The Guide to Philanthropy & Giving 2013

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04 FOREWORDBy Alex Blackburne

06 PHILANTHROPY PAST AND PRESENTBy Nick Slawicz

10 FAMOUS PHILANTHROPISTS IN THESPOTLIGHT

Buffett, Gates, Sainsbury, Soros, Branson

12 CAF WORLD GIVING INDEX 2012

14 PHILANTHROPY IS WHAT SUSTAINS THECHARITABLE SECTOR, NOT MONEY

By Mitchell Kutney

17 CHARITIES INVESTING FOR CHANGEWith Jane Tully, Charity Finance Group

20 WE NEED TO PUT ETHICS AT THE COREFINANCIAL HEART OF CHARITIES

With Helen Wildsmith, CCLA

24 HOW IMPORTANT IS STABILITY IN ACHARITY FUND MANAGER?

By Michael Quicke

26 THE WEALTHY ARE NOT TAX DODGERS;THEYRE A POSITIVE FORCE IN SOCIETY

With Cath Tillotson, Scorpio Partnership

30 ETHICAL INVESTMENT IS MORE THANBEATING ONE BASTARD WHILE FUNDING

THREE OTHERS

By David Ainsworth

32 ENVIRONMENTAL PHILANTHROPY:THE STATS

34 WHAT IS THE ENVIRONMENTALFUNDERS NETWORK?

By Tom Revell

36 FIXING THE ENVIRONMENTAL CRISISTHROUGH PHILANTHROPY

With Ben Goldsmith

39 QUOTE WALL

40 WHAT DO I DO NEXT?

CONTENTSWWW.BLUEANDGREENTOMORROW.COM



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Iexpect very few people will have heard of

Jos Mujica. As the president of Uruguay, heearns around 7,500 a month, but his riseto the countrys top job is quite a story.

He spent 14 years in squalid prison conditionsfrom 1971-84 during 17 years of dictatorship inUruguay, was shot six times by police andeven spent over two years living (not by choice)in a well.

But since he assumed ofce in 2010, he has beendescribed as the worlds poorest president.Why? Because he gives as much as 90% of hismonthly salary away to charity. He lives on asmall farm, drives an old Volkswagen Beetleand because of his generous charitable activity,gets by on roughly 7,000 a year the average

wage in Uruguay.Mujicas story is just one of a number of inspiringphilanthropic and charitable tales. Others includemulti-billionaire tycoon Warren Buffett givingaway 83% of his 28.8 billion fortune in 2006,

and Microsoft co-founder Bill Gates pledging 6billion to develop vaccines for children in 2010.These examples bring us to this latest Blue& Green Tomorrow report: The Guide toPhilanthropy & Giving 2013.

As we have outlined in previous guides, and asthe musical Cabaret rst suggested in the 60s,money does indeed make the world go around.The all-powerful nancial system can and must beutilised as a force for good.However, whereas in the past weve focused oninvestment, banking and the stock market, andencouraged readers to seek out ethical, sustainable

and responsible alternatives, our latest guide takes

a slightly different angle.Philanthropy, in its ancient Greek meaning, meansthe love of mankind. It is about giving back tosociety and the environment, for the good of both.Some of the worlds grandest museums, artsbuildings and monuments wouldnt have existed ifit werent for generous philanthropists. Similarly,some of the gravest threats to humanity and theenvironment would be a whole lot worse without

years of charitable giving.In these pages, youll hear from environmentalphilanthropists like Ben Goldsmith, who calls theenvironmental crisis the biggest challenge facingour generation, and read about the EnvironmentalFunders Network.

Youll hear from the Charity Finance Group andthe CCLA two of the leading organisations inthe UK charitable sector about how charitiesshould be investing responsibly so as to notcontradict their central missions.

Youll hear from Scorpio Partnership, which,

through its research of ultra-high net-worths,perhaps has a better understanding of whatmakes the wealthy tick than any otherorganisation in the world.Plus background, trends and statistics onphilanthropy and charity more generally.The quote on the front cover of this guide, by19th century American journalist Gamaliel Bailey,reads, Never respect men merely for their riches,but rather for their philanthropy; we do not valuethe sun for its height, but for its use.Its an interesting suggestion, and one that

would really shake up the way we think about

money if it happened.

EDITOR, BLUE & GREEN TOMORROW

FOREWORD

In the last 12 months, on average, I have

individually given to charity...

Source: blueandgreentomorrow.com % of readers

0 5 10 15 20 25 30

500 or more a month

250 to 499 a month

100 to 249 a month

25 to 99 a month

10 to 24 a month

Up to 10 a month

Nothing


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Philanthropy

PAST ANDPRESENTBY NICK SLAWICZ A SHORT HISTORY OFPHILANTHROPY

The notion of philanthropy that is, the giving ofresources by the rich to the masses in order to fund social

welfare programs and to encourage aspects of life such as

the arts and entertainment over long periods of time isfar from new.Even before the extensive private donations to set uphospitals and universities (common in the USA and UK;Harvard University, which was created from a donationof books and half of the estate of the British clergyman

John Harvard , celebrated its 375th anniversary in 2011),there was a long history of philanthropic giving in culturesall over the world. Platos Academy was first founded asthe result of an endowment around 387 BC, and lastedfor some 900 years; the Waqf served as a philanthropicfoundation for the Islamic world in as early as the

seventh century.Out of these historical examples, however, a numberof different approaches to the act of philanthropycan be determined:


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THE NEW-SCIENTIFIC MODELAlso known as venture philanthropy, the newscientific model emerged from the old scientific

model. It aims to deal with the same issues underlying social problems, rather than rapidly-changing issues such as natural disasters butinstead moves away from the patrician approach to

change the way funds are distributed.New and experimental methods of aid are mostoften pioneered by this model and its proponents

with varying degrees of success. The innovationthat comes from these bright young things of thephilanthropic world also leads to one of its biggestcriticisms. Helmut Anheier, current dean of the



Hertie School of Governance in Berlin,wrote in 2005, For many of thesenew philanthropists, philanthropy isan investment, not charity, and its aimis to create social wealth. The newphilanthropists are generallyresults-oriented; they want to see theimpact and the results of their givingrelatively quickly.Unfortunately, the majorityof problems facing the ethicalphilanthropist require time as wellas money, and often the short-termnature of donations from this modeldo not have the staying power tobring about long-term effects.

It is only by combining the positiveaspects of all three of these models social moralism; the importance ofcause-oriented problem solving, andthe application of novel techniquesto age-old problems that the futureof philanthropy can ensure it willcontinue to both grow and flourish.

