Slides from a guest lecture given as part of the Cass Business School MSc in Grantmaking, Philanthropy & Social Investment, based on my book of the same title. (Also see accompanying notes).

1. 1
Public Good by Private Means:
Principles of philanthropy policymaking
Rhodri Davies
Programme Director, Giving Thought

2. The Book
2

3. Session Plan
3
1) Intro & background (c. 5 mins)
2) Quick exercise (c. 5mins)
3) Principles of philanthropy policymaking (c. 70 mins)
4) Exercise (c. 30 mins)
5) Finish- contact details & follow up (c. 5 mins)

4. Quick Exercise
4
• Write down your top three principles that
policymakers should keep in mind when
designing policy to encourage or support
philanthropy/charitable giving

5. During the presentation
5
• As we discuss 8 proposed key principles of philanthropy
policymaking, consider the following question:
“To what degree is each principle descriptive
or normative?”
• i.e. does it say something objective about how philanthropy
is at the moment, or something subjective about how it
should be?

6. Key Principles of Philanthropy
policymaking
6
1) Philanthropy is about people and their choices
2) Philanthropic choices are about both head and heart
3) Philanthropy is not the same as public spending and cannot replace it
4) Tax relief on philanthropic donations is not a subsidy for services the
state would otherwise have to provide
5) Philanthropy is often ‘political’ (and that is a good thing)
6) Philanthropy should be progressive
7) Philanthropy should be prepared to take risks
8) Philanthropy can enable a long-term view

7. 1. Philanthropy is about
people and their choices
7
“The freedom for individuals to choose where they direct their gifts lies at the heart
of philanthropy and gives it much of its strength. But this also means that it is not
good at providing consistency or equality at a systemic level. Rather than trying to
overcome this by forcing philanthropy to be something it isn’t, we should respect
and cherish the importance of donor choice and tailor our expectations accordingly.”

8. Micro vs Macro
8
“Philanthropy can refer both to actions and institutions. We can think of
philanthropy both as a form of individual giving and as a complex economic
and policy structure – as the institutionalized practice of privately funding
the production of public benefits. If regarded from the first, agential
perspective, philanthropy stands apart from other forms of giving, such as
gift-giving to friends and family, and from spending for private
consumption. If looked at from the second, structural perspective, it stands
apart from alternative, institutionalized mechanisms of finance, such as
taxation or market exchange.”
(Reich, R., Cordelli, C. & Bernholz, L. (2016) Philanthropy in Democratic Societies: History,
Institutions, Values. Chicago: Chicago University Press)

9. The choices for policymakers
9
1. Accept the current reality of philanthropy at the micro level (i.e.
voluntary & irrational) and shape any policies about the role it
can play at a macro level accordingly.
2. Have a vision of how philanthropy should work at the macro
level and use policy to try to shape it at the micro level to
ensure it meets requirements. OR, what most often happens:
3. Accept philanthropy at the micro level, have some vision for it
at a macro level, hope the two match up, get frustrated.

10. 2. Philanthropic choices
are about both head and
heart
10
“Not only is philanthropy about individual choice, but those choices are informed by a
wide range of considerations, both rational and emotional. On the rational side there
is a demand for evidence – of where need lies and how best to address it. On the
emotional side is a complex mixture of factors – some are personal or cultural factors
and some are societal factors, such as prevailing attitudes towards wealth and need.
Philanthropy is therefore a product of both head and heart, and the balance between
the two varies between donors.”

11. Effective Altruism
11
Peter Singer

12. Scientific Philanthropy in Victorian
England
12

13. The “warm glow” theory of
philanthropy
13
“People get some private goods benefit from their
gift per se, like a warm glow. Because of this
second and seemingly selfish motive, this is called
a model of “impure altruism”.”
Andreoni, J. (1989) Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence.
Th Journal of Political Economy, Vol 97, Issue 6, Dec 1989. 1447-1458.

14. Warm Glow: biological reality?
14
Moll, J. et al (2006) Human fronto–mesolimbic networks guide decisions about charitable donation. Proceedings of
the National Academy of Sciences 103(42):15623-8 · November 2006

15. Things that affect giving
15

16. 3. Philanthropy is not the same
as public spending and cannot
replace it
16
“Philanthropic giving is nowhere near the same order of magnitude as public spending,
and the profile of giving does not match the profile of need at a societal level. The
element of voluntary choice and the influence of emotional factors also make
philanthropy ill-suited to meeting needs at a systemic level. Hence it is not a feasible or
appropriate replacement for public spending.”

