Identifying gaps

Evaluating options

The following table gives a high-level assessment of how well each existing giving option meets the different donor needs we have outlined previously.

Two points are clear from this.  First, although it is possible for an individual to direct their money with some precision, no option gives a high level of accountability to individual donors.  Second, the methods available to an individual for reaching a high number of causes (government, lotteries) do little to give control to individuals.

We don’t believe it’s necessary to look for a single solution with good coverage of all the criteria; our focus instead is on how to combine the solutions effectively and find where more is needed.

Best current options

Supporting community organisations gives a compromise across the board, but it doesn’t address the two high priority criteria: reaching a high number of causes, and matching an individual’s personal interests and values.  To cover these, we would suggest opting for government or lottery contributions, and philanthropy giving, while supporting community organisations for local and personal causes. We think this constitutes one of the best solutions currently available, and we will go on to discuss its weaknesses and opportunities for improvement.

Remaining gap

General causes

We believe philanthropy matching solves its area well, and gives the heartening message that philanthropy is not the preserve of high-wealth individuals.  We would like to see a solution that takes this message further – the scope should be the causes that people don’t have a personal attachment to but would support in principle, which we will call general causes.

We make a distinction between such general causes and projects serving “niche” interests, which are local or personal or driven by particular sets of values.  As a complex example, most people know someone whose life has been impacted seriously by cancer, and those of us who have been fortunate to avoid it are often still prepared to support cancer charities.  We say that cancer is a general cause, and for some people it is a personal cause as well, and for some of those people it feels right to dedicate more attention and money to that personal cause. More clear-cut personal interests are your local school, your church, and any political groups you subscribe to.

A further example, strategic goals like the Sustainable Development Goals or campaigns like making poverty history are general causes by design.  How much people want to support them relative to other general and niche causes can be expected to vary.

“Niche” giving is the side of charity that is understood and works well today.  There are several services that help you find good charities in your area of interest if you don’t already know them, and it is typically easier to achieve good results for representation, accountability, and appreciation.

A solution that handles general causes similarly effectively would move us closer to a “one-stop shop” or “give and forget” service, which will appeal to some donors.

Government’s role

Government makes funding available for these general causes, but their strategic objectives are not aligned well with the individual goals we have outlined.

The appeal of government involvement is that it has the electorally-backed authority to take difficult decisions about how to allocate funds to causes.  Added to which, many major causes are societal problems, for which many people expect the government to take direct responsibility.

We note that politics, which is heavily reliant on structures to represent, account for and choose between many incompatible and even diametrically opposing opinions and preferences, is fundamentally different in this way to charity, which is characterised by a broad agreement that projects are worthy and beneficial, with the main difficulty being in allocating funding among the many such projects.  There are places where the overlap between charity and politics is significant and ambiguous, and there are people who have political reasons for taking issue with charitable activity, but putting both of these aside leaves the majority of donors having no objection to the majority of charitable work.

Because government is a complex organisation with many responsibilities and stakeholders, and because some charitable causes by their nature attract strong partisan support, government is more vulnerable to biases and conflicts of interest, or simply works within a tighter set of constraints than is necessary for the problem.  A model of delegating to near-independent dedicated organisations while retaining ultimate accountability may be a more viable approach, but today it is difficult to see such organisations involving individuals meaningfully.

In part because its funding pool for grants is not protected from other government spending and in part because we don’t tend to like government directing our personal discretionary spending, government’s ability to encourage private contributions is restricted.  Increasing overall private contributions, whether in coordination with government or not, is one of our main goals here.

Lotteries

The National Lottery and others have a long and successful history of making a large funding pool available to a large number of organisations – they have a reporting focus on how many grants they make in each postcode district – and has more in common with our suggested direction than the other initiatives, despite charitable giving being a secondary consideration when we think of a lottery.  While there is some debate about the level of profit taken by the operator and how it safeguards vulnerable players, and there are opportunities to increase donor representation in the granting process, we consider this to be one of the more positive systems of charitable giving in the UK today.  We also think that there is demand for similar services without the game element but with the same scale of ambition.

Why is there a gap?

We feel that this is an important question that should be asked within the charitable sector.  The reasons are likely to be complex; we supply our own speculation here without detailed development.

A common theme is that individuals being able to take responsibility seems more reasonable in an information-rich age, with more accessible services for transferring money.  It is worth noting that the question of how an individual can and should respond to widespread suffering is a long-standing one with ample representation over centuries of art and literature.¹We note especially a theme commonly used by Charles Dickens and others, where a character’s lofty thoughts about and even large contributions to “global” problems are in contrast to a background of poverty, hardship and neglect in their immediate vicinity.  This is not to say that solutions were previously unfeasible – we do not believe this – but that it is now more apparent that they could work well.

There has been a long history of expecting government to take responsibility at least for coordinating responses to large problems – the welfare state and the National Health Service being key examples.  Making government responsible has created strong incentives (they are often key election issues) to show that these systems are working effectively and fairly, although this has not always been enough to guarantee their high performance.  This is not the only possible approach: there is the potential for privately-funded charity to make a significant contribution in these areas; we note that at present the combined welfare and NHS budgets are an order of magnitude greater than charitable sector income, but there is scope for taking a longer-term view that the balance of taxation and discretionary giving could either shift dramatically, or we could see better results in other countries with a different balance..

There is a dissonance between the emotive nature of the need to relieve suffering, and the complex compromises and trust mechanisms required by effective solutions.  Communicating can be difficult, and individual organisations can be vulnerable to public relations risks when they take difficult decisions.

The sector as a whole, despite being populated by people with similar needs, has never had a strong degree of accountability to individual donors, but has been oriented towards beneficiaries and major granting bodies (including government agencies) as its primary stakeholders.  Our view is that we should expect to see strong representation for donors arise naturally, given that the core interests of donors are largely aligned and technology is making collaboration more accessible and effective.

Other innovations may have dominated conversations in the sector without delivering major benefits, and it is also conceivable that operational pressures on individual organisations has limited the capacity for innovation inside the sector.

Summary

The strategic gap in current giving options is for a service that can cover a large number of general causes, while being able at some level to preserve an individual’s interests and preferences.

Continue: defining a service