Private Bank Barriers to Giving Research into the evolving world of Contents 3 Introduction 4 Methodology 5 State of play and missed opportunities - Sources of donations - Donation triggers 8 Barriers to giving - Anatomy of the barriers - Other financial priorities and obligations - The responsibility of others - Misunderstandings between charities and the wealthy - A lack of control 19 The future of giving - Summary - ‘Youthification’ of - Global causes may go viral – at the expense of local ones - Cause-based giving could reframe major gifting - Honesty and consistency in reporting - Qualitative assessment of the charity’s effectiveness 22 Conclusion: bridging the gap

Barriers to Giving | 2 Introduction

In 2009, in the aftermath of the , Barclays conducted research into charitable giving, focusing on the barriers to giving affecting wealthy individuals in the UK and US. One of the report’s key findings confirmed the difference between the philanthropic cultures of the two countries. Though they had similar levels of income and , wealthy individuals in the US gave a larger proportion to charitable causes than those in the UK.

Ten years on, philanthropy for the There are now an estimated 1.1 million wealthy in the US is as important multimillionaires (those with £5m+ as ever but this is in stark contrast in investable ) outside of the US, to much of the rest of the world. all of whom have the means to make In 2018, more than $425bn1 was major donations. And the reality is raised and donated in the US, that while many of them do give to equivalent to 2.1% of gross domestic charitable causes, their giving is often product (GDP). However, the total of limited – they are givers but not, just over £10bn raised and donated according to the standards of the in the UK2 in the same year equated charitable sector, major givers. to just 0.5% of GDP3. What motivates them to give in the One of the reasons for this, as first place, why do they give the identified in the original report, is amounts they do and what is holding culture. In many countries outside the them back from giving more? US, philanthropy and charitable giving are less embedded in society and are This report answers these questions often seen as an optional activity, by examining the giving behaviour of even among the very wealthy. However, global multimillionaires outside the this relatively small population of US and identifying the current barriers highly successful individuals is growing. to greater giving.

1Giving USA 2019: The Annual Report on Philanthropy for the Year 2018 https://givingusa.org/giving-usa-2019-americans-gave-427-71-billion-to-charity-in-2018-amid-complex-year-for-charitable-giving/ 2CAF: UK Giving 2019 https://www.cafonline.org/about-us/publications/2019-publications/uk-giving-2019 3Office of National Statistics – Gross Domestic Product: chained volume measures: Seasonally adjusted £m 30 September 2019 https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/abmi/qna

Barriers to Giving | 3 Methodology

This report was authored by Savanta on behalf of Barclays Private Bank. It is based on three main strands of research, conducted by Savanta in Q2 2019.

The first is a survey of more than 400 • Martin Brookes, Director, • Alison Morse, Senior Director, high net worth individuals (HNWIs) Brookes Impact Partnership Geneva Global in key wealth markets outside the US. These included the UK, France, • John Canady, CEO, • John Nickson, author, donor and Germany, Italy, Saudi Arabia, UAE, National Philanthropic Trust UK philanthropy campaigner Hong Kong, Singapore and India. All participants held assets of £5m or • Zaki Cooper, Director, ZC Consulting • Dhivya O’Connor, Former CEO more. These hard-to-reach individuals of Children, Cancer UK, and specialist were asked questions about their past, • Etienne Eichenberger, Managing in HNW Donor philanthropy current and future giving as well as Partner, WISE Philanthropy Advisors their attitudes to charities and causes. • John Pepin, Chief Executive, • Jo Ensor, CEO of Philanthropy Insight Philanthropy Impact In addition, data on the charitable giving of ultra high net worth • Ludwig Forrest, Philanthropy Adviser, • Petra van den Houten, Head of individuals (UHNWIs) – people with King Baudouin Foundation Individual Giving, Manchester assets of more than £30m – was sourced from Wealth-X. • Fabian French, Chief Executive, • Joanna Walker, Head of CAF Private UK Community Foundations Client Philanthropy To help interpret and contextualise these findings, Savanta interviewed • Ceris Gardner, Partner and • Paddy Walker, J Leon more than 25 experts and Head of Charity and Philanthropy, Philanthropy Council intermediaries from across sectors Maurice Turnor Gardner LLP connected with philanthropy. They We would like to thank all our included philanthropy authors, • Sianne Haldane, Head of contributors for their time and effort academics, philanthropy consultants Planned Giving Philanthropy, in helping to create this report. and intermediaries, family office Cancer Research UK professionals and private client lawyers such as: • Anna Josse, CEO and co-founder Prism the Gift Fund • Emma Turner, Director, Philanthropy Service, Barclays Private Bank • Plum Lomax, Principal: Impact Investing, New Philanthropy Capital • Dr Beth Breeze, Director and co-founder, The Centre for • Carlos Miranda, Founder, I.G. Advisors Philanthropy, University of Kent

Barriers to Giving | 4 State of play and missed opportunities

Sources of donations illiquid assets such as their business, increase for charitable causes. other financial investments and Given that there are approximately real estate. 2,000 outside the US4, Donating from income encouraging just 5% of these To understand the levels of giving As a result, very large gifts from to increase their annual giving to among HNWIs, it is important to assets tend to be made by a small £23.5m would raise an additional examine the different sources of pool of very wealthy people with £2.4bn a year for charitable causes. wealth available to them when it significant liquid assets, in fact just comes to making decisions 0.6% of the UHNW population Legacy giving about gifts. outside of the US. There are around Of course, when they pass on, the 750 UHNWIs giving more than wealthy leave their assets as part of For many individuals, their annual £500,000 a year. Around 300 more large estates to be dispensed with income is the most relevant source are making annual gifts of around according to their instructions. This and, while this is usually substantial, £7.5m and less than 10% of that is another potential source of gifts the real figure is the amount that number, who are almost all for charitable organisations. However, is available after other costs and billionaires, are giving on average the amount that is made available responsibilities have been taken £23.5m a year. can often be what remains after other care of. Their living costs can be legatees have been provided for. considerable and a great number Encouraging a small proportion of also use their income to provide for donors with the greatest potential On average, around two-thirds members of their family, particularly to give more could yield a massive (67%) of a multimillionaire’s estate in relation to education.

