Are we on the cusp of a golden era in British philanthropy?
Covid-19 has had both measurable and immeasurable impacts on society, and the ramifications of this pandemic are surely set to play out for a long time to come. However, we think we have unearthed some interesting evidence to emerge from 2020, which may suggest that the pandemic has given a shot-in-the-arm to philanthropy globally.
“We have unearthed some interesting evidence to emerge from 2020, which may suggest that the pandemic has given a shot-in-the-arm to philanthropy globally.”
Download our New Grant-Makers 2020 review
Our latest study which we are launching this week is a review of grant-making charitable foundations and trusts set up in 2020 in England and Wales. It is fair to say British philanthropy has made a significant contribution in the fight against Covid-19, be it through support for scientific research or providing assistance for the social and economic fall-out of the pandemic. The number of new foundations and trusts to have been registered last year suggest philanthropic endeavour has stepped up as a result of the pandemic and its impact.
In 2020, over 1,700 grant-making foundations and trusts were established in England and Wales, according to the Charity Commission's register of charities. It is the highest number of such trusts to be established since 2012, and provides a valuable indication of philanthropic intention. We think it also suggests that the pre-existing trend for High Net Worth Individuals (HNWI) and families to register philanthropic foundations trusts looks set to continue. Let me explain.
Context
Global philanthropy is a rapidly growing sector. Harvard University's Global Philanthropy Report – which we refer to a lot in our blogs because it is, as far as we can see, the most comprehensive study on worldwide philanthropy to date – concluded that the boom in philanthropy is explained by an increase in private wealth accumulation as well as government efforts to encourage philanthropic giving.
The 800 pound gorilla in the room is that the wealthy are getting wealthier. The Observer newspaper in the UK began 2021 with a headline warning that “Richest 1% have almost a quarter of UK wealth”. The startling headline drew on a study that concluded that the top 1% had almost £800bn more wealth than previously that. That inequality is on the rise is not entirely “new” news.
There has been a rising inequality for decades. Perhaps it seems more unpalatable to be reminded of this during periods of economic decline or recession.
In the last 20 years alone, global HNWI wealth has increased almost fourfold in the last 20 years. The Harvard report considers substantial private wealth as "a prerequisite of a robust philanthropic sector”. So at its’s crudest, inequality appears to be a prerequisite for philanthropy.
“Substantial private wealth is a prequisite of a robust philanthropic sector says Harvard University”
And so it shouldn’t be a surprise to learn from Harvard that it estimates nearly three-quarters of the world's philanthropic foundations were established in the past 25 years. As a result the institutional framework for philanthropic grant-making is becoming more sophisticated.
Our latest study looked at the Charity Commission register of charities and, when we put in the filters on for registered grant-making charitable trusts and foundations, we found there were 61,844 on the index. When we applied added another filter – a time frame of 20 years from 2001-2020, we discovered that 45 percent of all grant making foundations and trusts – 27,863 in total – were established in the past 20 years
While the registration of foundations and trusts does not provide any guarantee of the level of future funding, it does reveal an intention of philanthropic endeavour. And given the drama, the tragedy that befell 2020, perhaps the shortfalls and inequalities revealed by the Covid-19 pandemic have served as a reminder to many that, as the British businessman and entrepreneur Matt Moulding concludes, "it is essential that those who are able to help out, do so".
2020 in comparison to previous years
Given the relationship between private wealth accumulation and philanthropy, it is reasonable to assume that a significant proportion of grant-making foundations and trusts registered in 2020 were established by HNWIs and their families, and the sums involved are not insignificant. Our review found that 2,210 foundations and trusts established in the past 20 years spent more than £500k in the latest financial year reported. 1,394 of them disbursed more than £1m in philanthropic grants.
“The total number of foundations and trusts registered in 2020 is the highest since the aftermath of the last economic crisis.”