17. Giving vs Public Spending:
differing priorities
17
UK Charitable Giving UK Public Spending

18. Giving vs Public Spending:
differing magnitudes
18
Total individual giving in UK in 2016 =
Total Managed Expenditure by UK
Govt 2015-16 =
£9.7
billion
£753
billion
“Philanthropy is truly a
rounding error”
“All the billionaires added together are, as they’d
say bupkis compared to the amount of money
that government spends… It’s trillions of dollars.
Private philanthropy can’t do that.”

19. Giving vs Public Spending:
differing magnitudes
19
“A hedge fund manager pulled me behind a cactus at a
conference and says he’s going to raise $1 billion from the hedge
fund community over the next five years to fix public education.
When I explained to him that New York City’s annual school
budget was $22 billion a year, that was the last time we ever
heard from him...”
Michael Bloomberg

20. 4. Tax relief on philanthropic
donations is not a subsidy for
services the state would otherwise
have to provide
20
“Offering tax relief for individuals on their charitable donations is a valuable tool for
governments to support a philanthropic culture. It is not a given that donations should not
be taxed, so the relief does count as a subsidy by government. But it should not be seen as a
subsidy for the provision of particular services that the state would otherwise have to
provide. The tax relief only makes sense when seen as a generalised subsidy reflecting a
government view that a healthy civil society is important (including its role in advocacy and
campaigning), and that supporting individuals to make voluntary donations is an effective
way of ensuring this health.”

21. Justifying tax incentives for
philanthropic giving
21
1. Tax base rationale: Tax incentives for charitable giving are not really tax 'breaks' at
all, because you need to deduct any charitable gifts from an individual's income in
order to properly define what that person should be taxed on.
2. Subsidy rationale: The state collects taxes in order to pay for public or social goods,
and charities and civil society organisations work to produce these same goods.
Hence it is fair and efficient to allow people to choose to contribute to social good
directly through charitable gifts rather than through paying their taxes.
3. Pluralism rationale: There is inherent value to society in having a thriving
charitable sector - i.e. the public good is civil society itself. Hence any decent liberal
democracy should support the ongoing health of civil society by offering tax breaks
to those who want to contribute to it.

22. The value of adopting a Pluralism
Rationale
22
1. It will deliver a broad range of public goods, some of which
will overlap with governmental priorities
2. It will support a healthy, pluralistic civil society, which is a
vital part of a functioning democracy
3. There is inherent value in giving people a sense of personal
agency so it makes sense to support giving.

23. Tax relief justified in practice
23
“On that principle you
ought not to be liable to
the tax, and the exemption
is a just one. Exemption,
then, is not a privilege – it
is a right.”
“He pictured the tax exemption as
a subsidy of uncertain
proportions granted by the state
to institutions of questionable
value…a blind contribution, for
the state applied few of the checks
and none of the scrutiny normally
given to expenditures.”
“The exemption from taxation of money
or property devoted to charitable and
other purposes is based upon the theory
that the Government is compensated
for the loss of revenue by its relief from
financial burden which would
otherwise have to be met by
appropriation from public funds.”
“We regard it as essential to
maintain the link between rates of
income tax and Gift Aid, since this
embodies the principle that
charitable giving should be out of
untaxed income…This is a good
principle”
Subsidy Tax Base

24. 5. Philanthropy is often
‘political’ (and that is a
good thing)
24
“A key distinguishing feature of philanthropy is that it has a purpose or goal. In most
cases this can be framed as a problem that needs to be overcome or a change that needs
to be made in society. By giving to a particular cause, a philanthropist is expressing a view
about a way in which our society, our laws or government policies need to be different.
This is an inherently political act. It is only if we incorrectly conflate ‘political’ and ‘party
political’ that there is a problem. If we instead reclaim the proper understanding of what
the sphere of politics includes, then it is clear that philanthropy is, and always has been, a
valuable tool for people to express their beliefs within that sphere.”