The proportion of giving from ’ incomes is remarkably low – on average, around half of Donations by HNWIs as proportion of income non-US, global HNWIs donate less than 1% of their annual income. If every individual in this group 47% Donate <1% were to increase their donations to this amount, there would be an additional £800m in annual global funding for charitable organisations – UK multimillionaires alone would provide an additional £46.4m.

Donating from assets Multimillionaires’ assets are often the 53% Donate 1% focus of evaluations of their giving or more capability – particularly their capacity for more substantial donations – but these are often not the most reliable indicator of how much they can give Source: Savanta survey at that point in time. During their lifetime, an individual’s net worth can often be tied up in fixed or relatively

4Wealth-X

Barriers to Giving | 5 State of play and missed opportunities

is promised to family or friends would like it to be donated. And it with around a quarter (24%) made is also the case that these estate available to charitable causes. pledges are difficult for charities This amounts to an average of to work with because they cannot £1.88m per estate of those worth plan for them. This limits their at least £5m. If just 5% of non-US ability to use future pledges as part multimillionaires fulfilled these of their strategic vision. Added to estate pledges, the total would this is the sad reality that these equate to more than £100bn of donors never get to see the impact charitable funding over the next their gift has on the causes that 10 years. matter to them.

While this is encouraging, such Donation triggers levels of intended generosity are met with scepticism, as are estate Financial security pledges in general, by those who Among the wealthy, reaching a work in the charitable sector or point of financial security is not are advisers to it. In their view, a primary trigger for making legally binding commitments to especially large donations. the suggested level of intent rarely Only 30% of wealthy donors state materialise. It is difficult for the that it started their giving journey. executors of estates to interpret Perceptions of financial security an individual’s wishes without an are very subjective, and our panel accompanying plan or precedent suggest that feeling as though you of past giving to guide how they have enough wealth is a qualifier

Source: Wealth-X; Savanta survey

Barriers to Giving | 6 more likely to open the door to smaller ‘They’re either angry about donations, at least initially. something and want to Philanthropic influencers change it, or they’re There is a clear role for others in passionate and excited persuading HNWIs to make donations. about something and want In recent years, major philanthropists, particularly the signatories of the to change it. There needs Giving Pledge, such as Microsoft to be that really strong co-founder Bill Gates, have been emotion that drives them lauded as role models. However, the proportion being inspired by a public in their giving.’ figure to start their giving is relatively Director, Philanthropy Consultancy small (25%). However, personal experience goes However, generous-minded friends beyond events that affect HNWIs and family can influence the wealthy personally. The experience of ‘visiting by encouraging them to begin their other countries and seeing the giving journey. Being ‘encouraged by conditions’ (27%) can highlight and family/friends’ trigger over one in bring to life the problems affecting three (34%), showing how the culture the wider world. Reactions of sorrow of those around the wealthy can play and anger can ultimately provoke quite a significant part in donations. them to do more to make a difference through charitable giving. Passion for change The most significant triggers for HNWIs to make larger donations come from personal experiences. For many people, deep sadness, grief or anger relating to a ‘personal situation’, such as the illness of a relative or an unfortunate event, will inspire them to become a more involved and generous donor, their passion to force change igniting their sudden willingness to make large contributions.

Barriers to Giving | 7 Barriers to giving

Barriers to giving

Anatomy of the barriers • A lack of control on how a donation better relationships, particularly to It is often expected by charities that is used is also cited as a major reason overcome a lack of faith in charities. HNWIs will make more ‘major’ for not being prepared to make large donations given their personal wealth, donations, as well as a lack of faith in There is also a difference in how long or that there will at least be a positive charities and how they are run these issues remain barriers. Some of correlation between their increase them – such as having other financial in net worth and the increase in the • Additionally, many have a belief that priorities or viewing large donations amount donated. However, this is it is the responsibility of others to as the responsibility of the state or not the case. Many individuals do not provide this funding, whether the someone far wealthier – are long-term increase their donations in proportion state or individuals who are wealthier issues that grow over time, even with their wealth and, in some than they are through generations, and can block cases, they cease making donations entry to major giving. Others are more altogether or never even start: However, the impact of these barriers short term in effect – such as feeling differs. Some are fatal, acting as a lack of control over donations There are a multitude of reasons ‘donation blockers’ that prevent the made or having a poor experience why HNWIs do not donate or do not development of relationships with when making large gifts in the past donate more, but some are more charities and, ultimately, inhibit – which tends to limit the amount significant than others. larger donations. Other barriers are given but can also end relationships generally less final and simply limit in a moment. • The first of these is that these the individual’s propensity to give individuals have other financial larger amounts in the first instance. priorities and obligations that They are not considered permanent take precedence over making or irreversible, and there is evidence larger donations they can be overcome by building

Reasons for not donating more

Other financial obligations 28%

Don’t have control over how is used 25%

Don’t have faith in how charities are run 25%

Not enough knowledge or experience with charities 23%

Responsibility of those wealthier 23%

Responsibility of the state/government 20%

Extra sums aren’t large enough to have an impact 18%

Source: Savanta survey

Barriers to Giving | 8 The impact of the barriers

Long-term, Shorter-term, more prevent entry limiting on amount but can end relationships

Other financial The Lack of faith in Lack of Poor priorities and responsibility and knowledge control experiences obligations of others of charities over funds

Other financial priorities and obligations Just under a third (28%) of HNWIs say business and family spending commitments take precedence over giving more to charity. It is worth considering that despite their wealth, these people can be somewhat financially captive. Their various obligations, such as providing for and educating their children, buying and improving their homes, going on holidays with their families, investing in their businesses or simply preserving their wealth for later in life (to safeguard against illness and old age), can use up a remarkable amount of income and resources, no matter how large these might be.