The other revealing fact is the total number of foundations and trusts registered in 2020 is the highest since the aftermath of the last economic crisis. The years 2008-12 witnessed a boom in the establishment of foundations, coinciding with the last economic crisis. In total 14,000 grant-making charitable organisations were established in these five years. And not all survived; around 3,000 have since closed. So good intentions were not necessarily enduring ones. Even so, when we look at the total of grant-giving trusts registered with the Charity Commission, 13 percent were established between 2008-12. This suggests to us a strong correlation between philanthropy and economic adversity.
“17 percent of all grant-making charitable institutions registered with the Charity Commission expending over £1m in the last reported financial year were established between 2008-12. This is an extraordinary revelation.”
But what makes this period of philanthropic growth so interesting is when we look at those trusts established then and which continue today. 17 percent of all grant-making charitable institutions registered with the Charity Commission expending over £1m in the last reported financial year were established between 2008-12. This is an extraordinary revelation.
On the basis of these numbers, it seems pretty clear that during or in the wake of economic downturns, some of the most generous grant-makers emerge. If the current increase in the registration of foundations and trusts echoes the trend following the financial and economic crises of 2007-8, then we can expect a significant increase in the number of grant-making foundations and trusts being established during 2021 and subsequent years.
While the full scale of funds available for grant-making over the past decade by charitable trusts is unclear, we know from the Association of Charitable Foundations index of Britain’s leading 300 grant-giving foundations and trusts that their assets grew from £48bn to £67bn between 2012-2018. That’s 40 percent growth in six years.
It is also too soon to tell exactly how the new wave of foundations and trusts established in 2020 and coming years will choose to allocate their grants, but according to the Charity Commission register, the most-favoured areas for giving is education: 53% of grant-making trusts established 2001-2020 support educational causes.
It is also worth noting that 655 foundations and trusts (38 percent of those set up in 2020) stated that their grants will be directed towards international causes. This is in contrast to 32 percent of intended international grants over the last 20 years and the 21 percent of all 61,844 grant-giving foundations registered with the Charity Commission. This clearly suggests that there has been an increased internationalization in the UK’s philanthropic sector in recent years.
“53% of grant-making trusts established 2001-2020 support educational causes. ”
If recent history provides insight into future giving trends, the Covid-19 pandemic of 2020 may be the catalyst for a golden era in British philanthropy. The financial contribution of these charities may not emerge fully for some years, at least until the first set of annual accounts are filed with the Charity Commission, but the implications for potential grantees and organizations adversely affected by the pandemic is extremely promising.
Who comprise the class of 2020 philanthropists?
Identifying all the philanthropists to put their head above the parapet in 2020 is an extensive exercise. And the truth is not all philanthropists have a profile in public or business life. Many people with the intention to give may have quietly amassed wealth without doing so in the public eye. Some may have generated wealth; others inherited it or acquired it through other means. But we have identified some personalities in our research, and some companies which have also registered charitable foundations as part of their corporate social responsibility programmes.
Perhaps the most eye-catching is the Manchester-based businessman Matt Moulding. Mr Moulding is the founder and Chief Executive of The Hut Group, an e-commerce company headquartered at Manchester Airport. It operates over 100 international websites selling a wide-range of consumer products. The group has benefited from a boom in online shopping during the pandemic and reported to have added 3,000 jobs — to take its headcount to approximately 10,000.
In September 2020 Mr Moulding listed his company on the London Stock Exchange with a valuation of £5.4 billion. It was the largest stock exchange listing since the government privatised the Royal Mail and listed it in 2013. It was reported that he was on track to receive £830 million in stock and pledged to donate his £750,000 salary to charity.
At the beginning of December 2020, Mr Moulding and his wife, Jodie, registered The Moulding Foundation. According to its governing document, the Foundation is geared towards causes in the North of England, and will include charities and resources engaged in tackling the Covid-19 pandemic as well as a range of other activities such as substance abuse, domestic violence and children with behavioural difficulties.