PERSONALPHILANTHROPY

GLOBALFresh from the success of their workwith the Bil l and Melinda GatesFoundation, 2010 saw Bill Gatesand Warren Buffett then the two

wealthiest men in the US devotetheir attentions to the Giving Pledge,

which encouraged bill ionaires in theUSA to pledge half of their wealthto charitable organisations in thefuture. As of July 2013 there are 113signatories, including Gates, Buffett,Tesla Motors and SpaceX CEO Elon

Musk, mayor of New York MichaelBloomberg and Facebook founder MarkZuckerberg. As well as encouragingthe donation of monetary resources,the organisation helps to promotethe idea of large-scale philanthropicintervention across the country.However, in July 2013 the reachof the Giving Pledge was expandedoutwards from the US, in order topromote a more global approach tothe philanthropic movement. Twelve

new signatories from around the worldhave signed up (including Andrew andNicola Forrest from Australia, Patriceand Precious Motsepe from South

Africa , Hasso Plattner from Germany,Vladimir Potanin from Russia, AzimPremji from India, Victor Pinchukfrom Ukraine, and Richard and JoanBranson, John Caudwell, Chris and

Jamie Cooper-Hohn, Mo Ibrahim, andLord (David) Sainsbury from the UK),pledging a total of over $10 billion incharitable good.It is difficult to overstate the potentialmagnitude of this development. WithForbes putting the current numberof global billionaires at 1,426 (withan aggregate net wealth of $5.4trillion) and with only 442 of thesecoming from the US the door has

been opened to a whole new world ofpeople with the funds to really make adifference to global suffering.

As a case study, the UN put thefigure needed to eradicate worldhunger at $30 billion per year. Ifevery billionaire on the Forbes listpromised half their wealth, accordingto the Giving Pledge, it would be alarge enough donation to completely

wipe out globa l hunger for almost acentury. Put another way, if each of

the billionaires on the list pledgedjust six-tenths of 1% of their net-worth every year, the crisis wouldhave enough backing to be solved.(By comparison, and for reference,US defence spending in 2012 reached$737 billion, or almost 25 times the

value being discussed. )However, it is not l ikely to be withoutits problems. Even Buffett didnt wantto expand the programme for the firstthree years of its existence, recognisingthat it was a tough sell and noting that

the organisation felt it had its handsfull in the US.

Additional ly, there are many culturalissues to be overcome. Beyond thelanguage barrier recent addition andthe second-wealthiest man in Ukraine,

Victor Pinchuk, stated that he refusedto pledge at first because he did notinitially understand exactly what theorganisation was asking him thereare also significant cultural issues, withdifferent nations having very different

approaches to charitable acts. A letterfrom Gates and Buffett stressed theimportance of every country finding

ways to organise its own philanthropy

to best meet its needs, but theirdetermination to rollout the successesof the Giving Pledge to a worldwideaudience sets a healthy precedent forthe superrich who feel the urge to giveback to society.

IN THE UKThere has been an increasing relianceby many organisations on charitabledonations from large-scale donors,largely due to the fact that the pinch ofthe 2008 global economic crisis is stillbeing felt by many in the middle class.In the UK, for example, the average

amount donated by individuals hasdeclined in recent years, but in thelast year the total amount donated bythe nations top 100 donors rose by acolossal 21%, up to 1.77 billion. Thetotal amount of giving tracked from231 people in this years Sunday TimesRich List also is up from 1,715m to

2,081m, a level beaten only once inthe past 12 years.One of the downsides of this shiftfrom small-scale donations to reliance

on larger philanthropic gifts is thatsmaller charities may suffer: whilepounds and pennies add up tosignificant amounts over time, largerendowments tend not to be splitup quite as much, leading to manysmaller charities fearing for theirlivelihoods. According to a reportin the Guardian, in December 2012one in six UK charities feared theymight have to close within the comingtwelve months. Additionally, nearlyhalf say they are being forced to dip

into reserves, and a third say they fearbeing forced to cut services.Even the UK government has switchedits focus to larger donations, with thechancellor George Osborne laying outplans to encourage endowments afterdeath with inheritance tax breaks.While anything that encourages morecharitable giving can only be a goodthing for philanthropy as a whole,it seems clear that both large andsmall gifts should be encouraged,

allowing for a wider range of action bycharitable organisations and ensuringthat standards do not have to be cutdue to lack of funds.



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FAMOUS

PHILANTHROPISTSIN THE SPOTLIGHT

PHILANTHROPISTS COME IN ALL SHAPES AND SIZES, AND SOME HAVE MADE MOREIMPACT THAN OTHERS. HERE, WE LOOK AT A HANDFUL OF THE WEALTHIEST, AND MOST

SUCCESSFUL, WHOSE CHARITABLE EFFORTS ARE OFTEN PRAISED BY THE PUBLIC.

NAME: Warren BuffettNATIONALITY:AmericanKNOWN FOR: Being the CEO,chairman and majority shareholder ofBerkshire Hathaway: a multinationalholding company that owns more than70 rms globally.PHILANTHROPY SECTORS: Health,education, humanitarian causesPhilanthropic highlights: Giving away 83%of his $44 billion (28.8 billion) fortune tocharity in 2006 a signicant proportionto the Bill & Melinda Gates Foundation.This remains the largest philanthropicdonation in history. Buffett co-founded theGiving Pledge, a campaign to encouragephilanthropic giving by the wealthy, withBill Gates in 2009ESTIMATED LIFETIME GIVING: Wellover 26 billion

WHAT HE SAYS ABOUTPHILANTHROPY: If youre in theluckiest 1% of humanity, you oweit to the rest of humanity to think

about the other 99%.

NAME: Lord (David) SainsburyNATIONALITY: BritishKNOWN FOR: Being chairman ofsupermarket chain Sainsburys (foundedby his great-grandfather John James)PHILANTHROPY SECTORS: Education,arts, humanitarian, heritagePHILANTHROPIC HIGHLIGHTS: Beingplaced third in the Sunday Times GivingList 2013 an annual rundown of themost generous philanthropists in Britain after his family ofce donated morethan 217m in the previous 12 months.The Sainsbury Family Charitable Trustsoversees 18 grant-making trusts and isone of the biggest family trusts in BritainESTIMATED LIFETIME GIVING: Noconcrete data, but certainly in excess of

1 billion. The Giving List 2013 said hehad recently given away nearly 300m

WHAT HE SAYS ABOUTPHILANTHROPY: We do not believethat spending any more moneyon ourselves or our family would

add anything to our happiness.