Barriers to Giving | 9 This barrier helps to explain why This is an understandable and potential for philanthropy, enabling the amount given from income is so long established approach but them to make more considered low. Many of these individuals focus one that leaves little room for donations and generate more of an on creating wealth throughout discussion of and, therefore, impact. Trusted advisers are in a their lives and careers, with their less consideration and resource privileged position and can play a role income prioritised on enhancing for more advanced philanthropy. in helping clients plan for philanthropic or maintaining their lifestyle. giving. Not only are they able to show ‘Giving to charity is mostly they approach the issue from their ‘They want the bigger clients’ point of view, they are also well going to be what you can do placed to help navigate some of the house and they want … with money left over, that you challenges that uninitiated individuals their children to be privately feel you don’t need. I don’t might encounter. educated… There are all these think enough people know Seizing the offer of philanthropic other things that, I guess, what they don’t need, planning as an opportunity can they feel are priorities.’ because people are quite introduce a more holistic approach Head of Major Giving, Charity to the client relationship. This tends cautious and you’re banking to result in more committed clients, Though this may be viewed as on what might go wrong.’ fostering deeper relationships in every materialistic, it is quite apparent that Philanthropy Adviser respect. For example, discussions the multimillionaire lifestyle can be about succession and costly to maintain. It is also often the This lack of structural planning to can introduce questions about ‘giving case that these wealthy individuals include philanthropy as a financial while living’, encouraging earlier assist their friends and family obligation means charities tend to engagement with the causes clients financially, so some of their get the residual income after all are looking to support. expenditure arises from concern for other objectives have been fulfilled. those they love and care for and is This is not always caused by the The responsibility of others not purely the result of self-interest. wealthy’s reluctance to give – it is The notion of responsibility when it more the result of a lack of discussion comes to charitable giving can be a The case for a more holistic view with advisers or charities, meaning long-held and deeply embedded view. of there is not a considered and Individuals who grow up in cultures Advisers to these individuals thorough approach to thinking about or families where the responsibility consistently focus on the three major giving. Advisers could help for helping others, particularly among stages of wealth: first growth, then willing clients adopt a more strategic the wealthy, is clearly accepted may preservation and, finally, succession. approach that gives a greater financial find it hard to understand how others

Source: Savanta survey

Barriers to Giving | 10 from different societies and least £5m, multimillionaires are The passing on of responsibility backgrounds fail to acknowledge this. extremely powerful financially and to wealthier people by these fully capable of making a huge multimillionaires is also exacerbated However, in many national cultures impact individually, not to mention by the high-profile nature of the outside the US, there is a belief as a collective force. most celebrated philanthropists among wealthy individuals who give making vast commitments to causes. proportionately little, or sometimes However, many of these individuals Many of these are multibillionaires, nothing at all, that philanthropy is the do not feel they have the financial feeding perceptions that the smaller responsibility of others. muscle to make a difference. Around sums HNWIs can contribute are two in five (42%) consider that the inconsequential. Our experts identified That over half (54%) of non-US amounts they are able to give would that part of this issue is a lack of role multimillionaires consider it is the be insufficient to make a real impact models with lower levels of wealth, responsibility of the state, rather than and it was acknowledged by sector who are well known and perceived to themselves, to support charitable experts and advisers that many be making an impact. organisations’ causes is a personal wealthy individuals legitimately decision influenced by the prevailing question the impact of their donations ‘Are there enough public political and fiscal environment. when considering the scale of the In regions and countries with high tax problem at hand. role models for people at regimes or state socialism, the wealthy lower levels? I don’t see often consider that because they This is fed by their own definition of them or know who they are and others pay a large amount of tax, a major donation, with those in the it is the responsibility of the state to study considering a major gift to be necessarily. There are great provide for the needs of society. around £540,000, which is often much role models of big givers, higher than their own total giving over and they have spent a lot For instance, in France where state the course of a year. The perception of socialism is widely accepted and the feeling unable to make a philanthropic of time trying to encourage state provides many services, 71% impact also feeds another belief other people to be a lot agree in the state’s role. In contrast, held by three-quarters of non-US more public with what in the Middle-East where the state has multimillionaires: that it is the a far smaller role and religion takes a responsibility of those wealthier than they’re giving. But these larger role, the religious requirements themselves to support these causes. people, they’re billionaires.’ of zakat in Islam – the annual giving of Director, Philanthropy Consultancy 2.5% of accumulated wealth – only one There is greater harmony on this point in three (33%) agree. between the wealthy, the sector and philanthropy advisers with the This is not a view the charitable sector reflection that individuals of very great (or philanthropy advisers) share. They wealth have a greater moral obligation believe that these wealthy individuals to give and the amounts they are able are surely capable of seeing that states to donate mean they can make a fall short in providing for all the needs serious, immediate and often strategic of society and, with wealth levels of at impact on an organisation and cause.

