Reducing the disconnect between charities and wealthy individuals
23 January 2020
5 minute read
To give money away is an easy matter and in any man’s power. But to decide to whom to give it and how large and when, and for what purpose and how, is neither in every man’s power – nor an easy matter.
Today, the high net worth individuals (HNWIs) who gift charitable organisations with large sums often expect something in return. This expectation can sometimes mean their relationship with charities is more complex than for other donors. And with complication, comes tension – both charities and their potential benefactors often misunderstand one another.
Some charities, for example, may resent the implication that when a certain amount of money is given to them, they must relinquish some control over their business. Whereas some donors suspect charities of lacking transparency and operating inefficiently. To this end, this article aims to clear up some misconceptions, and aid potential donors in finding the right philanthropic partners.
According to a survey conducted by the Charity Commission for England and Wales, just over 50% of people trust charities. But that still means half of those surveyed regard charitable organisations with some degree of scepticism. Some of this may be the result of news reports on fraudulent philanthropic organisations or abuses of power.
However, just as there are examples of businesses behaving badly, that doesn’t mean the whole concept of business is tarnished. One man, Carlos Miranda, has a bird’s eye view of the relationship between donors and charities. In 2011, he founded I.G. Advisors, a strategic consultancy providing advice on philanthropy, corporate impact, and fundraising to organisations such as the Bill & Melinda Gates Foundation, UNICEF, and London’s Old Vic Theatre. As someone who works with both donors and fundraisers, he has a unique insight into the dynamic between the two.
Like many others involved in charity, Miranda believes that one way to develop better relationships between donors and charities is for the donors to carefully curate the sort of giving they engage in – and make sure they pick the right partner. “I think what’s changed now is that, when people care very deeply about a particular issue – or even a range of issues – you can tailor something that will help you move the needle on what you really, really care about.”
Miranda also acknowledges the tension between fundraisers and philanthropists – but thinks the best solution is better transparency on both sides. “The reality is that there is definitely a power dynamic. You cannot get around that – it’s there,” says Miranda. “However, what needs to happen is that donors need to see charitable organisations as professional partners.” Miranda says that when a philanthropist donates money to a particular cause, they need to specify exactly how they want that money to be used up front – and figure out ways they can have some assurance that their donation was activated appropriately.
Nazreen Visram, Head of Charities at Barclays, advises that both charities and donors should learn more about each other from the outset – and also keep in mind some of the additional benefits that benefactors can offer.
“Charities can do more to inform potential donors about how their sector works, helping donors feel more in control,” she says. “And charities should also remember that donors often bring more to the table than just a cheque book – many have applicable skill-sets, influence and other useful cards to play towards a common goal.” Charities should view HNW donors as potential strategic partners rather than a one-way source for hand-outs.
Collaborative charities such as Cancer Research UK encourage donors to contribute their time and expertise via initiatives such as its Grand Challenges, where donors are invited to advise, attend panels and run workshops. As leading philanthropist Bill Holroyd CBE and founder of OnSide Youth Zones says: “Use your skills and bring your business brain to the table. I help to grow businesses – that’s what I do. Do what you do, do it well, and make sure whatever you support is sustainable.”
As with any business relationship, even with the best intentions, things can go wrong. The important thing to remember is, that the more preparation you do and the more collaborative your mindset, the more likely it is that you will do great work together.
A ‘lack of faith’ between wealthy individuals and charities is a key obstacle to giving in the UK, our latest report Barriers to Giving has found. The UK’s philanthropic donations amount to just 0.5% of national GDP, compared with 2.1% in the US. This lack of major donors is having a considerable impact on UK charitable funding.
There is no doubt that philanthropy is a powerful force, transforming lives on both sides of the giving equation. But many misunderstandings and barriers exist around the subject, deterring potential givers from donating money and time to deserving causes.
