Philanthropy in Ireland
Patricia Quinn, CEO
Notwithstanding our reputation for generosity, successive studies point to the limited scope of planned, regular giving in Ireland. The number of individuals and families making charitable donations has halved in the last 30 years, and the number of Irish people making transfers by way of legacy or bequest is a fraction of the norm elsewhere in the developed world – likewise the number of philanthropic foundations, and the scale of their spending.
View a recording of our report launch webinar which took place on Monday 14 December 2020.
The winding-up of the Atlantic Philanthropies – whose €1bn contribution to the social economy between 1988 and 2018 dwarfs all other giving in Ireland – has left a sizeable gap.
A recent report from the sector’s representative body – Philanthropy Ireland – suggests that philanthropic donors (60% private, 40% corporate) have risen to the extraordinary challenges posed by the pandemic and its consequences for charities. Additional funds of €28m have already been provided in 2020 (more, if in-kind donations are counted) and grants distributed promptly. The Philanthropy Ireland report asks whether new donors that responded to the emergency will be tempted to stay involved in providing support for charities as they enter the next phase.
This question goes to the heart of what constitutes philanthropic giving. Rather than getting drawn into vexed definitional questions, let us consider adopting this elegant formulation.
“To give away money is an easy matter, and in any man’s power,” according to Aristotle. “But to decide to whom to give it, and how much, and when, and for what purpose and how, is neither in every man’s power nor an easy matter.”
Whither philanthropy in Ireland?
How ready is Ireland to develop more systematic, purposeful giving – by individuals, families and corporations?
Eight years ago, a 21-member Forum on Philanthropy and Fundraising published a bold vision for transforming the philanthropic landscape in Ireland. The forum’s members were drawn from the philanthropy and public sectors, and they were mindful of the imminent departure of the Atlantic and One foundations from major giving in Ireland.
Some of the changes they called for have already come to pass, including the implementation of the 2009 Charities Act in 2014, the creation of a national social innovation fund, and the provision of better professional supports for fundraisers. Other changes – in particular a suite of tax reform measures – are still the subject of an energetic lobby by the sector. The emergence of a body of “proactive and engaged” philanthropic intermediaries – another aspiration of the report – seems to have come about already, according to Kingsley Aikins analysis, although it’s not clear how many of these are active in Ireland.
Benefacts contribution – data and analysis
To prepare our first report on the work of Irish philanthropic institutions (listed here), we drew on the regulatory disclosures, published reports and websites of philanthropies based here, augmented by disclosures in the tax returns of overseas philanthropic donors active in Ireland. We followed up by classifying all of the philanthropies in our database, and we wrote to those that have been reported as the source of a grant in the financial statements of nonprofits.
We wrote to 74 Irish philanthropies inviting them to share some information with us about the targets of their giving, for analysis on an anonymised basis by sub-sector. Some already report this and we have relied on their published disclosures. Some wrote back immediately to provide the information and welcome the initiative. A handful said they were new, it was too soon to provide this information, or that they would need to take some more time to analyse it. A few said they don’t publicise that they give as a matter of policy. Others didn’t reply at all.
Our report reflects these circumstances, and provides an analysis derived from all reported institutional giving in Ireland in 2019. This time next year we would like to update this with 2020 data for a fuller population.
Kingsley Aikins
CEO, the Networking Institute
The virus is rampaging out of control around the world – infection rates are soaring, the death toll is astronomical and people feel weary, vulnerable and scared. The year is 1918 and the Spanish flu has the world by the throat. And yet, and yet, this awful tragedy eventually passed and was followed by a sustained period of innovation, creativity and growth leading to the Roaring Twenties. The drivers, particularly in the US, were comprehensive electrification and the mass production of millions of motor cars. This resulted in the construction of roads, hotels and restaurants. It was the golden age of sports, radio linked the nation and movies entertained the masses.
What if we were to have a repeat performance now, over a century later? What would be the modern day equivalents of electricity and cars? Perhaps the current drivers will be universal access to high speed broadband and a vast investment in the green economy.
So what does all this mean for the world of philanthropy here in Ireland. The bad news is that it would appear that in many countries giving at the middle and lower levels is declining whereas the good news is that giving at the upper level is exploding. This is a reflection of the intense inequity and inequality of the world we are living in. But, as the cliché says, it is what it is. The reality is that we are in the foothills of a massive intergenerational transfer of wealth – the immense wealth of those aged in their sixties and seventies will have to be transferred and it can only go three places.