Barriers to Giving | 11 Taking responsibility Reflecting what is socially acceptable more interested in global issues and These views – particularly the for the wealthy in their social circles inequalities and can see their parents’ misconception that the amount they can influence their behaviour. wealth as a tool to be used in could give would not make much of Hence those in the social milieu and philanthropy. They can also be part an impact or make them a serious peer group of the wealthy can be of wider discussions about succession philanthropist – can be very hard set instrumental in encouraging and building a multi-generational, in the wealthy. However, contextual philanthropy. Around a quarter (24%) family approach to philanthropy. understanding and education can of those making proportionately larger help to soften these perceptions. donations started to do so when they Misunderstandings between realised their peers were major givers, charities and the wealthy One example is that greater exposure highlighting the value individuals place Being able to trust organisations and to conditions in the wider world in doing what is expected. At very the people within them is central to can persuade some to accept more high wealth levels, philanthropy is many wealthy individuals’ ethos and responsibility and make larger almost a given and is expected socially. values, not only in businesses and donations. Bigger donors have often Those who do not give can feel investments but in all aspects of their been more affected by witnessing awkward and might not want to feel left lives. Though many have taken risks major issues, crises and living out by leaving philanthropy to others. to achieve their wealth, they can be conditions around the world, often For those who see this wealthier very cautious in their efforts to protect through their own travel but also group as having a greater responsibility, what they see as hard won and are through engagement with topical news of people in their immediate careful about how their wealth is used issues. Over half (52%) of those who circle – at the same wealth level – and who they entrust it to. gave £500,000 or more donated to making bigger gifts and more global rather than local causes. substantial commitments to charitable Unfortunately, many wealthy organisations can help to normalise individuals lack the requisite faith and Pointing out the inefficiencies of perceptions of major giving in their trust in the way charities are run, with states and governments is not likely peer group. Major fundraisers tell us one in four identifying this as a major to meet with significant disagreement that even strangers multimillionaires barrier to giving more and advisers among the wealthy. They will be meet at events, who talk passionately recognising this as a serious problem. aware that governments, no matter about their giving, can trigger an This is possibly linked to their lack of how well funded, will not be capable interest in doing more. knowledge and experience of charities of providing everything that society – which is also identified as a major requires, but also that official However, it is not only wealthy barrier by a similar number (23%). processes can be slow moving and contemporaries who exert an influence. lacking innovation due to their often Friends and family can also make a big Our experts also identified that risk-averse nature. It is clearly not only impact on changing HNWIs approach charities can lack an in-depth an issue of finite resources but of an to giving. Experts see HNWIs’ children, knowledge of the motivations, unwillingness to evolve. Charitable in particular, having a role in changing lifestyles, interests, challenges and organisations, on the other hand, the way their parents see the world and wider skillset of their largest potential particularly when powered by wealthy how their wealth can make a difference. donors. Together, misconceptions and donors, are not so hampered. The younger generations are often assumptions on both sides perpetuate

‘Figuring out [their] relationship with the state… to answer this [they’ve] got to say, “What am I doing that’s adding value the government can’t?”’ Philanthropy Author and Academic

Barriers to Giving | 12 a mismatch in understanding and partly down to the nature of wealth, However, it can also be difficult for expectations between the two groups. notably the difference between money organisations that make the opposite that is immediately accessible and assumption – that getting close to and This propagates a negative ‘us and ‘paper’ wealth that is illiquid. personal with donors will inevitably them’ culture with each side making yield larger donations. Here there is assumptions about the other instead Another challenge can be the biases a fine line between a productive of encouraging open, frank and held by those working in charities relationship with a shared goal, where tolerant discussion. against the wealthy and the wealthy the organisation’s officers are trusted about charitable organisations. Our and even admired by the wealthy ‘Lack of faith often comes expert panel of authors, academics, individual, and a situation where the consultants and professionals have arms-length nature of the relationship from lack of understanding. observed that there can be a lack is compromised by an over-eagerness I spend quite a bit of time of unprejudiced dialogue between for proximity, particularly when that explaining to clients what a both parties that prevents them appears to be for the sole purpose st from achieving what is essentially of requesting ever larger donations, 21 century charity is really a shared goal. without much else in return. like: challenges, competition, under-resourced, In the US, where philanthropy among But there are assumptions on both the wealthy is more commonplace sides. In the same vein, wealthy understaffed, replication in and where wealth creation is generally individuals hold a number of some cases… Once they celebrated, fundraisers applaud the preconceptions about the charitable start to understand, the success of their donors. They feel they sector. Our experts often felt this understand what makes the wealthy is due to a lack of knowledge about conversation shifts to their tick and they shape the relationship the organisations, which can be being more sympathetic as being one of teamwork rather extrapolated out to the sector as and open to learning more.’ than merely extracting funding. a whole. But beyond the US, a lot of charitable Director, Philanthropy Service organisations in many countries – The first typical assumption the in particular those not set up for major wealthy have about charities is that Negative assumptions donations – do not understand the they may not run or use resources Charities sometimes make wealthy in the same way. In some efficiently. Some wealthy individuals assumptions about the wealthy that cases, individuals working in these have been unfortunate to have are more likely to turn potential donors organisations do not view great wealth experienced this at first hand, but most off philanthropy completely than open in a positive light; a common narrative impressions are based on hearsay and them up to the idea of giving more across a wide section of many isolated incidents reported in the media. and becoming more involved with societies. Starting these relationships These individuals have taken this to be charities. One assumption relates to with a negative perception of the typical of the sector as a whole. their fortunes – charities can presume donor can impact the potential for a that these individuals can always give deep and meaningful relationship and, ‘From our own experience, more, simply because they are very consequently, the wealthy individual’s wealthy. In a number of cases, this is commitment to the cause. charities are not necessarily efficient with the money they’re given… for us, every penny that you put somewhere, no matter if it’s for a charitable donation or if it’s an actual investment, it has to generate much more than it’s actually worth.’ Family Office Director

Barriers to Giving | 13 The media have also fed another while at the same time demanding Charities therefore make assumption of the sector by wealthy them to be run with high levels of assumptions about the intent individuals – that the organisation and business-like efficiency and a sense behind the gift. At the lower end oversight of charities are questionable. of financial prudence that would be of the scale, a donation of below Scandals involving charitable rare even in the commercial sector. £5,000 is often labelled as a organisations can often be seized On top of this, there is also a degree ‘go away’ donation – the assumption upon as confirmation that the whole to which wealthy individuals expect being that if the wealthy individual sector conducts itself in a similar way. the highly skilled professionals who were more interested in philanthropy This reductive narrative immediately run these organisations to accept or the cause itself, they would have sets potential donors against charities, a ‘moral salary’ in lieu of market pay. donated a larger amount. However, which can lead to a hesitancy to this is often assumed without any engage with charities, preventing the The result of both charities and knowledge of the individual’s prior perspective that both are on the same multimillionaires’ preconceptions is a experience or history of donations team working toward the same cause. mutual misreading of intentions, a lack or without any better engagement of connection and poor relationship to understand their goals. In these ‘They have a broad-brush development – a vicious circle that only cases, a charity is often afraid to serves to worsen the perception of an engage properly and ask for more. lack of confidence in the ‘us and them’ culture. HNWIs may also sometimes be whole sector. In the same testing a charity with a small way as the business sector, The meaning of a donation donation before committing to One example of this misreading of more significant support. you have good organisations intent is the interpretation by charities and less good ones. People of wealthy individuals’ donations. lack the confidence to do This can depend on a charity’s annual revenues and, in particular, how good due diligence and work sophisticated the organisation is out which ones are good.’ when it comes to major gifts. Wealthy Director, Philanthropy Consultancy donors don’t often communicate the meaning behind their donation to the chosen cause, leaving a vacuum And despite their apparently low of understanding. expectations of the sector, some wealthy individuals expect charities to conform to especially high standards. For one thing, their status as charities carries unrealistic expectations of the organisations’ moral integrity, Donated Classification Interpretation amount by the charity

