Ho Ho Ho

It is the time of year when many of us think about giving to others less fortunate than ourselves and to good causes. Maybe we look more closely at the circulars which come through our letterboxes showing starving children, emaciated donkeys or the benefits of giving to cancer research.

A decade ago, Bill Gates and Warren Buffett two of the world’s richest men, launched the Giving Pledge ‘a commitment by the world’s wealthiest individuals and families to dedicate the majority of their wealth to giving back’. To date 210 billionaires have signed the Giving Pledge. How noble, what a great thing to do!

Bill Gates made the pledge in 2010 when he was worth $53 billion and Warren Buffett when he was then worth $39 billion. Ten years later Bill Gates is worth $115 billion and Warren Buffett is now worth $82 billion. What is going on? Are they cheating the system as many journalists would have us believe or is it more complicated and difficult than it would appear - to give money away?

Andrew Carnegie, the father of modern-day philanthropy, made his fortune from the Carnegie Steel Company and at his peak was worth in today’s money $300 billion. In 1890 he sold his company for $480 million and dedicated his life to philanthropy. By 1911 he had given away 90% of his wealth. But he admitted it wasn’t easy.

‘Of every $1,000 spent in so-called charity today’ Carnegie opined ‘it is probable that $950 is unwisely spent, indeed, the spending produces the very evils which it hopes to mitigate or cure’ the problem as he saw it was ‘indiscriminate charity, providing help to people who were unwilling to help themselves. That sort of philanthropy only rewarded bad habits rather than encouraging good ones’. He argued that ‘philanthropy should instead support universities, libraries, hospitals and meeting halls, recreational facilities, and similar projects that strengthened and refreshed individuals so they could become more independent and productive themselves’.

Making indiscriminate gifts whether it be responding to a tug at the heart strings or a plea from a local charity for funding at an auction or dinner often does more harm than good. Is the charity well run, how effective is it in delivering a decent ‘bang for your buck’, who makes sure that your money is well spent – or indeed spent at all on the causes you want served? 

Lump sums are not always the solution for many active charities. They could often benefit more from an annuity over a reasonable period so that it can budget to spend.

It is for these two reasons and many more why many wealthy families set up charitable foundations which research into active charities and find out what their funding requirements are before making a commitment.

But this approach brings with it its own headaches. Many charities find they are spending an inordinate amount of time and money preparing submissions to grant making foundations which may or may not be successful and if successful they will need to submit regular progress reports and in due course resubmit their applications as and when the funding runs out.

Then of course there is the media. The story of Camilla Batmanghelidjh is a case in point. Camilla founded Place2B and Kids Company for marginalised children and young people. From 1996 – 2015 she was the ‘media darling’ attracting serious funding for her street level centres and alternative education funding, therapy houses and programs in some 40 schools in London and Bristol and performing arts programs in Liverpool.

In 2007 the Guardian described her as one of the most powerful advocates for vulnerable children in the country.

But in 2015 her world came crashing down with a BBC Newsnight program of sexual abuse which was followed by allegations of mismanagement and squandering of funds. Camilla was forced to step down and Kids Company was closed.

Then this year 2021, six years later, these allegations were investigated by Mrs Justice Falk in the High Court. Camilla was exonerated. At a meeting on 23rd April 2021, Consultant Psychotherapist David Morgan invited other leading mental health practitioners to ‘call on the media that joined in this vicious attack on the leaders of Kids Company to redress their complicity by publishing and demanding an apology for the children, adolescents and young people who have suffered as a result of these attacks’.  

Giving is extremely difficult to do well and we as private client professionals need to be alive to these problems and club together to promote the skills and expertise of those professionals who research and promote good causes and philanthropy.

But outright giving is not the only solution, I am also a great fan of impact investing about which you can hear more from our Platinum Caroline’s Club member Mark Florman who is our podcast member of week.

Please let me have your comments and don’t forget to register for Caroline’s Club – it’s FREE to register and you can then learn more about our exclusive award winning club of leading private client professionals who are keen to win business and build trust with clients simply register here