25. The current climate for charitable
campaigning in the UK
25

26. Global closing space for civil society
26

27. Proud history of charitable
campaigning
27
Abolition of slavery
End of child
labour
Universal
suffrage
LGBQT rights

28. Too much freedom?
28

29. The crucial question
29
“When donors hold views we detest, we tend to see them as unfairly tilting
policy debates with their money. Yet when we like their causes, we often view
them as heroically stepping forward to level the playing field against powerful
special interests or backward public majorities… These sort of a la carte
reactions don’t make a lot of sense. Really, the question should be whether
we think it’s okay overall for any philanthropists to have so much power to
advance their own vision of a better society?”
Callahan, D. (2017) The Givers: Wealth, Power and Philanthropy in a New Gilded Age

30. 6. Philanthropy should
be progressive
30
“Philanthropy, properly understood, is about trying to improve society by tackling the root
causes of problems, rather than just addressing their symptoms. Philanthropy should
therefore be progressive, not regressive or conservative. Philanthropy is not about
maintaining the status quo or turning back the clock, but about moving society forward by
overcoming failings in existing government, welfare provision or legislation.”

31. But is it?
31

32. A shining example of progressive
philanthropy
32
Julius
Rosenwald
(1852-1932)

33. Philanthropy: an undemocratic
force for good?
33
“Philanthropy must be a place in which [the fundamental
liberal values of tolerance and respect for others, of decency,
charity, and moderation] are preserved, defended, and
championed, a sort of glass-walled sanctuary for the best of
American ideals.
Soskis, B. (2016) “New Realities for Philanthropy in the Trump Era. Chronicle of
Philanthropy, 10th November

34. Doing good with bad money?
34

35. 7. Philanthropy should
be prepared to take
risks
35
“Philanthropy is often aimed at intractable problems that have proved resistant to the efforts
of government and the market to solve them. To succeed where these other actors have
failed, philanthropy needs to try new and different approaches, and this means taking risks.
The voluntary nature of philanthropy and its basis in the social motivations of individuals
mean that philanthropy is able to take risks that would not be possible either for public sector
organisations, which are accountable to taxpayers, or for private sector organisations, which
are accountable to shareholders. This tolerance for risk is one of philanthropy’s greatest
assets.”

36. Risk in philanthropy
36
• Can take many forms, e.g.
oPolitical risk
oFinancial risk
oOutcomes risk
oReputational risk
oEtc.

37. Innovation
37
“Time after time philanthropy is seen breaking in on official routine,
unveiling new evils, finding fresh channels for service, getting things
done that would not be done for pay… In the face of enormous changes
philanthropy has shown its strength of being able perpetually to take
new forms… The capacity of Voluntary Action inspired by philanthropy to
do new things is beyond question.”
Beveridge (1948) Voluntary Action: A report on methods of social advance

38. Going against the grain
38
“I regard endowments as an important element in the experimental branches of
political and social science. No doubt the nation at large may take on the cost of such
tentative efforts, but this involves taxation; and the assent of the majority to increased
taxes could not be justly demanded by philanthropists or projectors, and certainly
would not be obtained until their speculations had taken such a hold upon the public
mind as no longer to require an exceptional support or propagation. The most
important steps in human progress may be opposed to the prejudices, not only of the
multitudes, but even of the learned and leaders of thoughts in a particular epoch.”
Thomas Hare, quoted in Owen, D. (1964) English Philanthropy 1660-1960

39. 8. Philanthropy can
enable a long-term
view
39
“Philanthropy is not beholden to the political cycle or to the short-term demands of
the market. That means that it should be able to take a longer-term approach to
dealing with social problems than either businesses or government. This is a great
strength of philanthropy, as there are many issues that clearly require long-term
solutions and philanthropic organisations may be the only bodies capable of
identifying and delivering them.”

40. Benefits of long-term philanthropy
40
1. Bringing attention to issues
2. Keeping attention on issues once they are in
public consciousness
3. Ability to try out longer-term solutions (e.g. early
intervention)
4. Willingness to fail

41. Now it’s your turn!
41
• In groups, come up with your key principles of
philanthropy policymaking (5-8 of them)
• Use mine, tweak them, or suggest entirely new ones of
your own.
• Rank them in terms of importance

42. Where to find me
42
• Giving Thought: https://www.cafonline.org/about-us/blog-home/giving-
thought
• Old Giving Thought blog: www.givingthought.org
• Giving Thought podcast: http://givingthought.libsyn.com
• Email rdavies@cafonline.org
• Twitter @Rhodri_H_Davies

43. Rhodri Davies
Programme Director, Giving Thought
Charities Aid Foundation