Lessons and warnings

As a former professional fundraiser in the USA I am worried that the Coalition’s apparent love affair with US-style philanthropy is based on an understanding of outcome rather than process. ‘Government-driven philanthropy’ (the thrust of Jeremy Hunt’s plan) is an oxymoronic idea in America, where donors are the lifeblood of the arts sector, not a bolt on to public support (which does exist in the USA, albeit on a much smaller scale). Government intervention in philanthropic work is rarely welcomed, and even Hunt’s relatively benign idea of a government-held matching fund would be met with suspicion about bureaucracy and political agendas. The UK government is proposing to have a heavy hand in the philanthropic process.

The area in which the US government plays an essential role in America’s philanthropic culture is where the Coalition is most tentative: tax breaks. Many donors in the USA, particularly the very wealthy, are as motivated by tax mitigation as by charity, and there are tax-friendly tools galore to encourage such thinking.

Consider a common US ‘planned giving vehicle’ known as a Charitable Lead Trust. Let’s say that Mrs Jones has £1m that she wants to give to her son, but she’ll be hit by big estate and gift taxes. Instead, she gives the money in trust to a charity for a period of, say, 20 years. The charity agrees to invest this donation; in return it can draw down a fixed amount from it each year. After 20 years, the charity relinquishes the donation to her son. He pays tax on what is left of the original donation, which is relatively small, but because of investment gains the total amount he receives may be two or three times the original donation, all of which is tax-free gain. Result: Mrs Jones gets a tax write-off on her donation, her son pays a substantially smaller amount of tax on a much larger inheritance, and the charity gets a nice income stream.

Gift Aid pales in comparison to this sort of incentive. According to the National Philanthropic Trust, in 2007 the USA boasted more than 100,000 arrangements of this sort, valued at more than $125bn. Is the UK government ready, or even able, to create this kind of giving environment here? Ironically, as the UK rushes headlong towards US-style philanthropy, the lingering recession has led to soul-searching in the USA as one arts organisation after another closes because donors can no longer provide enough support. In this regard, the haziness around the Coalition’s philanthropy scheme may be a blessing in disguise: there’s still time for clear dialogue about what philanthropy can genuinely do for the arts sector, and where it will inevitably fall short.

Simon Inch explains why organisations should engage with their individual volunteers and donors

“Size isn’t everything” is particularly true of theatre. Smaller spaces can put on incredibly engaging and intimate performances. This is why I got involved with the Tobacco Factory Theatre – because of the sheer joy I got from the performances I saw there. I’ve also had a sense that, as a smaller arts organisation, it gets real benefit from any efforts I’ve made by volunteering either my time or my money.

I’m more than happy for the theatre to use the passion of people like me who are pleased to do whatever we can to get involved. Using volunteers to do anything from selling programmes in the auditorium to distributing flyers in the local community is a great way of involving people who are eager to act as ambassadors for the theatre. And in return, we feel part of the life-blood of the place. I have found a warmth and familiarity with both the building and the people working there. It feels like coming home when, after a long day working in an office, I can relax into a performance – even if I’m only helping out by distributing tickets. It’s also helped to build the bond between me as a member of the audience and the ongoing future of the theatre. In a very minor way, I am able to meet up with some of the people shaping the future direction of the theatre and feel that my small voice can be heard. It may sometimes only be hearing about next season’s shows a bit earlier than the new brochure is sent out but even that’s enough to cement my loyalty.

Particularly now, I also recognise that individuals getting involved financially helps to spread the funding away from any one source for the theatre. The people turning up each week are the firm fans who are there because they value what the organisation does. So I’m glad to give some additional money to support that, and it isn’t something that a theatre should be afraid to ask for. Individual donations may not be as fruitful as corporate ones but they do help share the load, and it’s possibly easier to keep the ongoing relationship with the individuals. If anything, you’d struggle to keep us away! The current buzzword ‘philanthropy’ seems a grand way of talking about what we do. I’m just helping in whatever way I can to keep a place I feel passionate about continue its fine work.

More case studies online at http://www.artsprofessional.co.uk