The Coutts Million Pound Donors Report - Coutts Media Library

The Coutts Million Pound Donors Report - Coutts Media Library

The Coutts Million Pound Donors Report - Coutts Media Library

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<strong>The</strong> <strong>Coutts</strong> <strong>Million</strong> <strong>Pound</strong> <strong>Donors</strong> <strong>Report</strong>www.kent.ac.uk/sspssr/cphsjwww.coutts.com/philanthropyIntroductionThis report is the first attempt to collateand analyse data on UK charitabledonations of £1 million or more. <strong>The</strong> aimis to assess the scale and impact of suchgifts and to get a better understanding ofwho is making them and what causesthey are supporting.A number of reports now publish robust dataon charitable giving that capture donationsmade by the vast majority of the population.Most notable are <strong>The</strong> UK Civil SocietyAlmanac produced by the National Council forVoluntary Organisations (NCVO), CharityTrends published by CAF (Charities AidFoundation) and the new Charity MarketMonitor produced by Cass Business School.All these reports contain extremely useful andextensive information and analysis that areessential for understanding voluntary incometo charities.This report differs in that it focuses solely onthe largest charitable donations: those worth£1 million or more. <strong>The</strong> difficulty of capturingdata on such donations is widely acceptedbecause general survey methods, howeverlarge the sample, are unlikely to ‘catch’enough (probably any) millionaire givers.Whilst it is extremely helpful to know, forexample, that the average donor gives around£29 each month 1 , such figures do not castmuch light on the presence and practices ofmajor donors, especially as previous researchindicates that their giving is both quantitativelyand qualitatively different. A number of studieshave shown that the richest decile of societyhas the greatest incidence of giving and thehighest absolute value of donations yet, as apercentage of their wealth, they give at alower rate than the poorest decile 2 .<strong>The</strong>re is also a growing literaturedocumenting the significance of a modernapproach to giving by some rich donorscalled ‘new philanthropy’.<strong>Donors</strong> described as ‘new philanthropists’tend to have entrepreneurially-created, ratherthan inherited, wealth; to support newlyemerging causes, often connected toglobalisation, such as climate change andglobal health problems; and to take newapproaches to giving which incorporatebusiness-like practices such as monitoringand measurable outcomes.Aside from such broad-brush pictures, what isknown about million pound donors? To startwith the most basic point: in order to be ableto make a donation of that size, the individualmust, by definition, be a millionaire. This reportis therefore concerned with the philanthropicacts of that tiny sliver of the population – lessthan 0.25% – who have the capacity to makemillion pound donations.Who are these people and what resources dothey have available for charitable gifts? <strong>The</strong>most recent data on wealth in the UK wasgathered before the financial crisis of 2008,which will obviously affect the size of manyfortunes. However, in April 2008, the SundayTimes Rich List described the wealth of thethousand richest people in Britain andidentified 71 UK-based billionaires with acombined wealth of £206 billion; to make itonto the bottom of the Rich List required apersonal fortune of £80 million.Outside of the ‘super-rich’ is a further tier ofvery affluent people whose assets, salariesand bonuses make them a potential source ofmillion pound donations. <strong>The</strong>re are estimatedto be around 120,000 people in the UK whohave £1 million or more in disposable wealth 3and a further 300,000 people who aremillionaires 4 once illiquid assets, includingproperty, are included. Last year over 4,000people, primarily working in the City ofLondon, received a bonus worth £1 million ormore 5 , although obviously such incentivepayments will be lower this year given theeconomic downturn.<strong>Million</strong> pound donations also come frominstitutional donors, including charitable trustsand foundations and corporations. Whilst thereare estimated to be c.8,800 charitable trustsand foundations in the UK 6 , less than 300 ofthem have assets worth £10 million or more 7 .A small number of foundations choose to‘spend out’ their endowment and makedonations from capital, but most distribute outof interest, therefore very few foundationshave the capacity to make million pounddonations. However, some foundations haveendowments of sufficient size to makemultiple million pound donations.Aside from a few notable exceptions, thecorporate sector in the UK does not have atradition of making large charitable gifts. Thisis partly due to a widely held view that thecompany does not have the right to give awayprofits and that shareholders should maketheir own decisions about how to spend theirdividends. However, other companies take theview that philanthropy can help to create acompetitive advantage by enhancingreputation and attracting the best employees.1 UK Giving 2007, NCVO & CAF, cited in UK CivilSociety Almanac 2008. London: NCVO, p.55.2 Two studies that report this finding are J. Banks & S.Tanner (1997) <strong>The</strong> State of Donation: Householdgifts to charity 1974-96. <strong>The</strong> Institute for FiscalStudies; and B. Breeze (2006) Robin Hood inReverse. Centre for Civil Society working paper,London School of Economics.3 S. Lansley (2006) Rich Britain. London: Politico’s, p.64 Hiscox Wealth Review 2008, p.45 According to figures published by the Centre forEconomic and Business Research1

