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How philanthropy fills the gaps

By Dan Corry 2 July 2024 3 minute read

This article was originally published on 1 July 2024 in the MJ.

In ‘normal’ times, getting philanthropic money into local areas with many needs is very valuable. In times of fiscal tightness following a long period of prolonged austerity, Covid, wars, and a cost of living crisis, it is much more than a ‘nice to have’. That is why the next government should think hard about how to work with philanthropy at a place-based level–to encourage and promote it and ensure it is effective and impactful.

Policy-makers sometimes look wistfully at the USA, where a lot of people who make it in their career pump funding back into the towns they came from – sometimes fairly deprived towns. We have less of this and how we get more of it is an important question.

The outgoing Conservative Government has made overtures to the philanthropy and grant-making world, for instance, doing joint funding in certain areas. But it–and civil society as a whole–was downplayed in its Levelling Up agenda–a shaky plan that died the death in the Truss/Sunak premierships. But more is to be done if the will is there.

Previous Corbynite incarnations of the Labour Party leadership positively disliked philanthropy and charities, seeing it as paternalistic, necessary only because of a lack of state funding and a consequence of not strong enough progressive taxation. But a more pragmatic Starmer-led Labour government would not be ideologically hostile.

So why should such a government care about philanthropy, especially place-based philanthropy?

A thriving civil society is the backbone of many communities. It is better in many ways at delivering certain services, especially to vulnerable people who find it hard to trust those in positions of authority – such as social workers, teachers and police officers. A properly funded civil society would help a probable Labour government deliver on many of its five missions if it comes to power.

One of these is about achieving good growth in all parts of the country. Place-based philanthropy can greatly help in delivering spatial equality, a major aim for a Labour government.

But civil society organisations need funding. More funding from the state would be welcome, of course, but many do and will continue to rely largely or partly on donations from philanthropists and independent grant-makers.

Also useful to a new government is that philanthropy can take the risks those in charge of public spending feel unable to make. So, if you want to try a new method of helping kids at school, dealing with mental health or reducing re-offending rates, then getting initiatives funded by philanthropy to test their effectiveness makes a lot of sense.

The state will always have an endless list of competing priorities to fund and not enough money to go around whatever the fiscal situation. Philanthropy can fill the gap. Some of this is for things like funding art exhibitions and buying paintings for the nation, but a lot can be for supporting niche services for particularly vulnerable groups.

A new government should not shun philanthropy or ignore it. That does not mean it needs to give more tax breaks to encourage such philanthropy. Issue of fairness aside, it is not clear whether this really works because the costs of the tax break is often not outweighed by the extra money given. On the other hand, focusing tax breaks like gift aid on more deprived areas could have a major impact as the National Population Council has argued.

At the centre of Labour’s Whitehall, having a philanthropy ‘champion’ in a key role makes sense. Mood music in speeches by senior ministers matters too.

Local community foundations who often do a great job of directing this type of philanthropy – linking up funding support with local councils and other actors – should be encouraged and government should think about how to get community foundations in deprived areas where they do not yet exist.

In addition, a potential incoming Labour government is likely to be devolving more power in various ways to the mayoral combined authorities, something signalled strongly in its manifesto. These mayors also need to think how to harness philanthropy into their plans, to include them in their strategic decision-making.

Labour said little about any of this in its manifesto, no doubt worried it could look like Big Society Mk2–where an emphasis on civil society picking up the slack caused by the austerity-delivering Coalition Government was seen as a big mistake.

Of course philanthropy is not everything. In pure cash terms, it is small compared to the state. It is, by definition, spent where the philanthropist or grant-maker wants to spend it and how they want to spend it. So, it often does not reach those people and places most in need.

It also cannot promise the kind of sustained substantial investment many areas will need. But it can be a part of the mix and there are enough wise heads in the Labour leadership not to throw this opportunity away.


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