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Giving it Away and Making a Difference
There has been some very interesting research published recently in 'Why rich people give' (Teresa Lloyd, Philanthropy UK, 2004) which analyses in some detail the attitudes, intentions and aspirations of rich people who support charities. This showed that people give to charities for a whole range of reasons. Donors across a wide range of causes and types of support demonstrated a desire to:
- Make a difference and be a catalyst for change.
- Be appreciated and respected for their support, and for the expertise which is the source of their wealth.
- Be concerned with governance, effective management and accountability.
- Have relationships with senior staff in the recipient organisation, including those who deliver the mission, ultimate beneficiaries (where appropriate) and other donors, to reinforce the commitment to the cause and make giving enjoyable and fun.
Whilst some said that they sometimes responded to appeals, these donors all reported that the most important determinant of major sustained charitable giving was a passion for the cause they supported. This confirms a central part of our consistent message to clients that it is essential to develop long-lasting relationships with major donors, and encourage their progress through the Curve of Involvement so they become deeply involved in the charity.
We often say that, as consultants, we act as much in the interests of donors as in those of our charity clients. In encouraging donors to become involved we must help them think about how to give their money wisely and efficiently. This can be a challenge in its own right. Here are some thoughts for donors of all levels from the average individual up to the major donor:
Donors should give tax-effectively:
Use Gift Aid and let the Chancellor top up your gift. Giving shares can, in the right circumstances, give even better tax advantages to the donor.
Give regularly:
Use standing orders or covenants. This gives the charity a bedrock of income which it knows it can rely on.
Establish a Charities Aid Foundation Fund:
This is a tax-efficient fund which allows you to distribute gross income. It is particularly useful for donors who support a range of charities and like some freedom as to where they give their money tax-efficiently.
Support local charities through your local Community Foundation:
Community Foundations act as a focus for charitable endeavour in the area. They provide a pooled mechanism for local people to give to local causes. Essentially they do whatever their donors want. They offer a service to donors, a vehicle for giving, and their extensive knowledge of local charities and local needs can help donors target their money where it can be used to best effect.
Establish your own charitable trust:
For the very wealthy, this provides a lasting legacy for good work and is the tried and trusted route for many people who want to take philanthropy seriously. There are several organisations dedicated to helping people establish charitable trusts. A much cheaper alternative is to set up a named fund within a Community Foundation, though this is usually only suitable for those who want to give funds locally.
Our job as fundraising consultants is as much to encourage good giving as it is to invite support for good causes. The more the donor enjoys seeing their support achieving real benefits, the more likely they will be to support again and again.
(January 2005)