NAME: Richard BransonNATIONALITY: BritishKNOWN FOR: Being founder and chairmanof the Virgin Group, and one of the UKsmost successful businessmenPHILANTHROPY SECTORS: Environment,children, social, medicalPHILANTHROPIC HIGHLIGHTS: Settingup a $25m (16.3m) competition throughhis Virgin Unite foundation to ndcommercially-viable technology that wouldhelp dramatically reduce greenhouse gasemissions thus helping to tackle global

warming. Eleven nalists were selectedfrom 2,600 entrants in 2011. Revealed inFebruary 2013 his intention to give awayhalf his fortune to charity as part of theGiving PledgeESTIMATED LIFETIME GIVING: The2012 Giving List estimated that his annualcharitable donations totalled over 350mWHAT HE SAYS ABOUT PHILANTHROPY:Ridiculous yachts and private

planes and big limousines wontmake people enjoy life more, and

it sends out terrible messages tothe people who work for them. Itwould be so much better if that

money was spent in Africa andits about getting a balance.



OTHER NOTABLE PHILANTHROPISTS

John D Rockefeller (1839-1937) American industrialist whoseRockefeller Foundation is now one of the largest family grant-making foundations in the world Sir William Morris (1877-1963) British motor manufacturer

who founded of the Nufeld Foundation to advance educationand social welfare Andrew Carnegie (1835-1919) Scottish-American industrialist

whose large-scale philanthropy looked to improve local libraries,world peace, education and scientic research Joseph Rowntree (1836-1925) British founder ofconfectionary company Rowntrees who set up many charitabletrusts, including the Joseph Rowntree Foundation which still

exists today Edward Cadbury (1873-1948) Son of George, the founder ofchocolate manufacturer Cadburys, and founder of the EdwardCadbury Charitable Trust

NAME:Bill and MelindaGates

NATIONALITY: AmericanKNOWN FOR: Co-foundingMicrosoftPHILANTHROPY SECTORS:Global health anddevelopment, educationPHILANTHROPICHIGHLIGHTS: Establishingin 1994 what wouldbecome the largest privatephilanthropic foundation inthe world: the Bill & MelindaGates Foundation. Itsendowment, as of September2012, was $36.2 billion(23.7 billion). Gates co-founded the Giving Pledge,a campaign to encouragephilanthropic giving by the

wealthy, with Warren Buffettin 2009ESTIMATED LIFETIMEGIVING: Over 15.7 billionas of June 2009WHAT BILL GATES SAYS

ABOUT PHILANTHROPY:Is the rich world

aware of how fourbillion of the six billionlive? If we were aware,we would want to helpout, wed want to getinvolved.

NAME: George SorosNATIONALITY: Hungarian/AmericanKNOWN FOR: Being the man who broke theBank of England when he made $1 billion bybetting on the devaluation of the pound sterlingduring the 1992 Black Wednesday currency crisisPHILANTHROPY SECTORS: Open anddemocratic societiesPhilanthropic highlights: Founding the OpenSociety Foundation in 1993, which invests inareas such as university scholarships and economicrelief. Having been born and brought up inHungary, Soros foundation also helps encouragedemocracy in many former Soviet states

ESTIMATED LIFETIME GIVING: Over4.1 billionWHAT HE SAYS ABOUT PHILANTHROPY:The main difference between me andother people who have amassed this

kind of money is that I am primarilyinterested in ideas, and I dont have

much personal use for money.

Top 10 wealthiest philanthropic foundations inthe world1. Stichting INGKA Foundation (Netherlands) 23.5 billion endowment2. Bill & Melinda Gates Foundation (US) 22.6 billion3. Wellcome Trust (UK) 14.2 billion4. Howard Hughes Medical Institute (US) 10.5 billion5. Ford Foundation (US) 7.2 billion6. J Paul Getty Trust (US) 6.8 billion7. Mohammed bin Rashid Al Maktoum Foundation(United Arab Emirates) 6.5 billion8. Robert Wood Johnson Foundation (US) 5.8 billion

9. Li Ka Shing Foundation (Hong Kong) 5.4 billion10. The Church Commissioners for England (UK) 5.2 billion


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PHILANTHROPY ISWHAT SUSTAINS THECHARITABLE SECTOR,NOT MONEY

Bacon consideredphilanthropia to besynonymous withgoodness, whichcorrelated with the

Aristotel ian conception of virtue, asconsciously instilled habits ofgood behaviour.Then in the 1700s, an inuential lexical

gurehead by the name of SamuelJohnson simply dened philanthropyas, Love of mankind; good nature.This denition still survives today and isoften cited more gender-neutrally as thelove of humanity.In the online Merriam-Websterdictionary, the denition of philanthropyis, Goodwill to fellow members of thehuman race; especially: active effortto promote human welfare an act orgift done or made for humanitarian

purposes an organization distributingor supported by funds set aside forhumanitarian purposes.

As Sulek writes, the precise meaningof philanthropy is still a matter of some

Mitchell Kutney explores what it means to be aphilanthropist.IT APPEARS THAT PHILANTHRPA FIRST ENTERED THE ENGLISH LANGUAGEAS A TERM TO DESCRIBE PLANTS WHOSE SEEDS STICK RATHER TOO READILYTO PEOPLE. PHILANTHROPY WAS THEN MODERNISED BY SIR FRANCIS BACON,

WHO IS LARGELY CREDITED WITH PREVENTING THE WORD FROM BEINGOWNED BY HORTICULTURE.

contention, its definition being largelydependent on the particular interestsof the writer employing the term.Nevertheless, there are some workingdefinitions to which the communityassociated with the fieldof philanthropic studies mostcommonly subscribes.One of the more widely accepted of

these is the one employed by LesterSalamon, who denes philanthropy as,The private giving of time or valuables(money, security, property) for publicpurposes; and/or one form of income ofprivate non-prot organisations.This is the denition that resonates themost with my experiences in the non-prot/charitable sector.

