U.K. Family Foundations Rally to Support Rising Need

The U.K.’s top 100 family foundations give £1.33bn in past year – a fall of 1.8% but a rise of 6.2% when results of largest foundation,
the Wellcome Trust, are excluded

Family foundations – the leading source of major philanthropy in the UK – are diverting resources to help tackle increasing societal need, caused by spending cuts and the deepening recession, but say they are also feeling the effects of the difficult economy and say their contributions will come down in the years ahead.

The findings come in the fifth edition of the influential annual series Family Foundation Giving Trends; which also finds foundations strongly value their independence and remain unconvinced by policies that aspire towards significant changes in the way they distribute their wealth, meaning government may need to rethink how best to work with donors for the public good.

The report is produced by Pears Foundation and the ESRC Centre for Charitable Giving and Philanthropy at Cass Business School.

This year’s study is the largest yet and along with the league table of giving by the UK’s 100 largest family foundations reveals the vital contribution family foundations make, but also reflects a worrying pessimism about their ability to meet growing demand for their help:

  • The largest 100 UK family foundations donated £1.33bn to charitable causes in 2010/11 and a total of £6.9bn over the past five years, representing 8% of all private giving.
  • While there was an overall fall of 1.8% in giving in 2010/11, there was a 6.2% rise if the results of the largest foundation, the giant Wellcome Trust, are excluded. This rise is partly the result of a small number of major one-off donations and a mixed picture amongst other foundations – 47 saw a fall in their giving and 53 saw a rise.
  • Falling assets in the past year and other economic conditions have led the majority of family foundations to believe they will collectively reduce their charitable spending over the next few years.
  • Foundations said the biggest influence on recent spending decisions has been the reduction in public sector welfare expenditure and is also the area where they expect to see the biggest increase in demand for funding. However, they do not feel they can adequately meet this need.

The report finds foundations have a strong desire to maintain their independence – preferring to partner with other foundations than the public sector. This desire is also reflected in a lukewarm response to recent policy ideas:

  • When asked about the idea of a UK mandatory payout, as in the US where foundations are required to pay out a minimum percentage of their assets each year, the majority of those surveyed (65%) do not feel this will be beneficial to funding levels in the UK.
  • And with regard to social investment, where charitable funding is directed towards loans, investments and other kinds of financial products rather than grants, only 20% said they had been influenced by this in their recent spending decisions.

The full report is available for download at cgap.org.uk