I’m not engaged with <£5k ‘Go away’ your cause and this should placate you

£5k - <£50k Convertible I like you but I’m not committed

£50k+ Major I’m engaged and committed

Barriers to Giving | 14 A gift of more than £5,000 but less The dictionary definition of a This reframing of its meaning and than £50,000 is, for many charities, philanthropist as ‘a person who seeks associations has made the younger considered to be a ‘convertible’ to promote the welfare of others, generation of wealthy individuals donation, which is interpreted as a especially by the generous donation begin to reject the title ‘philanthropist’ message of vague interest but not of money to good causes’ seems a in favour of more politically charged commitment. This is despite the fact perfectly neutral description. However, monikers such as ‘activist’, that infer that many of the donors may view its common association with the creation of sustainable impacts a gift in this range as being very large, individuals who have vast personal and ‘grass roots’ results. certainly if it is significantly larger fortunes – wealth that is often than their previous donations. implied or explicitly voiced by parts For others, the associations with the of the media as being of immoral philanthropist label may push their It is at £50,000 that many charitable proportions, particularly in countries giving towards anonymity. Donor- organisations deem a gift ‘major’ and with large wealth divides – means advised funds, a financial vehicle that interpret this as a sign of engagement that ‘philanthropy’ and ‘philanthropist’ allows donors to make irrevocable and commitment from the individual. have become burdened terms. contributions to a charitable institution But, again, this approach lacks to manage and grow as an investment, relativity on the side of the giver: ‘I think one of the things and then only be gifted to charities, if they are used to giving far larger may become more attractive. They gifts to other organisations, assuming that’s particularly current promise anonymity, privacy and the the same level of commitment may now is that there is so much opportunity to be philanthropic out lead to misplaced efforts to involve criticism towards larger of the limelight, the latter increasingly them further. bringing more controversy than donors, I actually find it quite anything else. Navigating the negative reputation a concern. I worry that it of philanthropy might put the major donors However, it is not always an accidental misinterpretation by either wealthy off giving large gifts because donors or charities that causes distance of the backlash.’ between the two. Third parties can also Head of Major Giving, Charity exacerbate the problem. For example, parts of the media and the The fact that philanthropy is also commentariat are imbuing the terms often connected with tax-efficient ‘philanthropy’ and ‘philanthropist’ foundations results in the term being with negative connotations. connected with more bad than good.

Barriers to Giving | 15 ‘Donor-advised funds are expertise garnered in knowing what organisation can challenge pre- going to be a dominant area. works and what doesn’t work in conceptions of inefficiency and help solving the issues being targeted. value their expertise in their cause. What you’ll find is that the These can overcome a lack of faith and wealthy who have their own also provide both sides with a valuable Finally, intermediaries suggest that trusts and foundations education into how the other thinks charities consider mirroring some and operates. In particular, both sides aspects of the highly service-focused might have a special fund can address the problematic ‘us and world HNWIs are used to. This does with a donor-advised fund, them’ culture by tackling some of the not mean more overt displays of because then it’s anonymous. issues that exacerbate the situation. deference, as these are often transparently inappropriate. Instead, There is no transparency First, experts recommended addressing it involves approaching donors without as there would be in having the major-giving fundraising strategy prejudice, with respect and gratitude, your own trust.’ and team by taking a more holistic not just for their gift but for their time approach to wealthy donors. Our panel and input too. Director, Philanthropy Consultancy suggested that charities should be wary of the perception of being only Bridging the gap interested in the financial contribution To overcome the void of understanding of the wealthy. They should get to between wealthy individual donors know the donors and consider the and charitable organisations, bridges value of their other skills and must be built that enable each side to experience, often built over many understand the other more thoroughly years of business and/or professional and without prejudice. work, as well as their influence and potential network. Better communication can be achieved through a more sympathetic Second, donors can take a more and open-minded approach on both business-investor relations approach sides. Our panel of contributors to the relationship. A more hand-in- suggest that charities can spend more hand strategic partnership helps time discussing the challenges they create a professional bond of trust face with potential large donors. between charities and wealthy And the wealthy can approach the individuals. Getting to know the sector with an appreciation of the principal actors within the