Among famous philanthropists, thepeople that come to mind are Bill Gates,Warren Buffet, John Wilson McConnell,

Michael Bloomberg, John D Rockefellerand George Soros. All of these peoplehave donated enormous sums of moneyand have certainly earned their title asphilanthropists. But what made them

philanthropists? And who decidedthat they were philanthropic enoughto be labelled philanthropists? Afterall, being a philanthropist is a highlyesteemed role.Now this may not come to anyonessurprise, but there are somecommonalities between thesefamous philanthropists, with the

most outstanding being their massiveaccumulation of wealth. Is it acoincidence that these gureheadphilanthropists are also extremely

wealthy? Or is it a requirement tobe a philanthropist?This is an important question to askbecause in the lexical evolution ofthe word philanthropy, nowheredoes it state only the wealthy canbe philanthropic. We can certainlyconclude a massive accumulation of

wealth is correlated with increasedphilanthropy, but is wealth aprerequisite of philanthropy?With our understanding of metrics, it iscommon practice to normalise values in



a base number in order to discern actualimpact (the result of outcomes). Forexample, when calculating the valueof a basket of goods, we account forination; or when reviewing incidentrates, we base it on per capita basis.

What do we ground philanthropyin? It would make sense to calculatecharitable giving based on proportional

wealth versus absolute wealth,as one would think this would bemore philanthropic.For example, if I made a $100 andgave away $99, that would be morecharitable then if I made $1,000 andgave away $500. This however is notthe case when it comes to philanthropy.Furthermore, irrespective of the

proportional size of ones donationrelative to ones wealth, and irrespectiveof the lexical evolution of philanthropy,it seems that to me, one must give awaya wealth of money in order

to be considered a philanthropist inmodern society.If my statements are deemed accurate,I would pose a policy question: whatif we were to bring philanthropyback to Francis Bacons denition of

philanthropy as simply goodness?Would that not mean so much more?If we deconstructed the underlyingemphasis on riches and replaced it withgoodness, would a revitalisation ofgiving perhaps begin to take place?The charitable sector has not yetreturned to pre-recession giving ratesand has systematically been cutbackfrom government, foundational andphilanthropic support. Organisationssuch as Imagine Canada are pushing for

new tax credit benets to revitalise thesector and crowdfunding has surfacedas a viable alternative for raising dollarsin the non-prot sector.Moreover, the non-prot sector

is increasingly being pressured toparticipate in revenue-generatingactivities on a cost recovery basis.Though these are potential solutions tothe current stormy climate within thecharitable sector, the nancialshortfall affecting it is a growingproblem that will require a real culturalshift to remedy.So while this shift is taking place with afocus on changing tax policies, revenue-generating activities and fundingalternatives, I would argue the biggerpicture is being lost. Philanthropy is

what sustains the charitable sector,not money.The charitable sector is in a period

of ux right now and is moving tothe furthest extreme of whateverprospective alternative presents itself.I believe in order for the charitablesector to obtain steady change, theconversation should not be aboutmoney, but rather it should beabout values.What does it mean to be charitable?What does it mean to be aphilanthropist? If being charitable ispurely like a business, and if being

a philanthropist is just giving awaymassive amounts of money, it comesas no surprise to me that the sector isin trouble now, despite the negativeimpact of the economy.While the nancial shortfall isa real problem, another equallyimportant problem dogging the sector isits own values.

Mitchell Kutneys workfocuses on reimaginingthe roles of philanthropy

and social change tocreate sustainablesolutions. He has

spearheaded a numberof successful non-profit

initiatives in Canada andholds a Masters degree

from Carleton Universityin Public Policy. This

article originally

appeared on his website,where you can find afully referenced version.

www.mitchellkutney.com



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Blue & Green Tomorrow producedseven reports in 2012. Visit

blueandgreentomorrow.com/reports

to read them all.

reports



CHARITIESINVESTING

FOR CHANGEJANE TULLY, HEAD OF POLICY AND PUBLIC AFFAIRS AT CHARITY FINANCEGROUP, EXPLAINS WHY AN INCREASING NUMBER OF CHARITIES ARE LOOKINGAT RESPONSIBLE INVESTMENT.

What is the Charity FinanceGroup?

Charity Finance Group is amembership organisation that existsto raise the standards of charitynance across the sector. We haveover 2,200 member charities, but

we represent the views of the widercharity sector as well.We operate in a number of ways,providing a range of training, supportand advice to charities. We also seekto actively improve the operatingenvironment for charities throughlobbying and inuencing work.

Our work in the socially responsibleinvestment space really began in2008 when we published UnlockingSocially Responsible Investment,

which is a guide for charities thatexplains the legal framework forresponsible investment, and thedifferent approaches and strategiescharities can take.For the past two years, weveactively engaged our members inNational Ethical Investment Week,

taking the opportunity to promotesocial investment and sociallyresponsible investment and itsbenets to charities.



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When it comes to responsibleinvestment, why do you thinkits particularly relevant tocharities?There is a clear public expectation thatcharities should be at the forefront ofethical and responsible investment.Research published by YouGov in 2012

found that 56% of investors in GreatBritain believe that charities shouldmeasure the social and environmentalimpacts of their investments to the same

extent that they measure the impacts oftheir charitable activities.Fifty-nine per cent of investors believethat UK charities have a responsibility totake a lead on stewardship issues.This means engaging with thecompanies they invest in andchallenging them if they perform poorly

on issues such as excessive bosses payor environmental impact.Sometimes theres an assumption thatbecause charities tend to be at the

forefront of social justice issues, theyinvest in that way too. This isnt alwaysthe case though, and its not uncommonto nd charities investing in ways thatmay be publicly perceived as contrary toa charitys aims.Its worth noting that this can also

be a challenging area for charities asethical and responsible are relativelysubjective terms and can be interpretedin different ways by differentstakeholders. A nance directorsperspective on what an ethical approachis for their charity may be differentto what their colleagues, the public,trustees or service users perceive asethical or responsible.

What are the consequences

for charities if they investunethically and irresponsibly?There are two major risks: damage tothe charity achieving its mission and

ALL IT WOULD TAKE IS ONE VERYNEGATIVE NEWS STORY ABOUT A HIGH-

PROFILE CHARITY INVESTING IN A WAY THATIS CONTRARY TO ITS MISSION, TO MAKE OTHER

CHARITIES TO SIT UP AND START REVIEWINGTHEIR OWN INVESTMENT APPROACHES



damage to a charitys reputation.The damage to mission is fairlystraightforward - the activity supportedby the investments may run directlycontrary to the charitys goals andpurpose, hence undermining thecharitys overall impact.Reputational risks are a real concerntoo. The horror story of a nationalmedia outlet proving that a charityis investing in a way that is contraryto its organisational objectives cancause lasting damage by alienating thecharitys supporters.Not too long ago the LA Timesproduced a story on its front page thatshowed that the Gates Foundation wasinvesting in a way that was contrary to

its organisational objectives, and thatits investment activities were actuallydamaging in terms of some of the workit was trying to do. This is not the sortof headline or news story any charity

wants to be associated with.