<strong>The</strong> <strong>Coutts</strong> <strong>Million</strong> <strong>Pound</strong> <strong>Donors</strong> <strong>Report</strong>www.kent.ac.uk/sspssr/cphsjwww.coutts.com/philanthropy7. Of those donations that went directly tocauses and beneficiaries, the most populardestination by far was Higher Education,which received 45 donations worth a millionpounds or more, accounting for 42% of thetotal value of ‘spent’ or distributed millionpound donations.<strong>The</strong> next most popular causes were Healthcharities, which received 13.8% of thevalue of ‘spent’ million pound donations, andInternational Development charities whichreceived 11.5% of the value of ‘spent’ millionpound donations. No other charitablesubsector received more than 10% of thevalue of ‘spent’ million pound donations.Whilst charities categorised as HumanServices and Welfare were one of the mostcommon beneficiaries of million pound gifts(22), the donations they received had a loweraverage value than donations to many othercauses including Health, Arts & Culture andReligious causes, which therefore all receiveda larger share of the collective value of millionpound donations.<strong>The</strong> spread of the donations within eachsubsector varies greatly. For example themillion pound donations to International Aidand Development ranged from £1m to £54mwhilst the million pound donations toEducation ranged from £1m to £4.7m. <strong>The</strong>presence of one or two very large donations isindicated in those cases where the meanvalue greatly exceeds the median.<strong>The</strong> five donations to foundations worth £100million or more are the most significant casewhere a handful of donations affects both thescale of the overall sum and the meandonation to one subsector.Figure 7: <strong>The</strong> distribution of million pounddonationsCharitable subsectorNumber ofmillionpounddonationsMean valueof millionpounddonations(£ million)<strong>Media</strong>n valueof millionpounddonations(£ million)Percentage ofthe numberof millionpounddonationsValue ofmillionpounddonations(£ million)Percentageof total valueof millionpounddonationsPercentageof totalvalue of‘spent’donationsFoundations 21 43.5 4.5 10.9 913.3 56.4 -Higher Education 45 6.6 3.1 23.3 296.5 18.3 42.1Health 22 4.4 3.0 11.4 96.9 6.0 13.8International Aid & Development 15 5.7 1.6 7.8 81.3 5.0 11.5Arts & Culture 22 2.6 2.0 11.4 57.8 3.6 8.2Religious organisations & causes 10 4.4 1.7 5.2 44.0 2.7 6.2Human Services & Welfare 22 1.8 1.5 11.4 39.9 2.5 5.7Education (not universities) 16 1.9 1.5 8.3 30.2 1.9 4.3Environment & Animals 5 5.2 1.6 2.6 25.9 1.6 3.7Other public service benefit 11 1.8 1.7 5.7 17.8 1.1 2.5Overseas (outside UK, not development) 4 3.6 3.4 2.0 14.4 0.9 2.0All 193 8.4 2.0 100 1,618 100 1004

<strong>The</strong> <strong>Coutts</strong> <strong>Million</strong> <strong>Pound</strong> <strong>Donors</strong> <strong>Report</strong>www.kent.ac.uk/sspssr/cphsjwww.coutts.com/philanthropyDiscussion<strong>The</strong> findings underline the importance ofmajor donations to the health of the UKcharity sector whilst also generatingimportant questions about the scale,source and distribution of million pounddonations. This discussion explores eachof these themes in turn.<strong>The</strong> scale of million pound donationsHow big are million pound donations?Whilst a million pounds is, by definition, a biggift, there is a large difference between adonation of £1m and a donation of £100m.<strong>The</strong> average (mean) size of all million pounddonations is £8.4m, and the average size ofgifts ‘spent’ rather than ‘banked’ is £4.1m. Asthe mean is distorted by a small handful ofextremely large gifts such as the 24 donationsof £10 million or more, it is more useful to referto the median or the mode to identify theaverage size of donation. In both the case ofall million pound donations, and the case of all‘spent’ million pound donations, the median(middle) gift, is £2 million and the mode (mostfrequent), is £1 million.As figure 2 shows (page 3) the most commonsize of a million pound donation was between£1 - £2 million, and two-thirds (64%) were forunder £3 million.All five of the biggest donations, worth £100million or more, were ‘banked’ in foundationsfor later distribution. <strong>The</strong>refore donations spentdirectly on causes and beneficiaries tendtowards the lower end of the million poundscale.However, Sheila Hooper, Marketing and privateclient director at CAF (Charities AidFoundation) says her experience shows thatdonors often increase the size of their giftsover time.“We find that when people make their firstmillion pound gift they are amazed at theemotional wealth it generates. <strong>The</strong>y oftensay it is the best money they have everspent, and they will do it again – andeven give more – so long as the charitysucceeds in developing a goodrelationship with them. <strong>The</strong>y expect apersonal service and want to know howtheir money is spent, but equally theyconsider themselves a friend and asupporter and won’t abandon a causethey care about, despite the currentfinancial crisis”<strong>The</strong> prevalence of donations for exactly£1 million and other ‘rounded’ figuresAs figure 6 shows (page 3), one in five (19%)of the million pound donations are for exactly£1 million and one in eight (12%) are forexactly £2 million. In total, 79 donations (41%)are for a ‘rounded’ figure.<strong>The</strong>se figures probably include somedonations that have been rounded up or downby charities in their press releases, or byjournalists in their reports. This finding is alsoaffected by the ‘£2m’ price tag attached tobecoming a sponsor of a City Academy. Butthe prevalence of such rounded figuresindicates that the idea of “a million pounds” ora multiple of a million, has a culturalresonance that influences the amount given,irrespective of whether the cause requires aless-rounded sum.A number of sector experts agree that thefigure of £1 million appears to hold somesymbolic value in addition to its economicvalue to the recipient charity.Stephen Hammersley, chief executive of theCommunity Foundation Network notes,“<strong>The</strong>re is something about a roundnumber, often of £1 million, that fitspeople’s perceptions of what constitutesa big or ‘statement donation’ that will geta public profile and make the donor feelpsychologically that they’ve made asignificant donation”However, one million pound donor offers amore pragmatic explanation:“<strong>The</strong>re are two reasons that people givean exact sum, either people havecontributed to a campaign that isstructured in a way to ask, for example,for one gift of £5m and 5 gifts of £1m,and so on. Or they are doing it for status:to be included and named in the top tierof benefactors to an institution requiresgiving more than £999,999!”<strong>The</strong> <strong>Million</strong> <strong>Pound</strong> ceiling?A potential consequence of the symbolicvalue of a gift of £1 million, is that donorsmay be getting ‘stuck’ at a lower level thanthey can afford to give. Whilst the receipt of a£1 million donation is clearly greatlyappreciated by charities, it may be that –however unintentionally – fundraisers haveerected a ‘million pound ceiling’ as a highpointbeyond which most donors are notencouraged to stretch. If so, how can suchdonors be encouraged to ‘trade up’ and givemore than £1 million? And, recalling thepresence of 71 billionaires in the UK, forthose few that can afford it, how can charitiespersuade donors to move from £10mto £100m?5

