Economics United Kingdom

Hunt must give more thought to giving

While holding out one hand to the arts and culture, the government is taking away with the other, by removing financial support right across the sector

Just reward: honouring donors such as the late Sir John Paul Getty II could encourage philanthropy

Did you know that this is the “year of corporate philanthropy”? I thought not. It was launched in December 2010 by the culture secretary, Jeremy Hunt, as part of the Coalition government’s drive to encourage philanthropy by businesses, individuals, trusts and foundations. Since charitable giving fell by 7% in 2008/09, a government that is officially committed to creating a generous “Big Society” has cause for concern. A government report outlining and endorsing its policy on philanthropy is promised for the spring; the financier turned charity chief executive Tom Hughes-Hallett is chairing an independent review, and Hunt is doing his bit for the arts, which receive the smallest share of annual giving—just 2%. Only 8% of those who volunteer, giving time rather than money, help the arts.

That Hunt’s appeal to private pockets follows a cut of 30% to Arts Council England, and 15% to national museums, is of course entirely coincidental. Hunt insists “philanthropy is not about replacing state funding with private support”. Of course not. Indeed, in spite of the 25% cut in funding to his own department, Hunt has managed to find £30m for a scheme that will match private donations with public money. Announcing this, he said the council would be putting up a further £50m in Lottery money but, possibly to remind the minister about the arms’ length principle, the council pointed out that it would have to wait until they had met formally to agree to this. At present, there are no details on how the match-funding scheme will actually work. Care will have to be taken that the extra £160m in the scheme doesn’t just go to those who are good at fundraising anyway.

Nor is there much flesh on the bones of the Cabinet Office’s preliminary discussion report, titled Giving, which was launched into the void of 29 December. It wants to see “a culture shift that makes social action a social norm”, but apart from a headline-catching idea about giving something every time you use a cash machine, it is written at such a level of generality that a lot of work is needed before the discussion paper turns into a policy proposal. Such work as has been done in the cultural sector appears in two reports, both specifically on endowment funding, that Hunt commissioned from the council and the British Museum, and which were published to coincide with his announcement of corporate philanthropy year (see p13).

Hunt has ignored the council’s conclusion that endowments are not the things to focus on at present, and that most arts organisations are not in a position to start raising funds for them. Both the council and the museum argue that philanthropy will be best encouraged by honouring those who give large amounts, and incentivising all of us through the tax system. Surprisingly, the Giving discussion paper refers to the “red tape and lack of information” that means payroll-giving generates only 1% of donations, but makes no mention of the most familiar form of tax relief, Gift Aid.

The government’s office of tax simplification could do some useful work here. A substantial 24% of organisations that could run Gift Aid schemes don’t, and the Treasury enjoys a £700m windfall in unclaimed tax relief. Because tax relief (at above the standard rate) is shared between donor and receiving organisation, Gift Aid is a nightmare to administer. It would be far simpler to allow a donor to make a single Gift Aid declaration and allow all the tax relief to go to the donor. If relief on the standard rate of income tax were included, that would be a real incentive.

The British Museum report is more substantial than the council’s. Not surprisingly, it shows a good understanding of high-end donors. In 2008/09, 100 individuals gave gifts of more than £1m each, and 18% of the total went to museums and the arts. The museum argues persuasively that the government needs to be more appreciative of such people, especially if they don’t happen to be British nationals, and when it comes to the appointment of trustees to national museums and galleries. It also argues that the current £500 cap on personal benefits that can be offered to a donor should be replaced with a ceiling of 5% of the gift. Again, that would be a much bigger incentive to give.

The British Museum is also strong on two proposals that would substantially improve things for museums and galleries. Although the current “acceptance in lieu” scheme works well in relation to estate duty (when the “donor” is dead), the tax relief that is offered on gifts of cash, land, and stocks and shares should be extended to cultural objects such as works of art. This would undoubtedly appeal to the former Labour minister and Tate chairman Lord Myners, who has announced that he plans to give away his private collection, and is pushing the government on the philanthropy issue. The idea of “lifetime-giving” could be extended by giving tax relief to charitable remainder trusts, which give the donor financial security in their lifetime but ensure their capital goes to their chosen charity on their deaths.

Responses to the government’s discussion paper have to be in by 9 March. People can hardly fail to point out that, while holding out one hand to the arts and culture, the government is taking away with the other, by removing financial support right across the sector, where nearly all organisations are registered charities. In Giving, it admits that people can’t be made to give but they can be influenced by good example. Hard statistics to be published in the academic journal Cultural Trends show that when state support goes up, private investment does also. If the “year of corporate philanthropy” is to mean anything at all, the government needs to set a more charitable example of generosity to the arts.

The writer is professor of cultural policy and leadership studies at City University, London

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