Barriers to Giving | 16 A lack of control Charities are also highly concerned Ultimately, the effect of wanting Feeling in control is normal for many that the wealthy will always seek more control can be more disruptive than wealthy individuals. A huge number control over how their giving is spent, is often imagined by the wealthy. of them have attained their wealth by and they often do. These demands And with charities’ default position creating and directing their own for control from the wealthy can cause often to protect against this businesses and so they feel a personal charities to treat potential donors interference too, there is a risk that sense of control over their own future. with suspicion rather than openness. the donation experience will be In addition to this, they often employ A multimillionaire donor taking control much less engaging and fulfilling. professionals to provide a greater over how their money is spent can be sense of control over aspects of their challenging for many organisations, This is another situation where the life in which they have less expertise, not least charities who have a myriad ‘us and them’ culture is apparent. such as looking after their investments of complexities to manage. From the perspective of a charitable and exposure to risk. organisation, ceding control of a ‘They don’t have that donation to a wealthy donor is rarely Therefore, they are not used to lacking the preferable option. First, the control and without it they can feel control over their investment psychology of asking for more control uncomfortable. This can also be the funds. You trust the fund is, to many charities, a signal of a case when it comes to making large manager. You always have lack of trust. Organisations often donations, particularly to see this as a slight to their skills and organisations they have limited to trust intermediaries to management. And, far worse, they experience of and to individuals they do that. But when it comes often view this as part and parcel have only recently met. A quarter of to philanthropy, people of a wealthy individual’s belief that, wealthy individuals think a lack of despite the charity’s specialist control over how their donation is like to be hands-on and experience, the donor feels they spent is a major barrier to giving they like to be meddlesome, know best how to use the gift. charities more money. This is a refrain and they create huge costs that experts and intermediaries often ‘Unless a donor has spent hear and is one that clearly frustrates to the charity that receives the sector. their money.’ years really educating Philanthropy Author and Academic themselves on an issue, it’s very dangerous for them to come in and control the way an organisation works. They will have less understanding and knowledge than the people that are working within that organisation.’ Director, Philanthropy Consultancy

Practically speaking, donors taking control of the path of donations is problematic. The projects that many

Barriers to Giving | 17 wealthy individuals want to focus individuals want to get involved and help them feel more in control and their donations on are not the only really make an impact, such specific relaxed about making a large donation areas that need funding, and many demands can make operations difficult without onerous restrictions, and in specific requests by wealthy donors for some organisations. this there is a role for their advisers as cannot be fulfilled without funding well as the sector. parts of the organisation that they ‘We always want to see where have stipulated they do not want Another factor to consider is their money to support. the money’s going. Even these individuals’ desire for proper within this space, we would preparation and audit. Before making This can lead to a stand-off, where still not want just to give a a business decision, HNWIs are often wealthy individuals and charitable encouraged to conduct due diligence organisations are seeking to champion certain amount but to actually to ensure their investment is a wise the same cause but are unable to see where it will be going.’ one. Many donors seek this same agree on terms that are acceptable Family Office Director rigour for their charitable donations to both sides. – wanting to see thorough due diligence, not simply by reviewing the Wealthy individuals’ intermediaries, and For this reason, many charities don’t account books and considering the experts on the sector, take a different publicise that these are available, cause itself but by getting to know the view of their motives. They believe potentially reducing their overall people involved in the organisation. that the desire for more control is well income. Understanding and An important way to foster trust is to intentioned. Donors want to make a responding to the desires that underlie use a more qualitative evaluation of real impact and are worried most of restricted giving, and incorporating those in charge of delivering the impact their funding will be used in areas other these into fundraising plans, may be of the funding. Meeting the trustees than their chosen one, diluting the a more effective approach for both and senior figures in the charity, in impact and rendering their money and charities and their major donors. some cases even visiting the wider efforts less effective. team in their office, can help engender Understanding how a charity is run a donor’s trust in the organisation as It is common for these individuals to Helping wealthy donors feel a greater a whole and bring them reassurance. view a large donation as they would sense of control over their gifts is a financial investment and want to one solution suggested. This requires ‘If you’re trusting the ensure it performs well. If they feel input from trusted advisers, they lack control over their investments, representatives of the sector and the management team, you will it brings a greater feeling of risk and organisation in question to manage be enthused every time you a sense that they could have made donors’ expectations and help them see them and, as a result, a bad decision. Instead, many would feel more in control. prefer that their donation is ring-fenced you will stay the course for for specific uses. Part of this is educational. Many at least three years.’ wealthy individuals capable of making Philanthropist The challenges of restricted giving large, first-time donations may have This is the rationale for restricted a relatively low level of knowledge and giving, which is available to anyone experience of how charities operate. Wealthy donors can also feel in control who wishes to donate to any charity. In particular, an understanding of by fostering a feeling of openness in This is essentially when a donor has how overly tight restrictions and a the relationship from the outset. the opportunity to be selective about focus on hard solutions may not Transparency promotes trust and where their money goes. Often this achieve the strategic ends they desire reassures the charity that intentions means giving to the charity’s primary without the provision of non-project- are sincere, and a partnership can purpose but imposing certain related expenditure. emerge. This will also encourage limitations on how that gift is used. charities to be more open and honest Knowledge outreach can better prepare with the donor about any issues that However, this practice can be these individuals for what to expect arise in relation to their gift. A project problematic for charities. While they when making major gifts. Our panel of or the charity’s cause can then be are grateful that these generous contributors suggests that this could discussed honestly and proactively.