<strong>The</strong> <strong>Coutts</strong> <strong>Million</strong> <strong>Pound</strong> <strong>Donors</strong> <strong>Report</strong>www.kent.ac.uk/sspssr/cphsjwww.coutts.com/philanthropyAny artificial ceiling on gifts may, in part, be anartefact of major donor fundraising methods.As <strong>The</strong>resa Lloyd, philanthropic adviser andauthor of Why Rich People Give notes,“Usually people give what they are askedto give, and most of the wealthiestpeople are just not asked to give a sumthat they could afford, and might give ifasked in the right way.”But the million pound ceiling is also the resultof factors outside the control of fundraisers.In the time period covered by this report, only16 operating charities had an annual incomeover £100 million 10 and just 353 had totalincome of over £10 million 11 . <strong>The</strong> generally lowlevel of charity turnovers may be suppressingthe levels of giving. As Lloyd adds,“<strong>The</strong> size of donations is not onlyrelated to the donor’s wealth, it’s alsoaffected by the size of the recipientcharity. Even if they can afford it, no onewill give £1 million to an organisationwith a £50,000 or even £1 million annualturnover, since they would be concernedabout the capacity to cope.”This factor may be exacerbated by anapparent preference amongst major donorsfor supporting small and medium sizedcharities, as discussed by John Stone in hiscase study on this page.If the size of major gifts is being suppressed,that should be good news for the charitysector because it indicates the potential toincrease major donations. Charities can takesteps to encourage donors to break throughthe million pound ceiling and give at a levelthat more accurately reflects their capacityand desire to give. Martin Brookes, chiefexecutive of New Philanthropy Capital,believes charities can help donors gain thedesire and confidence to increase the size oftheir major gifts. He says,“If a donor is going to give more money,he or she needs to feel engaged andinspired. And the best way to make anydonor feel engaged is to help themunderstand how they can make a realimpact in their chosen area. <strong>The</strong>y need toknow what the most pressing needs arewithin an issue, and where funding gapslie. And once they have given, they needto be shown what their funding hasachieved.”<strong>The</strong> Cumulative <strong>Million</strong> <strong>Pound</strong> <strong>Donors</strong>Some donors who have given a millionpounds or more will be missing from our databecause the money is being transferred overa number of years rather than paid in a lumpsum. For example, a donor making five annualgifts of £200,000 would fall below our radar.<strong>The</strong>re are advantages to staggering donationsin this way: donors may prefer an extendedengagement with the recipient rather thanwriting one very large cheque and charitiesmay appreciate the security of promisedfuture funding. As Maya Prabhu, seniorphilanthropy adviser at <strong>Coutts</strong> & Co notes,“<strong>The</strong> amount of a donor’s gift oftendepends on the impact they are trying tohave, the total amount of money that isneeded for a particular cause, and howwell they know the charity. Some donorsprefer to agree certain milestones andfund over time rather than gift a lumpsum.”In future updates of this publication we hopeto cast our net wider to capture and report onthe incidence, size and distribution of millionpound donations made over an extendedperiod of time.<strong>Million</strong> <strong>Pound</strong> donorJohn StoneJohn Stone, a self-made entrepreneur inthe financial services industry establishedthe Stone Family Foundation in 2005 intowhich he has so far transferred £30million. <strong>The</strong> Foundation has distributedaround £2 million to date."I made far more money than I everexpected to make and take the view thatwe wouldn't do our children any favours byleaving it all to them. When we began, wedidn't have a passion for any particularcause, we really started with a blank pieceof paper. We sought advice, from <strong>Coutts</strong>and New Philanthropy Capital, who askedus lots of questions and got us thinkingabout how we could achieve the biggesteffect with the money we had. Wedeveloped some criteria for our giving: wewanted to give hand-ups, not hand-outs;we were more inclined to supportdeveloping countries where there's nowelfare state and our money can achievemore; and we decided to focus on threeareas: children, clean water andmicrofinance. We don't want to start ourown charities, we'd rather support othersdoing good work than re-invent the wheel.We'd also rather support smallerorganisations as I can relate to theirentrepreneurial outlook and it's easier toget involved with them than with bigger,more bureaucratic charities. But our initial'pilot portfolio' of ten projects includesinvestments in organisations that are small,medium and large, because we decidedto experience being involved in all types ofcharities.We have enjoyed a wonderful timetravelling extensively in Africa and Asiavisiting our first ten projects. We are nowdeciding which we should support furtheras a result of seeing their work first-handand meeting their staff on the ground.Parking the money in the foundation didn'tgive me any particular satisfaction - thatjust involved moving money from one bankaccount into another. <strong>The</strong> satisfactioncomes from meeting beneficiaries whoselives have been transformed as a result ofour involvement."10 Charity Trends 2007. Op cit11 UK Civil Society Almanac 2008. Op cit, p.236