Another well known figure in UK society is Dame Zandra Rhodes, who set up the charitable foundation that bears her name in June 2020. It appears to have coincided with her 80th birthday last year. The stated objective is to advance education in the art of fashion design and textiles. It also appears that the grant-making component will go towards financing the custodians of her collection of work and design, suggesting this trust is as much about Dame Zandra’s legacy.
Theatre producer and chairman of Everton Football Club Bill Kenwright established the Bill Kenwright Hope Foundation in August 2020. Mr Kenwrigh is widely known in Everton circles as a generous benefactor. The establishment of a trust suggests he is formalising this giving.
Celebrated architect Chris Wilkinson and his wife Diana established a family foundation in February 2020 which they have called the Palmata Charitable Trust. The founder of WilkinsonEyre Mr Wilkinson’s work includes projects in Australia, China, Singapore and the restoration of the Battersea Power Station in London.
Television producer Dame Philippa Harris and her husband Richard McBrien established the Prandem Charitable Trust in October 2020. Dame Philippa is the Chair of BAFTA and, along with Sam Mendes, was co-owner of Neal Street Productions which, it is reported, was sold in 2017 for $60m.
Formula One Chief Financial Officer Duncan Llowarch registered his charitable trust, The Polmax Charitable Trust, in January 2020. Duncan Llowarch). He is reported to have acquired significant wealth when LibertyMedia completed its the purchase of Formula One in 2017.
Property investor and founder of Delancey Jamie Ritblat and his wife Joanna set up the Tigris Charitable Foundation in September 2020. A well-known Conservative Party donor, Jamie is the son of Sir John Ritblat, the former Chairman and CEO of British Land, who himself is a reputed philanthropist.
Sir Charles Matthew Farrer, formerly senior partner of Farrar & Co and the private solicitor to HM The Queen from 1965 to 1994, registered the CPF Trust with members of his family in October 2020.
As I mentioned, in 2020 some businesses also set up dedicated foundations and trusts to channel their corporate philanthropy.
The Compass Group is the largest contract foodservice company in the world. Compass Group has operations in 45 countries and employs over 600,000 people. In January 2020 it registered the Compass Group Foundation, the objective of which is the advancement of education and training for the public benefit, in particular in relation to catering, food and nutrition.
HG Capital, a private equity firm targeting technology buyouts primarily in Europe and the US, established its charitable foundation in 2020. With offices in London, Munich and New York the aim of the Foundation is to make increasingly meaningful impacts in the area of education and technology primarily in the US and Europe.
The London Insurance Market, part of the U.K. insurance and reinsurance industry centred in the City of London comprising insurance and reinsurance companies, Lloyd's of London syndicates and Marine Protection and Indemnity Clubs (P&I Clubs) has established a collective foundation with a focus on supporting education.
“Economic adversity, paradoxically, appears to present philanthropic opportunity.”
Sitting behind these individuals and institutional structures will be an array of different motivations, different interests and different passions. The challenge of course for any organisation or institution is to try and identify if there is any match, any relational dimension that could lead to interest or an undisputed alignment between the donor and prospective recipient. This research doesn’t do that, of course, but the conclusion anyone reading this should take away is this – economic adversity, paradoxically, appears to present philanthropic opportunity. And perhaps there has never been a better time to go out looking for funding among UK’s growing charitable foundations and trusts circuit.
Our methodology
The purpose of our research was to identify grant-making charitable foundations and trusts established in 2020, and to provide a 20 year context. UniversityPhilanthropy.com and The Cape Partnership drew on data available at the website of the UK’s charity regulator, the Charity Commission for England and Wales.
The Charity Commission for England and Wales is a non-ministerial government department that regulates registered charities in Great Britain. All registered charitable foundations and trusts are required to file annual reports and adhere to the laws and regulations governing charities. While every effort has been made to ensure the accuracy of this data, it does not necessarily represent a complete picture of all UK charitable foundations and trusts.
Our research identified 1,731 grant-making charities registered in 2020; however, some foundations and trusts may not yet provide explicit definition of how the charity will operate. In addition this study does not include charitable foundations and trusts registered with regulators in Scotland and Northern Ireland.