Barriers to Giving | 18 The future of giving

Summary ‘Youthification’ of wealth discussing succession. Some wealthy Despite the challenges the charitable One of the most promising families are engaging their younger sector and its wealthy donors face developments for the charitable sector members in the family’s giving in bridging the gap between them, is how the younger generation of early on, informing them about the there are signs of a brightening wealthy individuals thinks differently charitable sector and how giving future for the involvement of wealthy to its elders when it comes to works, while highlighting the individuals in philanthropy. charitable giving. world’s problems. Such an approach introduces the children to financial There will not only be an increased Only 32% of non-US multimillionaires management and prudence in the acknowledgment of the need for over the age of 65, who are already context of good causes, something philanthropy, with future generations giving, plan to donate more next to which many young people are starting to reframe the concept for year. However, 75% of those under naturally drawn. a new era, it is also clear that there the age of 45 are actively planning is more information on the positive to give more. There is also evidence ‘[The young] have peer effects of major giving. from charities and sector experts that younger people, particularly the support and there are This is partly the result of the work large millennial cohort, are travelling organisations that are of high-profile philanthropists, more and, therefore, seeing problems encouraging them and whose achievements are reported and imbalances in the world at an widely and easily in this digital era, early stage in their lives. As a result, motivating them. I think and partly down to increasing they are seeking to take action social media has played awareness of how philanthropy relatively quickly. a part in that, too.’ actually benefits not just the cause Director, Philanthropy Consultancy but the donors themselves. MIT ‘They’re younger, travelling scientists, for example, have revealed the neurological benefits of the more and seeing more However, young people are also empathetic thinking at the heart of things, seeing the impact encouraging their parents to think philanthropy. They have shown how of climate and poverty in differently about philanthropy in the benefits on the donor of giving go terms of activism – focusing on beyond the simple ‘feel-good factor’ different countries, they are strategy and involvement in the cause to actually improve their decision more attuned to that.’ rather than simply writing cheques. making, health and wellbeing. Head of Major Giving, Charity Some children are more aware of global issues and the continued need However, there is also a need to This higher level of engagement with for philanthropy and greater social recognise that changes must be such issues has not been overlooked change. Their involvement can have made. Approaches and practices by the older generation either, as two a profound influence on the priorities must evolve to enable charities in five non-US multimillionaires of the family business, for example, and donors to develop better believe their children are more inclined by directing more profits towards relationships and, ultimately, how to charitable giving than they are. charitable giving or emphasising wealthy individuals can be attracted social and environmental investments to major giving. The following are Young people are being educated in the family’s portfolio. emerging trends that were brought in charitable giving by their parents to light in our research. in other ways, particularly when

Barriers to Giving | 19 The future of giving

Global causes may go viral – ‘They have access to the This may also help to give major at the expense of local ones world… They can easily go donors a sense of control and that One of the most outstanding their funding is helping the end achievements of social media over and visit Sri Lanka. Whereas cause. It can attract project donors the past few years is its ability not 30 years ago people wouldn’t to the organisation, rather than only to report events but set the travel and explore, people go attract organisation donors who global news agenda. seek to choose projects of their own and study abroad now or to fund. And such an approach could This is a valuable tool for philanthropic spend a year abroad… more be especially popular among the causes. Anger, outrage and sorrow environmental charities will be younger generation, helping them expressed in relation to tragic world feel more like frontline ‘activists’ events can lead discussion and debate considered and that may be than back-seat ‘philanthropists’. when they go viral on social media the entry point.’ channels, prompting potential wealthy Honesty and consistency in reporting Director, Philanthropy Consultancy donors to consider how they can help. One of the reasons why wealthy individuals feel a lack of control over However, people’s involvement in Cause-based giving could reframe their donations and are reluctant to these trending causes is not always major gifting give more money to charities is that entirely altruistic. As with all social Another trend recognised by charities, many organisations do not media trends, being liked, admired and experts and intermediaries is that communicate with them in the seen to show others a level of concern individuals are focusing on giving to an manner they would like, or in a way for the key issues of the time, as well end cause, rather than an organisation that is likely to build trust, rapport as a feeling of ‘not being left out’, are or charity itself. and strengthen the relationship for key drivers of engagement for many. the future. ‘Increasingly, giving It is also possible that causes that go Experts recommend that approaching viral may receive disproportionate across the board is much reporting with a sense of responsibility attention, funding and shorter-term more about causes and and transparency is more likely to engagement. This can be an issue for projects, with which the result in an improved relationship other causes with a lower profile, with wealthy donors. It is not only which aren’t currently perceived to be donor can identify, than it is about letting them know when things as important or worthy of attention. about organisations and go well but keeping them up to date For instance, younger individuals are institutions.’ when things do not. If a donor often focused on international projects discovers an attempt by a charity and long-term global issues, such as Philanthropy Author and Campaigner to conceal failures – however well the environment. The mass scale of intentioned – such a revelation could ‘awareness’ created through social While there is naturally concern that bring a potentially great relationship and other media, as well as young this pushes the sector towards to an abrupt end. people’s international travel, means project-based restricted giving, which global issues may receive more is problematic for the functioning of A communication programme of attention and funding, whereas more many charities, it is also seen as an honesty and consistency will not only local, less grandiose causes may suffer. opportunity. This trend could be keep the donor engaged and updated, harnessed effectively to highlight it will reinforce the feeling that this strategic projects that need funding is a partnership akin to a business and perhaps encourage greater giving relationship with full disclosure, which that will achieve an end goal. will increase the donor’s trust in the

Barriers to Giving | 20 professionalism of the organisation passion and approach – rather than overall. This, in turn, will avoid just a cause or an organisation. questions about the organisation’s efficiencies, while managing At present, intermediaries admit expectations throughout the process that most wealthy donors approach will minimise any disappointment on assessments of their giving from a the part of the donor. financial perspective or trusted numeric metrics of success. While this Ultimately, the most valuable aspect can lead to a high-level understanding of this approach is the likelihood of of their return on investment, it does it maintaining, restoring or even little to increase their knowledge of, deepening a wealthy donor’s faith and trust in, the individuals running in a particular project or the broader the organisation itself. This can limit cause, avoiding that awkward and the depth of the relationship and, in unwelcome feeling of having wasted turn, the satisfaction a donor derives their time and resources. from giving.

Qualitative assessment of A more qualitative assessment may the charity’s effectiveness actually be more important to many Wealthy individuals also have a role potential major donors. By meeting key to play in reshaping the relationship management, they will gain a better they have with the charitable sector understanding of the people working and, in particular, the type and level of in the charity and what they do. assessment they conduct in the charity itself and the causes it supports. Sector specialists consider that charities have a key role to play in Intermediaries and professionals this. Senior figures in the organisation within this sector suggest that what need to ensure they can tell a story, this demands of them is a more take potential donors on a journey qualitative assessment of the charity’s and inspire them to believe in their effectiveness instead of the more cause and projects. This is the spark common impact assessments. This that can move donors from a position concept arises from the finding that of curiosity and broader trust to a many wealthy individuals end up true belief in the end goal and their investing in people – their knowledge, role in helping to achieve it.