<strong>The</strong> <strong>Coutts</strong> <strong>Million</strong> <strong>Pound</strong> <strong>Donors</strong> <strong>Report</strong>www.kent.ac.uk/sspssr/cphsjwww.coutts.com/philanthropy<strong>The</strong> Source of <strong>Million</strong> <strong>Pound</strong> DonationsWho gives million pound donations?As figure 3 Shows (page 3) the main sourceof million pound donations is individuals(53%), followed by professional charitablefoundations (35%) then corporations (9%).<strong>The</strong> largest donations, worth £100 million ormore, were all made by individuals placingmoney into foundations for later distribution.Six corporations also ‘banked’ money intocorporate foundations.<strong>Donors</strong> making multiple million pounddonations are primarily professional charitablefoundations, however a handful of individualdonors also made more than one donationworth a million pounds or more.Anonymous givingWe do not know the identity of every millionpound donor as some were made underconditions of anonymity. Some critics viewanonymous giving as an attempt to evadeaccountability and believe anonymous givingdeprives the charity sector of much-neededrole models that could inspire similar gifts fromtheir peers. However, others note thatanonymity can be driven by entirelyhonourable reasons, including religiousbeliefs, and a concern to avoid unwelcomeattention, unsolicited appeals and personaldanger. Anonymous giving may be moreprevalent in some sub-sectors than others.For example, donors to InternationalDevelopment charities may be acutely awareof the gap between their own wealth and thepoverty of the people they are seeking tohelp, and feel it is more appropriate to givediscreetly to such causes.High profile million pound donorsAt the opposite extreme to anonymous givingis high profile giving. Some majorphilanthropists are very happy to discusstheir giving, usually because they wish to drawattention to a favoured cause or to promotethe benefits of philanthropic activity andbelieve this will encourage their peers tofollow suit.12 B.Breeze (2009 forthcoming) More than Money:the meaning and purpose of philanthropy incontemporary UK society. Unpublished doctoralthesis.13 T. Lloyd (2004) Why Rich People Give. London:Philanthropy UK/Association of CharitableFoundations.<strong>The</strong> willingness of a handful of donors to ‘gopublic’ is obviously helpful to those trying toencourage large donations, but it carries a riskthat the views of such donors are interpretedas representative of all major philanthropists.This risk is exacerbated by the fact that highprofile givers are a small group. An analysis ofall print media coverage of philanthropy andphilanthropists in 2006 12 found that 10% ofarticles focused on one named philanthropistwere about the same individual: Sir TomHunter. Adding in coverage of just four furtherphilanthropists accounted for a quarter of allmedia coverage of named donors.But more major donors may become willing toraise their heads above the philanthropicparapet, according to Susan Mackenzie,director of Philanthropy UK, who says,“New donors, especially, are oftenreluctant to speak publicly about theirgiving. But as they gain experience, and‘find their feet’, they become moreconfident and willing to share their ownexperiences and learning to help others.”Donor motivation and the case of the poisonedsilver spoon<strong>The</strong>re are many reasons behind philanthropicacts, perhaps as many reasons as there aredonors and gifts. Research based oninterviews with 76 rich donors identified fivemain motivations: belief in the cause; being acatalyst for change; self-actualisation orpersonal development; feelings of duty andresponsibility; and the enjoyment ofrelationships with charity staff, beneficiariesand other donors 13 . A growing number ofmajor donors have begun to describe afurther motivation for their giving: the desire toavoid burdening their children with anexcessive inheritance.Warren Buffett famously said he wished toleave his children enough so they can doanything, but not enough so they will donothing. Rich UK donors have echoed thissentiment and wealth advisers report thatconcerns about the impact of handing onfortunes to the next generation areincreasingly being raised in the context ofplacing funds into charitable foundations. Anadded consequence of this solution is thatchildren can be appointed as trustees,creating opportunities to bring the familytogether to discuss the distribution of grants.<strong>Million</strong> <strong>Pound</strong> donorJamie Cooper-HohnJamie Cooper-Hohn is chief executive ofthe Children’s Investment Fund Foundation(CIFF). She and her husband Chris Hohnhave put over £800 million into CIFF, whichmakes grants to partners that candemonstrably improve the lives of childrenliving in poverty in developing countries.“I’m happy to talk about our experiences asbig donors because we’re hoping to makean impact as a foundation and one way ofdoing that is to be visible to other potentialmajor donors.When we give million pound grants, it isdefinitely an investment and not a gift. Wewant to know what the organisation will doin a really big and meaningful way that itwouldn’t have done otherwise. We’re alsolooking for a philosophical alignment withthe organisations that receive funds.We go into our grants with enormousoptimism. We take big bets with substantialrisks but it is the potential for making aquantum leap in terms of impact forchildren that feels so exhilarating.<strong>Million</strong> pound donors are interested intaking on a big problem and trying toaddress a very specific issue. <strong>The</strong> sectorwe work in allows you to do that, and youget more value for money – whether it’s£100 or £1 million it goes a lot further ininternational development than moneygiven to any other cause.My experience is that ninety percent of thetime donors have a preference for a causebecause they relate to it, such as theeducational institutions they attended or ahealth charity as a result of a relationshipwith a certain disease. Do most peoplepersonally relate to internationaldevelopment issues? No. So the level ofsupport for that area amongst the wealthyis actually quite high.People making the largest donations seemto have different preferences to the generalpublic. I have been shown data thatsuggests animal and historical preservationcharities are very popular in the UK; it’sinteresting to see those areas of giving are,according to your research, not mirrored bythe biggest donors!”7

