New Works in the Field / Philanthropy and Historical Research / Philanthropy and the State

The Social Benefits of Philanthropy & Charity

Editors’ Note: Below, Rhodri Davies discusses his new book, Public Good by Private Means: How philanthropy shapes Britain (2016).

It is easy to take for granted the idea of charity as an accepted public good and to picture the not-for-profit sector as having incrementally yet inevitably developed towards its current form. However, my new book, Public Good by Private Means: How philanthropy shapes Britain, which offers an in-depth study of the history of philanthropy in the UK, reveals a more complex and surprising story (and one that is also relevant to a U.S. audience). I argue that many of the issues that we are dealing with today are in fact cyclical; that what we see as modern and innovative philanthropy often has earlier precedents; and that unless we address the philosophical weaknesses of current claims about philanthropy, civil society will be condemned to political inertia.

Much of the difficulty we face when it comes to policymaking around philanthropy stems from lack of clarity about its proper role. In the UK, for example, a country where a long-standing welfare state provides for most basic needs and the market allows us to buy most things at price, what – if anything – is the function of people voluntarily giving away their money and time for others? Failing to address this crucial underlying question results in a debate littered with hidden assumptions and preconceptions; many of which would benefit from being challenged.

Public Good by Private Means traces some broad trends in the development of UK philanthropy: the gradual secularisation of giving following the Reformation under Henry VIII; the increasing use of social research methods to make philanthropy more discriminating; the slow emergence of a legal definition of charitable purpose; and the birth of a formalised sector of not-for-profit organisations. It also examines the changing nature of the relationship between philanthropy and public welfare provision, and the interaction between philanthropy and democratic government.

A number of key themes emerge. One is the importance of retaining the political dimension of philanthropy (‘politics’ with a deliberately small ‘p’). Many of the great successes of UK philanthropy have resulted from campaigning for social reform to address the causes of social problems, rather than simply delivering services to address their symptoms. The abolition of slavery, the extension of the vote to women and the working class, and the decriminalisation of homosexuality were all campaigns underpinned by philanthropic support.

Despite the clear importance of philanthropy’s campaigning role, there is currently a great deal of negativity in the UK towards the idea of not-for-profits engaging in political activity. Although registered charities are already subject to strict rules governing such activity, the government introduced new legislation in 2014 designed to curb their ability to campaign during elections (commonly known as the “Lobbying Act”). Furthermore, government rhetoric regarding charity campaigning work is increasingly negative, and this has recently been mirrored by a negative narrative in the media.

The UK is far from alone in taking a regressive attitude towards the campaigning role of not-for-profits: many governments around the world are introducing similar restrictions on the rights of such organisations to speak out in the public realm. This is not the same phenomenon as was seen in the early 20th century in the US, where Congress sought to curb the perceived threat to democracy represented by the political power of “big philanthropy”: the organisations currently having their voice restricted in the UK and elsewhere are primarily those focused on representing the interests of marginalised individuals and communities, and are largely supported by a wide base of smaller donors rather than a handful of wealthy donors. The desire on the part of governments to suppress criticism by not-for-profits is a major element of the “Closing Space for Civil Society”: the global trend for increasingly illiberal governmental attitudes towards civil society that has been identified as a major cause of concern by many international rights organisations and philanthropic funders.

One of the implications often made by those who criticise not-for-profit campaigning is that it is somehow a ‘new’ phenomenon, which represents an undesirable departure from the ‘traditional role’ of such organisations. However, as my book argues, nothing could be further from the truth: campaigning for social reform has always been just as important a part of philanthropy as providing direct services to those in need. To pretend otherwise is to be guilty of misrepresenting history. This is definitely an instance in which better understanding of the historical context of philanthropy is important in order to combat misconceptions that are having tangible, negative impacts right now.

A further, indirect benefit of considering the historical context of philanthropy is that it often leads to a more philosophical perspective on the key issues. For instance, considering the history of tax breaks on donations – which in the UK at least, came about largely as a result of accident rather than design – highlights the fact that the justification for offering these tax breaks is often far from clear. Although post hoc rationalisations may be offered when the topic comes to the fore (as it recently has in the US, where controversy about plans to limit the charitable deduction has been rumbling on for some time), what becomes obvious during debate is that there are wide philosophical and ideological differences about the underlying justification for offering tax relief on donations, and these potentially have significant ramifications in terms of things like the definition of charitable purpose and the attitude of government towards advocacy by not-for-profits, as I argue in the book.

Another important theme that emerges from the book is that the history of the relationship between philanthropy and the state services can give us valuable insights into how we should understand the role of philanthropy today. Any idea that the interaction is a zero-sum game is mistaken: from the outset state provision of welfare and philanthropic provision have existed side-by-side. The balance between the two has certainly shifted over time, and the expectations that we as a society have about that balance have also changed, but it is clear that both are necessary elements of the overall picture.

Whenever there has been an attempt to replace philanthropy with state funding or vice versa, it has ended in failure. The ‘grand experiment’ of the Victorian era which attempted to deliver a universal system of welfare via philanthropic means did not succeed, because as the scale of the problems facing society became clear (often, it has to be said, as a result of the work of pioneering philanthropists) it became obvious that the state would have to play a part in dealing with them. Conversely, in the decade following the establishment of the welfare state in the late 1940s, UK philanthropy began to decline and many thought it would wither away into irrelevance. However, by the 1960s, people were already starting to voice dissatisfaction with the reality of the welfare state and coming to appreciate that philanthropic organisations had an important role to play in terms of driving innovation, challenging state provision, advocating on behalf of special interest groups and even delivering services on behalf of the state where they were better-placed to do so.

I hope that my book will provide some important context around the role of philanthropy that should be of use to those making policy affecting philanthropy, both within and beyond Britain. There is real value to understanding the added value that philanthropy can bring within a state-delivered system of welfare, whilst also recognising that this service delivery aspect of the work of not-for-profits is only one half of the picture, and that the role they play as independent, critical voices within our society, able to stand up for marginalised individuals and communities, is just as important. The history of philanthropy is far more than just the stories of long-dead donors and their gifts: it can offer real insights into issues that are affecting the vital work of philanthropists and not-for-profit organisation right now.

-Rhodri Davies

Rhodri Davies works at Charities Aid Foundation (CAF), where he leads Giving Thought – CAF’s in-house think tank focussing on current and future issues affecting philanthropy and the charitable sector. Rhodri graduated from the University of Oxford with a first-class degree in Mathematics and Philosophy and embarked upon an academic career before migrating into public policy work, where he has spent nearly a decade specialising in the policy aspects of philanthropy and charitable giving.

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