Barriers to Giving | 21 Conclusion: bridging the gap

This report highlights an important preconceptions and prejudices, asking between HNWIs and charities. It will problem in the relationship between more questions and being braver support The Beacon Collaborative’s wealthy individuals and the charities when discussing key issues such as objective to generate an additional they have the potential to support the size of donations and restrictions £2 billion in donations to charity with major gifts. Many of the barriers on gifts, both sides can be brought by 2025. Barclays Private Bank and to forming successful relationships closer together. The Beacon Collaborative will also stem from misunderstandings on work with the Institute of Fundraising both sides, with the relationship often Advisers from across the sectors that to deliver a series of events to help starting from an awkward position engage with the wealthy can also help fundraisers engage and form of misread intent. to build this bridge. They can educate long-term relationships with HNWIs. their wealthy clients on what to Wealthy individuals have other realistically expect from the charitable priorities for their wealth as well as sector and how they can best achieve concerns about how their money satisfaction in giving. is deployed and the success it brings, however that is defined. And those who work with the wealthy Their confidence in the efficiency on a regular basis in different contexts of charitable funding is clouded can inform charities on how the by their lack of trust in the way wealthy think and operate, helping the charity sector operates. them work with HNWIs to achieve bigger and more meaningful results. Meanwhile, charities who make To start bridging that gap, Barclays assumptions about HNW donors’ Private Bank is partnering with intentions, are often defensive of The Beacon Collaborative, a collective their way of doing things and founded to encourage and celebrate sometimes lack an understanding major donors in the UK, and the of the perspectives of wealthy Institute of Fundraising, the individuals in the first place. professional membership body for These issues create a gap between UK fundraising. The partnership aims the two sides. But it is one that to deliver a step change in giving can be bridged. By tackling by building trust and understanding

Barriers to Giving | 22 This document has been issued by Barclays Private Bank and is not a product of the Barclays Research department. Any views expressed may differ from those of Barclays Research. All opinions and estimates included in this document constitute our judgment as of the date of the document and may be subject to change without notice. No representation is made as to the accuracy of the assumptions made within. This document has been prepared for information purposes only and does not constitute a prospectus, an offer, invitation or solicitation to buy or sell securities and is not intended to provide the sole basis for any evaluation of the securities or any other instrument, which may be discussed in it. Neither Barclays, its affiliates nor any of its directors, officers, employees, representatives or agents, accepts any liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this communication or its contents or reliance on the information contained herein, except to the extent this would be prohibited by law or regulation. This document and the information contained herein may only be distributed and published in jurisdictions in which such distribution and publication is permitted. You may not distribute this document, in whole or part, without our prior, express written permission. Law or regulation in certain countries may restrict the manner of distribution of this document and persons who come into possession of this document are required to inform themselves of and observe such restrictions. The contents herein do not constitute investment, legal, tax, accounting or other advice. You should consider your own financial situation, objectives and needs, and conduct your own independent investigation and assessment of the contents of this document, including obtaining investment, legal, tax, accounting and such other advice as you consider necessary or appropriate, before making any investment or other decision. Barclays offers private and overseas banking, credit and investment solutions to its clients through Barclays Bank PLC and its subsidiary companies. Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register No.122702) and is a member of the London Stock Exchange and NEX. Registered in England. Registered No. 1026167. Registered Office: 1 Churchill Place, London E14 5HP. Barclays Bank Ireland PLC, trading as Barclays Private Bank, is regulated by the Central Bank of Ireland. Registered in Ireland. Registered Office: One Molesworth Street, Dublin 2, Ireland, D02 RF29. Registered Number: 396330. VAT Number: IE4524196D. Calls are recorded in line with our legal and regulatory obligations, and for quality and monitoring purposes. In the Principality of Monaco, Barclays Bank PLC operates through a branch which is duly authorised and falls under the dual supervision of the Monegasque regulator ‘Commission de Contrôle des Activités Financières’ (with regards to investment services) and the French regulator ‘Autorité de Contrôle Prudentiel et de Résolution’ (in respect of banking services). The registered office of Barclays Bank PLC Monaco branch is located at 31 avenue de La Costa, MC 98000 Monaco – Tel. + 377 93 15 35 35. Barclays Bank PLC Monaco branch is also registered with the Monaco Trade and Industry Registry under No. 68 S 01191. VAT No. FR 40 00002674 9. Barclays Bank PLC is registered in the United Kingdom under No.1026167, authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The registered offices of Barclays Bank PLC are located at 1 Churchill Place, London E14 5HP. Barclays Bank (Suisse) SA is a Bank registered in Switzerland and regulated and supervised by FINMA. Registered No. CH-660.0.118.986-6. Registered Office: Chemin de Grange-Canal 18-20, P.O. Box 3941, 1211 Geneva 3, Switzerland. Registered branch: Beethovenstrasse 19, P.O. Box, 8027 Zurich. Registered VAT No. CHE-106.002.386. Barclays Bank (Suisse) SA is a subsidiary of Barclays Bank PLC registered in England, authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. It is registered under No. 1026167 and its registered office is 1 Churchill Place, London E14 5HP. Barclays Bank PLC (DIFC Branch) (Registered No. 0060) is regulated by the Dubai Financial Services Authority. Barclays Bank PLC (DIFC Branch) may only undertake the financial services activities that fall within the scope of its existing DFSA licence. Principal place of business: Private Bank, Dubai International Financial Centre, The Gate Village Building No. 10, Level 6, PO Box 506674, Dubai, UAE. This information has been distributed by Barclays Bank PLC (DIFC Branch). Certain products and services are only available to Professional Clients as defined by the DFSA. Barclays Bank PLC. Registered in England. Registered No: 1026167. Registered Office: 1 Churchill Place, London, E14 5HP. Registered Office in India: 801/808 Ceejay House, Shivsagar Estate, Dr Annie Besant Road, Worli Mumbai 400 018. Barclays Bank PLC is a member of Banking Codes and Standards Board of India. privatebank.barclays.com

IBIM9550