<strong>The</strong> <strong>Coutts</strong> <strong>Million</strong> <strong>Pound</strong> <strong>Donors</strong> <strong>Report</strong>www.kent.ac.uk/sspssr/cphsjwww.coutts.com/philanthropy<strong>Million</strong> pound donorAlec ReedAlec Reed CBE, put £5 million into theReed Foundation in 1985 and hasfounded and supported a range ofcharitable organisations.“I’ve been a volunteer all my working life,but after using some of the proceeds ofselling a company to set up the ReedFoundation, I had to think seriously abouthow to give money away for the first time.I believe it’s better for donors to separatethe decision about how much money tospend on charitable giving, from theenjoyable act of giving to charity.By deciding how much you want to giveaway as a lump sum or annually, andring-fencing it in a foundation, you canelevate the satisfaction you get fromgiving, not to mention making it easierto make the gift. Once you’ve done that,you can continue your research anddecide which good causes you wish tosupport. I call this 'Disneyland Giving':theme park visitors pay once at the gateand are then free to enjoy the rides. I'mstill enjoying giving away money I 'spent'on charity 20 years ago.People can be reluctant to publicly makelarge donations for fear of the charityletters and requests that follow. I havealways believed that most people prefer tobuy than be sold to – a concept frequentlyapplied in retail but almost unheard of inthe charity world. I recently set uptheBigGive.org.uk to help donors enjoythe process of shopping for a charitywithout the sales pitch.I am attracted to ‘entrepreneurial giving’and have invested in setting up six newcharitable ventures, including WomankindWorldwide and Ethiopiaid; I’ve also givensubstantial donations to some existingcharities. I prefer to largely back my owninterests because I can be a bettersupporter if the work has my interest aswell as my money.”<strong>The</strong> Distribution of <strong>Million</strong> <strong>Pound</strong>DonationsWho gets million pound donations?Only a tiny fraction of the charity sectorbenefits from million pound donations. <strong>The</strong>reare over 160,000 registered charities but, assome charities received more than onedonation of £1 million or more, just 159different charities are known to be recipientsof such gifts in 2006/07.As shown in figure 4 (page 3) in the findings,the vast majority of recipients (140) receivedjust one million pound donation and thelargest quantity received by any one charitywas seven gifts of that size.<strong>The</strong> distribution of million pound donationsacross causes is uneven, as shown in figure 7(page 4). Excluding money ‘banked’ infoundations, Higher Education (universitiesand colleges) gets almost half the gifts (42%)although these are mostly from largeprofessional foundations such as theWellcome Trust, rather than from individuals.<strong>The</strong> next most popular cause is Health,including charities that provide health careand undertake medical research, whichreceived 13.8% of the value of million pounddonations, and then International Developmentcharities which received 11.6%. No othercharitable sub-sector receives more than10% of these largest gifts.However, the institutional setting of theorganisation that receives the donation maynot accurately reflect the purpose of the gift.For example, whilst the higher educationsector receives almost half of the value of allmillion pound donations, the actual purpose towhich these donations are put includesawards for poor students attending auniversity and research to develop drugs fordiseases that affect the poorest countries.<strong>The</strong> impact of such funding may moreaccurately be described, respectively, aswelfare and international development even ifthe donation passes through the financialaccounts of a higher education institution.<strong>Million</strong> pound recipientCanterbury CathedralHeather Gambrell, UK FundraisingDirector at the Save Canterbury CathedralAppeal.“We received a £3 million donation fromthe Garfield Weston Foundation. Weheard the news the day before the launchof our appeal in October 2006, so it cameat a very opportune time!A gift of that size does more than bring uscloser to our appeal target of £50 million,it helps to open doors to other high-valuedonors that we need to reach. Inparticular, it sends out a reassuringmessage to potential donors that ourgovernance is good, and that they canhave confidence in our trustees tomanage their money well.In the current climate, when the value ofmany people's assets has droppedsubstantially, they naturally want to knowthat any wealth they transfer to a charitywill be well looked after.<strong>The</strong>re's no doubt at all that being on thereceiving end of a multi-million pounddonation gave an enormous boost toeveryone involved in the appeal,especially to our staff and volunteers. Itwas overwhelming and lifted our spirits tosee that many noughts."8

<strong>The</strong> <strong>Coutts</strong> <strong>Million</strong> <strong>Pound</strong> <strong>Donors</strong> <strong>Report</strong>www.kent.ac.uk/sspssr/cphsjwww.coutts.com/philanthropy<strong>Million</strong> pound recipientNational TrustGill Raikes, director of fundraising at theNational Trust.“We receive one or two donations eachyear of £1 million or more, and these largegifts are essential to our efforts to protecthundreds of historic buildings, 700 milesof coastline and over a quarter of a millionhectares of countryside.No two major donors are the same, theyare individuals with their own uniquereasons for choosing to support our work.But we have found that people whosupport us at this level often share twocharacteristics: they want to be involved inthe project they are supporting and theyhave a preference to do so anonymouslybecause they don’t want to shout about it.Most donors giving a million pounds ormore have an intimate relationship with aspecific building or piece of thelandscape rather than with the NationalTrust itself, so their donations are oftenring-fenced for a specific part of theTrust’s work. For example the Welsh-bornactor Sir Anthony Hopkins donated £1million in 1998 to help us buy and protectWales’ highest mountain, Snowdon.We can’t predict or budget for millionpound donations, but we do rely on them,especially when we need to raise a largesum of money in a short space of time.Despite the current credit crunch, weneed to raise £3 million by the end of 2008to buy Seaton Delaval Hall inNorthumberland; lots of smaller donationsdo add up but we need bigger gifts toreach the target in time.”‘Banked’ versus ‘Spent’ donationsOne of the most interesting findings of thisreport, as shown in figure 5 (page 3) is thatover half of the total value (56%) of millionpound donations made in 2006/07 were notdistributed to a specific charity or cause, butwere placed in charitable trusts andfoundations for later distribution. This situationcould result from major donors demonstratinga careful approach to giving, by earmarkingfunds in a tax-effective vehicle and takingsufficient time to ensure they are spent wiselyonce they have time to focus on distributionand put strategies in place. Major donors mayalso choose to distribute funds through afoundation in order to create an institutionallegacy. But donations could remain 'banked'rather than 'spent' as a result of difficultiesencountered in the administration of funds.This may be due to a failure on the part ofpotential recipients in communicating theirneeds or providing a sufficiently robust casefor expenditure. It may also be due to theabsence or limitations of the infrastructuralmeans for the administration of funds. Butinefficiency on the part of foundations couldalso be a factor, such that accumulated fundsrepresent a form of hoarding, with moneystagnating and taking a long time to reachultimate beneficiaries, despite the immediatereceipt of tax breaks.Stephen Hammersley, chief executive of theCommunity Foundation Network takes theformer view,“<strong>Donors</strong> who park money in foundationsmay not really know what they want to dowith it yet. People come into money andknow they want to do some good with itbut are not sure exactly what. Putting it ina foundation can be a temporary solutionthat enables them to begin theirphilanthropy whilst giving them time todevelop a strategy”<strong>Million</strong> pound recipient<strong>The</strong> Community Foundation forWiltshire and SwindonRosemary Macdonald, chief executive ofthe Community Foundation for Wiltshireand Swindon.“In 2007, the community foundation forWiltshire and Swindon received a legacyof £2.2 million from a local couple, Brianand Marie Shuker, to be used forsupporting young people in ourcommunity to attend higher education.It was the largest gift we have everreceived and has given us an opportunityto develop a whole new side of ourorganisation. <strong>The</strong> legacy is part cash andpart property, so we have also had todevelop new skills in managing aproperty portfolio.One benefit of such a large gift is thatwe’ve been able to use the intereststraight away and start offering help tolocal students without having to wait foran endowment to build up.But the biggest benefit has been thehuge boost to our credibility andpositioning. We are now recognised as asafe place to put a significant amount ofmoney and we feel we’re more likely toreceive similar large sums in future.A further unexpected consequence isthat the Shuker’s advisor, who handledtheir will, has been so impressed with theprocess of dealing with us and seeingthe difference the money has made, thathe is happy to talk to others about howthey can make or refer similar donations”9