Is there also a financialelement?Research demonstrates that returnsfor ethical and responsible investmentproducts can be equal to or above

market rate. Furthermore, investing forthe long-term, rather that chasing short-term gains, can serve to strengthen the

value of the underlying investment,as John Kay ably demonstrated in hisreview of equity markets. There are anumber of particularly forward-thinkingcharities that actively operate in this

way, such as the Church of England.

What kind of trends have youseen in positive screening andshareholder activism?

In the main, the way charities engagewith socially responsible investment isthrough negative screening, though Ithink to some extent were beginningto see a growth in shareholderactivism too. Were now seeing morecharities looking at how they can useownership of shares to try to inuenceorganisational activities as part of theircampaigning work.I think theres a role for more educationin the charity sector about the potential

benets of positive screening andshareholder activism. The main reasonwhy fewer charities will do it is thattraditionally most charities have

associated ethical investment withnegative screening, which admittedlycan be simpler and less time-consuming.

Is there much interest in impactinvesting or social investment

from charity investors?Were seeing interest in socialinvestment growing slowly, but I thinkthe tradition within the sector, and theopportunities that are offered by mostinvestment houses, is for relativelystraightforward negative screens.Its important to distinguish betweencharities receiving social investmentand making social investments inthe media charities are generallyreferred to as potential recipients of

social investment, although relativelyfew have done this up to now, butsome charities, notably trusts andfoundations, are looking into investingsmall parts of their own portfolios inthis way too.

How much do charities relyon philanthropic trusts andfoundations for funding?It varies from charity to charity. Thereare some that are heavily or almost

solely reliant on funds from high net-worth individuals and grant givingorganisations, but there are others

which do not receive any incomein this way.In the US there is a well-developedculture of philanthropy with strongrelationships between charitiesand philanthropists. The signicantinvestment that goes into this kind offundraising isnt necessarily replicatedhere, possibly for cultural reasons.

Looking ahead, what kind ofthings do you expect to seechange in charities investmentstrategies?We would often say of our membersthat while theyre interested inresponsible investment, for many it fallsto the bottom of the priority list. I thinkas it becomes more of a social norm forcharities to be seen as forward-lookingresponsible investors, more will want tobecome involved and be at the forefront

of this process.I also think we will see a growing shiftto more mature and wide-reachingresponsible investment policies that are

not just about negative screening.As social investment evolves anddevelops too, we will see moreorganisations explore opportunitiesarising in that area.One positive development in the pastfew years that has led many charitiesto review their investment strategies

was the issuance of the new CharityCommission guidance on investments.The guidance clarified the legalposition for charities making socialand ethical investments, and hashelped to dispel the myth that charitiesmust always seek the highest rate offinancial return.Charities adopting a socially responsibleapproach can accept a lower rate of

return in instances where investmentsmight run contrary to their mission ormay disenfranchise supporters. This hasgiven comfort to many charities lookingto explore responsible investment. Thatis not to say that responsible or ethicalinvestment necessarily results in returnsat a sub-market rate.

What would it take for a charityto begin investing responsibly?In many instances at present the

decision to adopt an ethical approach isthe result of one or a few individualsinfluence. For example, a trustee orfinance manager who has a firmbelief that thats how an organisationshould be investing, and pushingfor a more proactive responsibleinvestment policy.I think the strongest driver ofbehaviour in this area, though, is thechanging public expectations abouthow charities should invest. I thinkall it would take is one very negative

news story about a high-profile charityinvesting in a way that is contrary toits mission, to make other charities tosit up and start reviewing their owninvestment approaches.

www.cfg.org.uk



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WE NEED TOPUT ETHICS

AT THE COREFINANCIALHEART OF

CHARITIESHELEN WILDSMITH, OF CHURCH AND CHARITY ASSET MANAGER CCLA, SPEAKSTO BLUE & GREEN TOMORROW ABOUT PHILANTHROPY AND ETHICAL ANDRESPONSIBLE INVESTMENT.



What does ethical andresponsible investmentoffer to philanthropists andfoundations?I think the most interesting newapproach is being able to leapfrog thetraditional capital markets, and investdirectly in an area thats related to themission of the philanthropist orthe foundation.Theres a famous example from the

US where a charity that was set upby philanthropists to address healthissues used to invest in the S&P 500,collect the dividends, buy mosquito

nets, and then send them out to Africa.It now invests in microenterprisesmaking nets in Africa. Obviously thosemicroenterprises give a far lowerfinancial return, but in terms of theiroverall philanthropic mission, whichis all about how getting nets ontobeds, they find this is a much more

successful approach.In general, amongst bothphilanthropists who have traditionallygiven away their money to charities,and those whove set up permanentendowments to sustain their giving,

were seeing an increased interest inwhat the Charity Commissioncalls mixed motive and programme-related investment.Mixed motive investment is where

you get some financial return, but

youre taking quite a lot of yourreturn in relevant environmental orsocial outcomes, and programme-related investment is where an evenhigher proportion of your return isfrom relevant charitable outcomes.Sometimes programme-relatedinvestment just aims to get your moneyback with no real financial returnto speak of. It can be thought of asrecycling grants instead of givingthe money away it helps deliver themission several times.

This type of investing can be hardwork for trustees and staff, so sharingdue diligence costs and learningfrom each others experience isbecoming more common. Interestedfoundations can join the Associationof Charitable Foundations workinggroup by contacting their Deputy ChiefExecutive, Carol Mack.

How would you definephilanthropy?

Philanthropy for me is all aboutthat instinct to give away assets forcharitable purposes.Ive always thought of the difference

PHILANTHROPISTS CREATE

MECHANISMS WHICH TURN INTOLASTING INSTITUTIONS



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between charity and philanthropyas being about scale. Warren Buffettand Bill Gates are modern dayphilanthropists, whereas I tend to thinkof my more modest giv ing as charity,rather than philanthropy.Philanthropists tend to be able tocreate mechanisms which turn intolasting institutions. Im not wealthyenough to set up the WildsmithFoundation, but Bill Gateshas the wealth to sustain theGates Foundation.

Why do you think a growingnumber of charitablefoundations are lookingat ethical and responsible

investment?I think foundations and charities arerealising that their financial assets canactually help with their mission inmultiple ways. So if theyre a humanrights charity and own companies thathavent quite got their policies andpractices in line with latest thinking onbusinesses role in human rights, theycan engage themselves or ask theirfund manager to engage ontheir behalf.

