david-stead-270

Executive Director of Philanthropy and Development
Charities Aid Foundation

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E: dstead@cafonline.org

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UK GIVING AND TRUST: CAN WE LAY OUR MONEY ON IT?

Despite the reports of public trust in the non-profit sector eroding, UK charitable giving has remained consistent over the years. So what is the relationship between giving and trust? And how will changes in the social and technological landscape effect it in years to come?

THE UK GIVING LANDSCAPE

The UK’s average ranking over the last 5 years in CAF's World Giving Index is 7th. This measures giving behaviours based on helping a stranger, giving money and volunteering. Furthermore, CAF's UK Giving Report from 2016 states 61% of the population gave £9.7 billion; it is therefore still a strong base compared to the rest of the world. However, the UK dropped to position 11 in the last year which suggests that we cannot take a giving culture for granted, as well as needing to keep encouraging and incentivising giving. 

The most popular causes in the UK were medical research, animal welfare and young people in which 24% to 26% of the people surveyed. The average gift was £18 and of course, giving through the year fluctuates depending on the timing of major campaigns such as the Poppy Appeal, BBC Children in Need, #givingtuesday and so on.

UK Giving and Trust

THE BIGGER PICTURE

Before we look at giving and trust, it is worth considering the broader view of giving in terms of different types of givers. General giving by the public is obviously very important and an essential part of a healthy civil society, especially in terms of the number of people involved  but there are other givers too and they make an important difference to overall funding.

In our FTSE100 report, we study major companies and their giving in the UK and we are excited to update this piece of research soon. It does however lag due to the need to wait for audited reports of all of the companies, but the pattern has been as follows. Giving has risen since 2011 but total donations fell in 2014 to £2.1 billion. However, the median donation grew to a high of £3.8 million and average donations as a percentage of pre-tax profit hit 1.9%, their highest point since 2009. Meanwhile, healthcare was the most popular cause, supported by 40% of corporate donors. 

But a small number of donors account for the majority of FTSE100, giving with the 10 biggest companies, accounting for around three quarters of the overall FTSE giving. In summary, giving by big corporate companies in the UK is very dependent on the decisions of a few and it would be great to know more about the trust these corporate companies have in the charity sector and how much that matters.

In terms of other types of givers, The Association of Charitable Foundation (ACF) reports that the top 300 Foundations in the UK granted out a record £2.9 billion last year. This represents a healthy 12% growth on the previous year.

The Coutts report, Million Pound Donors 2017, also reported peak growth with 310 donations over £1 million and 45 over £10 million. This includes individuals, companies and Foundations, representing a total of £1.83 billion of donations over £1 million in the UK, with an average of almost £6 million.

Our recent report on donor advised giving in the UK, whereby CAF accounts for about half of all donations, showed a 51% increase from 2013 to 2016 with donations in of around £370 million and total charitable assets held in Donor Advised-type Funds reaching £1 billion. We expect this to grow further, especially if intermediaries like law firms and financial advisors pick up on the flexibility and value of this service when they are speaking to their clients. 

The UK does have a strong history of sustained charitable giving, but in a wider context of declining trust in our established institutions, we must examine the relationship between giving and trust.

TRUST

Despite all of that giving I mentioned above, only 53% of people thought charities were trustworthy in 2017 which is down again on the previous year, according to Edelman’s Trust Barometer.

The reasons are fairly complex and we don’t have time to look into them all, but in the UK, reasons include the aggressive fundraising techniques of some charities, high profile charity failures such as Kids Companies, press stories about poorly spent funds, high perceived costs and claims of poor transparency.

But I’d like to focus on the interplay between trust and giving – does increased giving lead to increased trust? Or put another way, does lower trust lead to reduced giving? I haven’t yet found any evidence to prove this one way or another, and perhaps it would be a useful extension of current research, but here are some of my thoughts.

If trust has fallen but giving has remained stable, it suggests that giving is quite inelastic and isn’t immediately influenced by trust levels. But assuming we want more trust and more giving, perhaps trust really depends on the way people give? If an individual is very engaged with their giving and spends time getting involved with a charity, as a trustee, volunteer or by experiencing the work of the charity at the front-end, then it seems likely that their giving will lead to greater trust. If they speak directly to beneficiaries and see the difference charities make for themselves first-hand, then trust is likely to be higher. If they see their money working, they are likely to give more.

ENGAGED GIVING

On the other hand, if giving is more reactive and less engaged, although there must be some implicit trust in order to provide the assurance to donate in the first place, it may be more fragile. If the donor is not seeing the effect of their giving first-hand, a rumour or press story may erode that implicit trust and with it further donations.

So perhaps engaged giving leads to more permanent trust and that is one main reason why charities should do what they can to bring their donors closer to them. Maybe this is connected to Edelman’s “Informed Public” as I guess both may rely on better knowledge and understanding?

To take an example of that engaged giving, CAF has created a programme in the UK for smaller charities, CAF Resilience. With the funding support of a wealthy donor, who obviously does trust the charity sector to do good work, we have started a pilot programme to support charities who are very effective but still suffer from a shortage of funding and expertise. To engage other donors, we have asked them to join the advisory board, meet the charities selected and discuss the state of the smaller charity sector in the UK, based on facts and evidence. It’s too early to see if this will lead to greater trust in the sector for those donors but we certainly hope it will.

Also, I wonder how technology and the application Blockchain to philanthropy in particular will affect trust. The potential of this decentralised digital ledger system to revive peer-to-peer philanthropy is huge. Such enterprises are springing up everywhere and if they can deliver end to end transparency over giving and reduced costs, this could herald a new era of trust. Or will donors and regulators have insufficient confidence in these brave new systems?

Finally, how does trust impact risk appetite? Many of us want donors to take more risk, certainly more than the state, because outcomes are often very uncertain; but we know most donors tend to be very conservative, in fact most of those I mentioned above. So how do we change the mentality to accept more risk in order to get bigger impact? Would greater trust in the sector encourage this?

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David has extensive knowledge of philanthropy-related topics and can help bring your event to life.

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