<strong>The</strong> <strong>Coutts</strong> <strong>Million</strong> <strong>Pound</strong> <strong>Donors</strong> <strong>Report</strong>www.kent.ac.uk/sspssr/cphsjwww.coutts.com/philanthropy<strong>Million</strong> <strong>Pound</strong> recipientSave the ChildrenCaroline Underwood is Director ofPhilanthropy and Partnerships at Save theChildren, which receives million pounddonations from individuals andcorporations.“Gifts of a million pounds or more aretransformational. <strong>The</strong>y help Save theChildren to start and build newprogrammes and to maximise the numberof children that we can reach. But millionpound donors don’t come out of the blue.Donations of that size only come fromcarefully built long-term relationships fromsupporters who are closely involved in ourwork. <strong>The</strong> biggest donations come as aresult of discussions that can last two orthree years. Given the length of time it cantake from first contact to making thedonation, it is important that the donor’srelationship is with the senior leadership ofthe charity, and not just with an individualfundraiser, although they are of course key.Our major donors have a directrelationship with staff that work in the field,not just with our team in the developmentoffice. <strong>The</strong>y need to see the work, even ifjust on a DVD, to understand howimportant it is. We also try to engagedonors’ families, for example some bringtheir children on visits to projects.In my experience, people with the capacityto make very large gifts often begin bymaking smaller donations to ‘test’ howeffectively their money is used and howwell the charity looks after them. If theyhave a good experience then millionpound donations might follow. Having saidthat, mid-value gifts, say of £100,000, canmake a huge difference too.We try to make sure that the donor’sexperience includes personal touches andanecdotal reporting, as well as formalprocesses and reports. For example wemight show major donors press releasesor tell them stories of individual childrenwho have been reached through ourprojects to help them to make connectionswith beneficiaries. Because it is thedifference they can make to the lives of thechildren we work with that ultimatelyinspires million pound donors.”Factors that affect million pound recipients:contacts, credibility, sociability and askingA number of factors that affect the likelihoodof receiving million pound donations wereidentified as a result of discussing the findingsof this research with a range of experts,including philanthropic advisers, fundraisersand donors.<strong>The</strong> ‘contacts’ factorPeople give to charities they are familiar withand of which they have personal experience.In the US it is well documented thatuniversities and hospitals benefit from the highincidence of donations from, respectively,alumni and former patients. Other causes areless likely to have personal connections towealthy individuals, especially InternationalDevelopment organisations and Welfarecharities that operate in poor communities inthe UK. <strong>The</strong> difference between charities thatare ‘contact-rich’ and those that are ‘contactpoor’is therefore a factor affecting their abilityto appeal for donations from the richestsections of society.<strong>The</strong> ‘credibility factor’Once an organisation receives its first millionpound donation and proves itself capable ofhandling a donation on that scale, it gains a lotof credibility and is well positioned to receivefurther donations of that size. Butif a charity needs to receive a gift of this sizebefore it can ‘prove’ itself, it does raise theclassic ‘chicken and egg’ question of how toattract the first donation of that size.<strong>The</strong> ‘sociability factor’One explanation for the success of culturaland arts organisations in attracting majordonors is that they offer a unique form ofbenefit. Support for institutions such as operahouses and art galleries can be integratedinto the social lives of donors in a way that, forexample, support for welfare organisationscannot. In particular, donors who are retiredand seeking to share their philanthropicactivity with their spouse, may find that theopportunity to attend ‘first nights’ andconcerts together is an attractive part of theexperience of being a major donor.Collaborative types of philanthropy, such asgiving circles and funding networks also offersocial opportunities to network with likemindedpeers, to share experiences andlearning. This is an especially valuable benefitfor new donors, who typically don’t have anexisting network of experienced givers thatthey can easily access. <strong>The</strong> importance of thesociability factor creates a challenge forfundraisers working in all types of charities tobe creative in finding ways to involve donors intheir cause and to introduce them tofellow philanthropists in a convivial andunpressured setting.<strong>The</strong> ‘asking factor’With rare exceptions, donors only give amillion pounds or more if they are asked todo so. To this extent, million pound donationsdepend upon the ‘demand’ of charities, asmuch as the ‘supply’ of donors. Someorganisations and causes, notably arts andcultural institutions, hospitals and universitiesmay be better at asking for larger sums ofmoney because they have made greaterinvestments in this funding stream.10