At CCLA 20% of the t ime we spend onstewardship, engaging with companiesand voting at their annual meetings,is explicitly tailored to fit with ourclients missions.The flipside of investing for positivegood and being a good steward of theassets you hold is making sure thatcharities arent investing in anythingthat fundamentally underminestheir mission.The Evening Standard recentlyhad a headline article about local

authority pension funds investing intobacco while they were also runningprogrammes to try and reduce deathsfrom smoking within their local areas.The Charity Commission guidancemakes it much easier for trustees ofcharities to avoid things that conflict

with their mission than other trustees.They can also avoid things that wouldmake it difficult for the charity tocontinue to operate.Reputationally damaging mistakes are

usually unwittingly made. Traditionallytheres been a silo approach withincharities and foundations, wherefinancial experts look after the

investment and then hand over thedividend returns to people who areexperts in the mission. What were

seeing now is people starting to workacross those boundaries, and deal withethical and responsible investment inall its guises, whether its engaging

with companies and policymakers,avoiding certain things or seeking outinvestments that align really well withthe mission. They are all good ways tomake the money work harder for thatimportant ultimate charitable purpose.

How much do you thinkcharities rely on philanthropicgiving?Charities rely quite a lot ongovernment contracts, selling servicesin the way that you buy yourNational Trust membership, andphilanthropic giving.I think at the moment, all of thosesources are under pressure, becausein times of austeri ty, the governmentand the public bodies have got smallercontracting budgets, people are givingless and people are cutting back on

leisure activities, memberships andsponsorships. At the same time, formany churches and charities, there ismore pressure being put on them tomeet charitable needs.

What are the motivations forgiving to charity or becoming aphilanthropist?I did a masters degree in voluntarysector organisations about a decadeago, and there are multiple motivations

for people getting involved in charityand philanthropy. I think, just as inthe Victorian era, quite a lot of theinstinct at the moment is people giving

back to a society that has helped themcreate huge amounts of wealth, andthe instinct that some of their expertisefrom business and other careers canhelp with some of societys problems.For example, some venture capitalistsbecome venture philanthropists,bringing innovation to the sector.

Why do you thinkenvironmental philanthropyrepresents such a smallamount of total philanthropicgiving?Thats certainly the longstanding trend,but it might be one of those thingsthat does change. If you think aboutorganisations like Oxfam, Christian

Aid and CAFOD, which tradit ionallyfocused on issues that are clearlylinked to poverty and development,now theyve got big programmeson the environmental issues that

wil l disrupt progress in thedeveloping world.

You see the same sort of thinkingflowing through in philanthropy, if

you speak to the family foundationswith multiple generations of t rustees.Youll probably see an increase in

interconnected systemic thinking asthe sustainability crisis becomes morewidely understood.

Any final thoughts onphilanthropy, or ethical and

responsible investment?For both people who aregiving to charity, and forphilanthropists who arethinking about setting upfoundations, remember

that the core financial heartof a charity or endowment

can also help with thecharitable mission.

It is increasingly possibleto make money and makea difference, by careful

selection of investments andappropriate stewardship

across the resulting portfolio.

www.ccla.co.uk

QUITE A LOT OFTHE PHILANTHROPICINSTINCT IS PEOPLE

GIVING BACK TO ASOCIETY THAT HASHELPED THEM CREATEHUGE AMOUNTS OFWEALTH



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HOWIMPORTANT IS

STABILITY IN ACHARITY FUND

MANAGER?CHARITY ASSETS NEED A FUND MANAGER THAT RECOGNISES THEIR SPECIALCHARACTERISTICS, IS GEARED UP TO MEET THEIR NEEDS, AND CAN PROVIDEA STABLE RELATIONSHIP THAT IS NOT MOTIVATED BY THEIR OWN SHORT-TERMFINANCIAL TARGETS.

BY MICHAEL QUICKE, CHIEF EXECUTIVE, CCLA

less than the minimum to invest in their

pooled funds.These moves all have a good commercialrationale as far as the fund managersand their shareholders are concerned.They might dispose of an area ofbusiness the seller no longer considerstrategically important, or build scale ina strategically important area of businessfor the buyers. In a world where there isa constant drive to increase protability,shareholders benet.

How will this change affect theunderlying charity clients?In answering this, we need toremind ourselves of the needs of

The charity fund

management industry hasseen a surprising level ofrestructuring recently,raising the question ofhow this upheaval might

affect charity clients.It started in February when Standard Lifebought Newtons private client business,including 400m of charity funds. Sincethen, Schroders acquired Cazenove,both with about 3 billion of charityfunds, and most recently Blackrock has

reorganised its charity team, substantiallyincreasing the minimum size of charitywhere they are willing to provide a fullrelationship, and encouraging those with



charity investors.Charity investors are in some important

ways quite different from other assetowners. Charities are often the ultimatelong-term investors, wishing to continuetheir work long into the future. Unlikeall of us, they dont die; neither dothey have the dened liabilities andtimescales of pension funds or otherinstitutional investors.

They often have quite sophisticatedinvestment requirements, includingthe need for regular and growingdistributions to fund their work,

and many also have ethical requirementsto ensure alignment with theirpurpose, their supporters beliefs andbeneciaries needs.

Yet despite this complexity, charitytrustees are non-executive and oftenmeet infrequently. They generally do nothave the resources to justify the level ofprofessional advice enjoyed by pensionfund trustees. As a result, most rely

heavily on their relationship with theirfund manager. The fund manager needsto understand their needs and provideadvice and guidance to help the trustees

ensure that the charitys funds aremanaged to best effect and in accordance

with its objectives.Such an understanding takes timeto develop through a long-term andcommitted relationship. Any strategic

change by a fund manager will belikely to impair its ability to meet theserequirements, at least in the short-term.Staff changes will inevitably result in aloss of knowledge and understandingbuilt up over the years. The best recordkeeping cannot replace the kind ofempathy that comes from a longstandingrelationship. Even staff who keep theirjobs may be distracted by uncertaintyover their future, reducing theiremotional engagement with clients.

Competition for status or inuence in anew corporate environment can easilyweaken their focus in the short term.

How should trustees respond?Clearly this depends upon theircircumstances. But if a change of fundmanager is appropriate, this most recentperiod of change does emphasise theimportance of stability in the newlyappointed rm the last thing trustees

want is to be faced with the samedisruption all over again a couple of

years later. That means choosing afund manager with a solid corporatecommitment to your type and size ofcharity from the shareholders, throughthe board to the front-line staff.

