “sector”.

It might sound somewhat churlish given that every organisation has the highest of motives and is doing the best that it can but it seems that none of them is immune from the cold blast of competition in this day and age. The philanthropists clearly want to see that they are as lean and mean as their own operations were.

For Charity Accountant advice – empowering charities to effectively deal with current challenges, visit http://www.bakertilly.co.uk/sectors/not-for-profit/charities-and-social-enterprises.aspx