<strong>The</strong> <strong>Coutts</strong> <strong>Million</strong> <strong>Pound</strong> <strong>Donors</strong> <strong>Report</strong>www.kent.ac.uk/sspssr/cphsjwww.coutts.com/philanthropyConclusionsThis report documents all that we havebeen able to learn about million pounddonations made in the UK in 2006/07.We identified 193 donations of this size,made by 109 different donors andreceived by 159 different organisations.<strong>The</strong> typical million pound donation wasworth between £1-2 million, and one infive were for exactly £1 million. <strong>The</strong> fivedonations worth £100 million or morewere all ‘banked’ into foundations for laterdistribution, rather than ‘spent’ onoperating charities. In total 56% of thevalue of million pound donations, totalling£913 million, was ‘banked’. Of the £705million that was ‘spent’, the largest share(42%) went to universities and the onlyother two charitable sub-sectors thatreceived more than 10% of the totalvalue of million pound donationswere International Development andHealth charities.This report also discusses some of thethemes that emerge from these findingsincluding the apparent existence of a ‘millionpound ceiling’, the presence of bothanonymous and high profile giving, distributiveimpacts that favour Higher Education andfactors that influence charities’ ability to attractmillion pound donations, including being‘contact-rich’, having organisational credibility,being able to offer activities that can integrateinto donors’ social lives and moresophisticated major donor fundraising efforts.This conclusion reflects on how these themesmight change in the year to come.<strong>The</strong> financial crisis of 2008 is likely to affectthe confidence, if not the actual capacity, ofdonors to make million pound donations.Charities will need to work harder, and morecreatively, to ensure that supporters remainloyal, and even increase their donations, inorder to meet the likely increase in demand forservices that will occur in parallel withdecreases in funding from other sources,including investment income and corporatesupporters.<strong>The</strong> continued interest and intervention ofgovernment is likely to push philanthropycloser to centre stage, not least in the areas ofWelfare and Education. Both the currentgovernment and opposition parties are keento develop policies that will encourage thetransfer of funds from private wealth to thepublic good.<strong>The</strong> growing role and influence ofphilanthropic advisers is likely to positivelyaffect the confidence of potential donors tomake significant gifts, because there isanecdotal evidence to suggest that lack ofinformation and confusion about ‘where tostart’ is holding back potential donors whohave both the capacity and the inclination tomake major donations.Having produced this first account of theincidence, scale and distribution of millionpound donations, we hope it will help potentialdonors to reflect on their capacity to give, theprioritization of areas of charitable need andthe respective benefits of setting funds asidein foundations versus putting their money towork immediately in operating charities. Wealso hope it will help fundraisers to developtheir relationships with people who have thecapacity to make million pound donations,especially in terms of the level of their ‘asks’or requests for donations. This outline of thecontours of million pound donations may alsoprove useful for those developing newinitiatives to encourage major philanthropy.For example new incentives may be neededto help donors break through the millionpound ceiling, to promote giving to causescurrently neglected by the richest givers andto encourage foundations to distribute theirassets at an appropriate rate.<strong>The</strong> findings and discussion point to the needfor further work in the following areas:Firstly, the need to update this report atregular intervals to create a robust longitudinalstudy that enables trends in million pounddonors to be tracked over time.Secondly, the desirability of extending thescope of this study to include million pounddonations that are paid in instalments over anumber of years.Thirdly, the need to engage with more millionpound donors to better understand theirexperience and to incorporate theirperspective on the ideas raised in this report.<strong>The</strong> proposed ‘<strong>Coutts</strong> <strong>Million</strong> <strong>Pound</strong> Donorclub’ will be one avenue for such engagement.We hope this report begins to fill an importantgap in our collective knowledge about majordonations and that it stimulates usefuldiscussions. One sign of its success will be ifdonors and recipients are more willing tocontribute information about the incidence ofmillion pound donations, so that future editionsof this report are even more comprehensiveand useful to all who care about encouraginga culture of giving in the UK.11

<strong>The</strong> <strong>Coutts</strong> <strong>Million</strong> <strong>Pound</strong> <strong>Donors</strong> <strong>Report</strong>www.kent.ac.uk/sspssr/cphsjwww.coutts.com/philanthropyHow to make a <strong>Million</strong> <strong>Pound</strong> Donation<strong>The</strong>re is a growing body of supportavailable to people interested in makingsubstantial charitable contributions,including advisory departments withinprivate banks, independent philanthropicconsultants and charitable organisationsthat provide training and information tosupport donors.One comprehensive source of informationis A Guide to Giving, which is sponsored by<strong>Coutts</strong> & Co. and produced by PhilanthropyUK. <strong>The</strong> editor, Susan Mackenzie, says,“<strong>Million</strong> pound donors shouldremember three key principles: giveresponsibly, understand the impact ofyour giving and seek good advice.Effective giving involves makinginformed choices, being confident thatgifts will make a difference and beingassured that donations are an efficientuse of money.”<strong>The</strong> <strong>Coutts</strong> Philanthropy Handbook isanother useful resource, which encouragespotential major donors to create apersonalised giving strategy involving fivesteps:1. Understand the causes that you want tosupport2. Set your objectives3. Set up a giving vehicle, such as a charityaccount or private family charitable trust4. Establish criteria for selecting the charitiesyou want to fund5. Monitor and learn from the experience ofgiving.As Mark Evans, Head of Family Businessand Philanthropy at <strong>Coutts</strong> & Co says,"Giving is a very personal act. Creatinga giving strategy is all about getting theright balance between what matters toyou, and what the sector or charityneeds. On the one hand you need tounderstand what you want to achieve,how involved you want to be and thetarget of your giving. On the other handyou need to understand the charity'sobjectives, how they think they can bestuse your money and how muchinvolvement you can have withoutblowing them off course".<strong>The</strong> development of advisory servicesreflects the increasing maturity of the UKphilanthropic sector. Since the year 2000, anumber of organisations have beenestablished in the UK to provide education,training and advice for donors and potentialdonors, including New Philanthropy Capital,the Institute for Philanthropy andPhilanthropy UK. <strong>The</strong> wider availability ofsupport for donors is also expected to raisethe incidence and level of giving, as DavidCarrington writes in the foreword to <strong>The</strong><strong>Coutts</strong> Philanthropy Handbook,"<strong>The</strong> more confident and informed thedonor becomes, the more active anddiscerning they become asphilanthropists, both in their support forthe charities on which they choose tofocus their attention and also in theiradvocacy among friends andcolleagues of the personal value theyderive from their philanthropy"<strong>The</strong> <strong>Coutts</strong> Philanthropy Handbook isavailable directly from <strong>Coutts</strong> & Co, seecontact details below the foreword.A Guide to Giving is freely available onlineat www.philanthropyuk.org/AGuidetoGivingFurther useful resources:New Philanthropy Capitalwww.philanthropycapital.orgPhilanthropy UK www.philanthropyuk.orgInstitute for Philanthropywww.instituteforphilanthropy.orgAssociation of Charitable Foundationswww.acf.org.ukCommunity Foundation Networkwww.communityfoundations.org.ukCharities Aid Foundation www.cafonline.org12