Michael Quicke is chiefexecutive of CCLA, whichmanages funds for morecharities than any other

investment manager.

www.ccla.co.uk

UNLIKE ALL OF US,CHARITIES DONT DIE; NEITHERDO THEY HAVE THE DEFINEDLIABILITIES AND TIMESCALESOF PENSION FUNDS OR OTHERINSTITUTIONAL INVESTORS



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WORKING WITH HUNDREDS OF FINANCIAL INSTITUTIONS ACROSS 35 COUNTRIES TOINTERVIEW THOUSANDS OF MILLIONAIRES AND HIGH NET-WORTH INDIVIDUALS, SCORPIOPARTNERSHIP HAS AN ALMOST UNPARALLELED UNDERSTANDING OF WHAT MAKES THE

WEALTHY TICK. MANAGING DIRECTOR CATH TILLOTSON DESCRIBES HOW PHILANTHROPY AND

RESPONSIBLE INVESTMENT KEEP CROPPING UP AS KEY ISSUES IN ITS RESEARCH.

THE WEALTHYARE NOT TAXDODGERS;THEYRE A

POSITIVE FORCEIN SOCIETY

Explain a bit more about Scorpio Partnership.Were a strategy rm, which means most of our clients innancial services, were telling them how to expand theirbusiness, nd new markets and change the way they interact

with their existing customers.A few years ago, we noticed a lot of wealth managementinstitutions were starting to talk about philanthropy as anarea of business practice. We got involved in a number ofdifferent strategy projects, around understanding the process

of philanthropy and where wealth management rms tted inalongside lawyers and accountants.Weve also done a lot of research with major donors of differentlevels of wealth. So from major donors at the high net-worthlevel who are perhaps part of a giving circle, up to major donors

who have billion dollar foundations.Were trying to understand what motivates them, and what theysee as the future of philanthropy and philanthropic advice.Weve interviewed probably about 10,000 millionaires andmulti-millionaires face-to-face, and weve done quantitativeresearch with probably another 20,000-30,000 on top of that.So weve got a very good insight into what makes the global

wealthy tick, and philanthropy keeps coming up.

Youve also done research into responsibleinvestment and wealth creation. What are themain trends that you identified?That work was spurred really by the fact that there was a lot ofpressure a year ago. It perhaps came to a head with the Give it



with. We just couldnt see how this proleof tax dodging tted against that.If you talk to a wealth adviser, they willtell you that a wealthy person is onlyinterested in securing their wealth fortheir family. If you talk to the government,theres more of a slant on making thempay the appropriate levels of tax. If youtalk to charities, they characterise wealthy

people as those who put restrictionson the way that they give and can bequite awkward to deal with in terms ofinformation ows.None of this added up, so we did

some specic research looking at whatresponsible wealth creation meant. Wecall it a Responsibility Index, whichbasically asks wealth creators to rank howimportant things like securing wealth fortheir families, paying taxes, charitableactivity, obeying international laws,the environment and a whole range ofdifferent factors.What we found was that people that wedeal with everyday regard all of thosefactors important. And in fact, securing

wealth for the family and paying taxeswere broadly on a level. Now obviously,

they put slightly more emphasis on familythan they do on tax, but actually yourelooking at somewhere between six andeight out of 10 for all of these factorsIf you then go to advisers and ask thesame questions, you nd that adviserssignicantly overweight the importanceof family and signicantly underweightthe importance of responsible investingor the environment or giving money tocharity. What that said to us is that theresan imbalance about the way that society

perceives wealthy individuals, and if wehad a better understanding of the personin front of us, we would actually see thattheyre quite a positive force in societyand not the stereotypes that sometimesget put forward.

Why and how do you think thisperceptions and stereotypeshave been created?I think its because inevitably, anyindividual, when they are interacting withone authority or one adviser, is focusing

on a particular issue.When you go to see your nancialadviser, you are going to be talking tothem about pensions and school fees andso on. It is about your family; it is aboutthat particular aspect of your life. When

youre interacting with the authorities, itsprobably around tax returns.People focus on the thing that they see,and they forget the individual in front ofthem is actually much more rounded.

And if we understood that person in a

much more rounded way, then wecould balance products and servicesaccordingly. At the moment, theindividual has to go out and interactseparately on all of these issues.

Back George campaign, which appearedto be casting wealthy individuals whogave money as being motivated bydodging taxes. We, in all of our research

with thousands of high net-worthindividuals, just couldnt see that as aprole that we regularly came across.Most of the wealth creators we spendtime with, and most of the wealth

creators who respond to our quantitativework, are very interested in wealthcreation as a concept not just forthemselves, but for the businesses thatthey run and the organisations they work

ONE PHILANTHROPISTS INTERESTS ARE NOTTHE SAME AS ANOTHERS. HOWEVER, IF YOU CANINTRODUCE A COMMON MOTIVATION AND PROFIT

IS A VERY GOOD ONE THEN YOU CAN ALIGNPEOPLES INTERESTS



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Your research says,Responsibility is far moreimportant to wealth creatorsthan the wealth managementindustry gives credence today.Why do you think this is?I think its because wealth advisers willfocus on one aspect, and that is the mostimportant thing. And if that is just oneout of 10 or 20 or however many factors,theyre kind of missing the point. Theycould just as easily have a conversation

with that person about philanthropy andsocial investment. And those would be

equally interesting topics.If you want to deliver a holistic wealthsolution, you should be comfortablehaving those conversations, because theperson in front of you is interested. If

we look at our work that weve donein the philanthropic space particularly

with very major donors they are muchmore in tune with the concepts of

venture philanthropy, social investmentand impact investment, however you

wish to dene those terms, because they

understand that if you can put some kindof prot motivation into the equation, itbrings more efciency into the model.When youre giving money away, you

want to maximise the efciency. You want

to make sure that everybodys on thesame page with the same motivations, soits a natural step for many major donors

to say that there are some problems thatare best solved with charity, and thereare some problems that would be bettersolved with an equation that has protmotivation in there.