Firstly, it will go to heirs – the children of the wealthy will inherit enormous amounts of money. If you are a member of what Warren Buffet describes as ‘the lucky sperm club’ you are going to be financially very secure. But there are many people who believe that giving enormous amounts of money to children can damage them. Back to Buffet who said in an interview in Fortune magazine that it is more important what you leave within your children that what you leave to them.
Option two – giving your money to the government in taxes doesn’t seem to appeal to many.
Option three is intriguing, giving your money away philanthropically – university, library, hospital, church, the arts, diaspora etc. Accenture have written a report entitled “The Greater Wealth Transfer” which says that this intergenerational transfer of wealth in the US alone will amount to $30 trillion between now and 2050.
So what are the implications?
One assessment would suggest that we are in the early days of a surge in philanthropic giving around the world including Ireland. However in Ireland we lack two key elements, the first of which is to allow the donor get a tax benefit. The second is for financial institutions and professional intermediaries to put in place the structures that will facilitate this transfer, and to promote them to their clients.
This is what has happened in the US and has changed the architecture of philanthropy. It all started back in 1991 when a bank in Boston called Fidelity applied to the IRS to establish a 501(c)3 (tax exempt)entity within the bank called the Fidelity Charitable Gift Fund. It was based on the Community Foundation model which had been around since 1914. This allowed for individuals and families to set up Donor Advised Funds and was a tax efficient way for these clients to carry out their philanthropic wishes. In 2017 the Fidelity Charitable Gift Fund raised the most money of any public charity in the US and 6 of the top 10 recipients of charitable giving were Donor Advised Funds in banks. We have seen similar structures emerge in the UK and Australia.
So as we exit, hopefully and gingerly, from this dastardly virus will we go back to the way things were before or will we go forward to something new, different and better. The way people live, work, travel and learn is in for significant change. The way we view each other, the way we view the role of companies – purpose rather than just profit – and the way we view the environment is shifting.
Philanthropy can play a role here but, as social animals, we yearn for social contact and the spontaneous outcomes of serendipitous meetings. We need to get the balance right between face to face creativity and the benefits of remote working. We will enter into a period of experimentation with new work and organisation models. In all that I detect a sense of hope, optimism and, even, excitement. There doesn’t seem to be an appetite to go back, a realisation that success in the past is no guarantee of success in the future and to quote famed American management consultant Peter Drucker – “to create the future you have to be the enemy of today”. Or as Charles Darwin put it – “it’s not the strongest of the species that will survive, or even the most intelligent – it’s those most able to handle change”. And that applies equally well to Philanthropy.
Roll on 2021.
Charitable giving by individuals
We have implemented the other data-based recommendation of the Forum, by commissioning an analysis of charitable giving derived from Household Budget Surveys produced periodically by the Central Statistics Office. The findings are stark, and must be a source of concern to the Minister of State for Community Development and Charities, who has assumed responsibility for the philanthropy policy brief.
Charitable Giving by Individuals will be updated as soon as the results of the CSO’s 2020/21 Household Budget Survey – deferred because of Covid19 – become available
Giving by way of legacy
Another new and as yet unexplored source for evidence of giving by individuals (after their death) is the data to derived from probate documents held by the Charities Regulator, flagged in his report for the Community Foundation by economist Jim O’Leary. This body of hitherto untapped evidence has the potential to add a key layer of full population data to our understanding of the profile of giving in Ireland
According to Dr O’Leary’s estimates (published in 2018), aggregate charitable bequests currently amount to about €50m a year in Ireland, thereby accounting for about 0.9% of the inter-generational transfer of wealth at death. In contrast, charitable bequests are estimated to account for 9% of all charitable giving in the UK and 12% in the US. If charitable bequests in Ireland were on a comparable scale to the UK, they would currently be generating something in the order of €220m per annum.
What’s next?
Benefacts serves philanthropies and their stakeholders – including other nonprofits – by making their work more accessible and more transparent. Philanthropies in Ireland and the US have given us financial support for this work but they exercise no editorial control. With their help, we plan to do more next year, updating our existing reports, and working with others to surface better data on legacies and bequests, and on corporate giving.