|UK Family Foundations Withstand Test of Time and Recession|
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Family foundation giving is defying the economic downturn and making a substantial and growing contribution to tackling society’s ills, says a new report produced by the ESRC Centre for Charitable Giving and Philanthropy at Cass Business School, City University London, in collaboration with Pears Foundation.
The Family Foundation Giving Trends 2010 report paints a vivid picture of the commitment, drive and diversity of approach to giving amongst family foundations in the UK, highlighting “many thoughtful and imaginative initiatives”.
Its authors call on wealthy individuals to follow suit and set up their own foundations.
It finds that:
·The largest 100 family foundations in the UK gave a total of £1.4bn to charitable causes in 2008/09 – 9% of all private giving
• Between 2005/06 and 2008/09 the amount they gave increased by 40%
• In spite of the economic turbulence which saw their asset values fall by a real 12% in 2008/09, family foundation giving fell by just 0.2% in real terms
• The top five family foundations by charitable expenditure were the Wellcome Trust (£681m), the Gatsby Charitable Foundation (£50m), the Leverhulme Trust (£45m), the Wolfson Foundation (£39m) and the Monument Trust (£35m)
• Between 2005/06 and 2008/09, the value of family foundation giving grew from £998m to £1.4bn.
Commenting on the report findings, Trevor Pears, executive chair of Pears Foundation, called on wealthy individuals and families in the UK “to be inspired, step up and usher in a new age of long term, committed giving.”
“Family foundations have proved remarkably resilient at a time when state resources are stretched and other forms of giving are under pressure. The top 100 Foundations set an example of what passion, commitment and strategic thought can achieve – but it’s not enough. We need hundreds more foundations and many more initiatives which show philanthropy working at its best."
David Emerson, chief executive of the Association of Charitable Foundations welcomed the findings: “From this top level analysis the research reinforces the value of the family foundation as a proven vehicle for delivering money and public benefit to civil society over a very long period.
“That family foundation giving has remained stable against a background of economic turmoil, while banks and finance companies go to the wall, shows it is far from being ‘stuck’ as the FT commented in its reporting of the story, but is a positive cause for celebration of the careful and effective management and distribution of assets.
“The research echoes just what the Charity Commission said about endowed foundations in its assessment of their work last year [Firm Foundations published in Autumn 2009].
“Foundations may not always be seen as a ‘sexy’ or ‘exciting’ way of giving, but on this evidence a family foundation offers effective and sustainable ways for philanthropists to make a positive contribution to society, and surely that’s what matters.”
Fiona Ellis, former director of Northern Rock Foundation and just appointed trustee for Nationwide Foundation, commenting on the findings said: "Where once the only alternatives for a donor were to give a gift directly or to set up a foundation, the contemporary philanthropist has various choices available to him or to her. The whole range of giving now encompasses social investment in several guises and a raft of vehicles for immediate and deferred donations.
"In such a climate it is good to see evidence that the foundation is still an intelligent and effective option. This report demonstrates the value of funds invested for the good of society in the longer term and thus available in good and bad times. The foundations described have bucked economic trends and spent more money when needs were greatest even where their own endowments had suffered from the downturn. Being established for the long term they are able to behave counter-cylically and take a long view to balance needs and resources in a way that other giving options do not so readily allow," says Ellis.
"The family foundations described in the report are both focused and flexible; they have identified valuable roles for themselves in funding, for example, education, research or arts and culture. But they are also able to change course if their assessment of social needs changes. The virtues of the foundation model can easily be overlooked by philanthropists seeking quick hits or new ways to invest in social change but their unique qualities give them an enduring attraction that may well outlive some of the newer models."
Cathy Pharoah, co-author of the report and Professor of Charity Funding and co-director of the ESRC Research Centre for Charitable Giving and Philanthropy, Cass Business School, said: “You hear a lot of talk about what the Big Society is or isn’t, but family foundations have been quietly taking an active role in our communities for generations. We’ve seen a number of new foundations coming into the top 100 recently, and I’d like to see the trend towards creating family foundations grow in terms of scale, scope and ambition to meet the escalating needs of society.”
Among the new family foundations that have been established over the last couple of decades, largely funded by the successful entrepreneurs of an era of expanding global markets and capital flows, are the Waterloo Trust, set up by owners of Admiral Insurance; the Volant Trust, set up by J K Rowling; the Foyle Foundation; the Martin Smith Foundation; and the Children’s Investment Fund Foundation.
Pharoah says among the reasons individuals do not set up foundations is they are simply unaware of what foundations can do or how to set them up. “We feel this report will provide good examples of how effective giving through family foundations can be and provide peers with excellent role models.”
A Cabinet Office spokesperson on seeing the report, said: “We recognise and value the generous contribution made by Family Foundations. Philanthropy and charitable giving is an important part of our Big Society agenda. We are committed to encouraging individuals and organisations to think about the contribution they can make.”
Family Foundation Giving Trends 2010 is the third in a series of annual reports tracking trends in the giving of the largest 100 UK family foundations (by giving). It includes tables of the 100 largest family foundations in the UK by annual charitable spending, benchmarked against giving trends in the UK and US.
The full report was launched on 16 November at an event at Cass Business School in central London with representatives from some of the UK’s largest foundations.
The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.
Published on our website on Nov.11, 2010