<strong>The</strong> <strong>Coutts</strong> <strong>Million</strong> <strong>Pound</strong> <strong>Donors</strong> <strong>Report</strong>www.kent.ac.uk/sspssr/cphsjwww.coutts.com/philanthropyAppendix on MethodThis report identifies all known charitabledonations worth £1 million or more thatwere made either by UK donors or to UKbasedcharities during 2006/07, which isthe last financial year for which accountsare available. As charities’ financial yearsend in different months, and their annualaccounts are published at different timesof the year, the donations included in thisreport could have been made at any timefrom 1st January 2006 to 31st December2007.Almost all of the data discussed in this reportwas gathered from publicly availabledocuments, primarily from charity annualreports and accounts but also from printmedia coverage. Some additional data wasalso provided by donors and by charities inreceipt of million pound donations, with theconsent of their donors.<strong>The</strong> vast majority of the donations included inthis report have been paid in full to recipientcharities. We have included a small number offormal pledges that will be realised in comingyears, including promised legacies, whensuch donations are formally recognised by thecharities to which they are pledged andincorporated into the financial planning ofthose organisations. We do not includeaspirational statements about sums thatdonors hope to eventually distribute duringtheir lifetime.We include million pound donations tocharitable foundations and trusts, becausethey are irrevocably committed to be spent forthe public good. However, we are aware thatincluding such figures risks ‘double counting’when the original sum put into the foundationis added to the value of grants laterdistributed from that same pot. We havetherefore tried to be clear when we arereferring to all million pound donations (both‘banked’ and ‘spent’), and when thecalculations and analysis refer only todonations that have been ‘spent’ on causesand beneficiaries.<strong>The</strong> charitable sub-sectors are those used inthe <strong>Million</strong> Dollar Donation List, which iscompiled by the Center on Philanthropy atIndiana University. Whilst some definitionstravel better than others across the Atlantic,we decided to retain their typology to enablecross-national comparisons. Furtherinformation is online atwww.philanthropy.iupui.eduAcknowledgementsAny effort to analyse the size and natureof large charitable donations is only asgood as the data on which it is based.I am therefore extremely grateful to anumber of people who helped to makeour dataset as robust as possible.Kayleigh Newby worked diligently to identifymajor donations mentioned in the media anddescribed in the annual reports and accountsof grant-making and grant-receiving charities.A number of organisations helped tosupplement this information with thepermission of their major donors; thanksespecially to the Community FoundationNetwork. <strong>The</strong> Institute of Fundraisingendorsed our research and encouraged theirmember charities to help supply furtherexamples of million pound donations, we areespecially grateful to Caroline Howe, LindsayBoswell, Megan Pacey, the RNLI, the BritishRed Cross, TreeHouse and Help the Aged inthis respect. We are grateful to the donors andrecipients who agreed to appear as casestudies in this report: Jamie Cooper-Hohn,Alec Reed CBE, John Stone, Gill Raikes,Rosemary Macdonald, Caroline Underwoodand Heather Gambrell. Thanks also to thosewho provided expert comments and feedbackon earlier drafts of this report: <strong>The</strong>resa Lloyd,Martin Brookes, Stephen Hammersley, MusaOkwongo, Karl Wilding, Liz Goodey, SusanMackenzie and Sheila Hooper.This project benefitted enormously from theinput of Melissa Brown and DavidFleischhacker at the Center on Philanthropy atIndiana University, where the <strong>Million</strong> DollarDonor list has been compiled for over threedecades. <strong>The</strong>ir intellectual generosity isgreatly appreciated, not least because itenables our findings to be available for crossnationalcomparison.Finally, without the support of Professor ChrisHale, the initial seedcorn funding approved byProfessor Keith Mander at the University ofKent and subsequent full sponsorship from<strong>Coutts</strong> bank, arranged by Mark Evans, wecould not have completed this work.13

<strong>The</strong> <strong>Coutts</strong> <strong>Million</strong> <strong>Pound</strong>s <strong>Donors</strong> <strong>Report</strong> is the firstattempt to collate and analyse data on charitabledonations worth £1 million or more. It describes anddiscusses 193 gifts of this size that were made in theUK in 2006/07.<strong>The</strong> aim of this report is to assess the scale andimpact of such gifts, to get a better understanding ofwho is making them and to identify which causes theyare supporting.Case studies of both ‘million pound donors’ and‘million pound recipients’ are used to illustrate theexperience of giving and receiving large-scalecharitable donations.<strong>The</strong> findings are contextualised within a number ofimportant factors, including the financial crisis of 2008,the rise in philanthropic advisory services and theenthusiasm of all mainstream political parties forencouraging the transfer of funds from private wealthto public benefit.This report should prove useful to donors, fundraisers,charity leaders, policymakers and all interested inencouraging philanthropy in the UK.<strong>The</strong> content of this report does not constitute advice whatsoever from<strong>Coutts</strong> & Co.. <strong>Coutts</strong> & Co will not be liable for any loss arising from yourreliance on any of the information contained in this report. This documentcontains references to third party websites. <strong>The</strong> views and opinionsexpressed in these websites are those of the website authors and are notnecessarily shared by <strong>Coutts</strong> & Co.<strong>Coutts</strong> & Co. is authorised and regulated by the Financial Services Authority.<strong>Coutts</strong> & Co. is registered in England No. 36695. Registered office:440 Strand London WC2R 0QS.University of KentCentre for Philanthropy,Humanitarianism and Social JusticeSchool of Social Policy, Sociology andSocial ResearchCanterburyKent CT2 7NFT +44 (0)1227 824303E cphsj@kent.ac.ukCalls may be recorded.www.coutts.comISBN 978-1-902671-60-4DPC 107191

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