Is there a difference currentlybetween ethical, sustainableor responsible investment andphilanthropy?Theyre two very different activities, butthey are certainly related. Philanthropy,

at its purist, is about alleviating suffering.Thats fundamentally what it is, but there

are many different types of problems andthose problems are usually complex, soif you want to scale up philanthropicactivity you need to motivate a widegroup of people and that is a verydifcult challenge.One philanthropists interests are notthe same as another philanthropistsinterest. However, if you can introducea common motivation and prot is a

very good one, and has worked for manythousands of years then you can alignpeoples interests. But in order to get the

process started, you need seed capital.That seed capital will almost certainlyhave a philanthropic goal and initially willprobably be philanthropic capital,but that capital has an investmentmotivation by which I mean that itspurpose is to prove a concept and engageothers in the investment.So the philanthropist says, We canhelp to make this work, and we canprove it, test it, and then move it acrossinto the mainstream.

THERESAN IMBALANCEABOUT THE WAY

THAT SOCIETYPERCEIVES WEALTHY

INDIVIDUALS

www.scorpiopartnership.com



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ETHICAL INVESTMENTIS MORE THAN BEATING

ONE BASTARD WHILEFUNDING THREE OTHERSAS PART OF NATIONAL ETHICAL INVESTMENT WEEK 2012, THE CHARITY FINANCEGROUP (CFG) PUBLISHED A SURVEY OF ITS MEMBERS THAT FOUND THAT JUST OVERHALF HAD ANY SORT OF ETHICAL INVESTMENT POLICY, AND THAT OF THOSE WHODID, MOST ONLY USED NEGATIVE SCREENING, WHERE THEY AVOID COMPANIES

WHICH HAVE ACTIVITIES THAT GO AGAINST THE CHARITYS AIMS.BY DAVID AINSWORTH, THIRD SECTOR

owners. Those who ght to preventpoverty are often happy to invest inarms manufacturers. And so on. Manycharities have developed investmentpolicies to beat the bastards theyrepersonally battling, while funding threeother types of bastard.

Charities attitudes also seem to be atodds with what the wider public wantfrom them.

A survey by UKSIF, the ethicalinvestment industrys trade body, foundthat 59% of investors want to seecharities take a lead in investing moreethically. Whereas, if anything, charitiesare being dragged into the eld by theirinvestment managers.There are reasons why charities havebeen slow to invest ethically. One is

a lack of resource. It takes time andeffort to develop an ethical policy, andthe trustees who should be in chargeof doing so are often part-time, withlimited investment experience.

T

here is little, in short,to suggest that charitiesare displaying higherethical standards in theirinvestment than theaverage man on the street.

This is a bit of a worry. If charities dont

have any sort of ethical investmentpolicy, it makes it almost certain thattheyre investing money in someone,somewhere, who is doing somethingharmful to their beneciaries.Charities are supposed to act ethically,after all. Charities are supposed tobe the ones leading the crusadeagainst companies that pollute theenvironment, make banned munitions,and run sweatshops in the developing

world, arent they?

Its also perhaps disappointing that mostthat have ethical policies are worriedonly about their own beneciaries.Those who protect the environmentare often happy to invest in sweatshop-

THEREIS LITTLE TO

SUGGEST THATCHARITIES ARE

DISPLAYING

HIGHER ETHICALSTANDARDS

IN THEIRINVESTMENT

THAN THEAVERAGE MAN ON

THE STREET



Another is the separation of those whomanage money from those who spendit. A CFG seminar on this subjectfound that there was often a lack ofconnection between nance teams andtheir campaigns and policy counterparts.

A third is a belief that you should focus

rst on maximising your returns orperhaps more serious, that trustees arerequired to maximise returns, becauseof their duciary responsibility totheir charity.Charities have argued previously to methat its their duty only to be concerned

with their own beneciaries or, toput it another way, that if the best wayto help dogs is to invest in people whomake cluster bombs, then dog charitieshave a duty to do so.

Im not sure this is really true, but ifit is, it seems silly. And it argues thatperhaps the duties of charities shouldbe widened to include somethingthat looks a little like the Hippocratic

Oath not just to do good for yourbeneciaries, but to do no harm toeveryone else while youre at it.Of course, in reality, the question isprobably moot, because there is noevidence that being ethical in yourinvestment costs money. If anything,

theres some evidence that companieswhich have good environmental, socialand governance (ESG) records provide abetter return for the long-term investor.In addition, Charity Commission

guidance also indicates that charitytrustees have reasonably broad powersto make investments in line with theirethical judgements.The evidence suggests that the numberof charities who are developing anethical investment policy is growing.

But it appears that it will be a whilebefore the 59% of investors who wantto see charities take a lead are likely toget their wish.

David Ainsworth is a seniorreporter at Third Sector, theleading business publication

covering charities andvoluntary sector organisations.

www.thirdsector.co.uk

CHARITIESATTITUDES TO

INVESTMENT SEEMTO BE AT ODDS WITH

WHAT THE WIDERPUBLIC WANT FROMTHEM



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WHAT IS THEENVIRONMENTALFUNDERSNETWORK?THE ENVIRONMENTAL FUNDERS NETWORK (EFN) IS A NETWORK OF PHILANTHROPICTRUSTS, FOUNDATIONS AND INDIVIDUALS THAT FUND ENVIRONMENTAL ANDCONSERVATION INITIATIVES.BY TOM REVELL



L

aunched in 2003, itsmission is to inspireincreased levels ofcharitable support forsuch causes and tomake environmental

philanthropy better organised andmore effective. Its members arecollaborating to secure a trulysustainable and just world, fit forpeople and nature.

A project of the Ecology Trust, it wasfounded with the support from thefamily of the late billionaire financierand politician Sir James Goldsmith.The Goldsmith family remainsactively involved in fundingenvironmental initiatives.

EFN is a funder-to-funder network,meaning that it is not open to grantseeking organisations. Its mainpurpose is to allow contact betweenenvironmental grant-makers, andprovide a forum where commoninterests can be discussed. To thatend, the network holds a yearlyretreat, quarterly lunches, and otherad hoc events, all of which bringphilanthropists together.The trusts and foundations that

have worked with EFN have diverseinterests. Some are concerned withspecific issues, such as the PeoplesTrust for Endangered Species,

which is especially concerned withBritish mammals.Others want to tackle broad, globalissues, such as the Waterloo Foundation,

which supports internationaldevelopment work and fundsinternational environmental initiatives.Some are familiar names, suchas Comic Relief, the Body Shop

Foundation and the BBC Wildli fe Trust.Some have religious connections, suchas the Joseph Rowntree CharitableTrust, which is strongly linked to theQuaker community. Meanwhile, theNew Israel Fund exists, it says, to helpsecure Israels long-term prospects andto promote environmental activismthroughout Israel.For their various reasons they haveall gathered under one environmentalbanner to work with the EFN.

The EFN has made a name for itselfthrough a series of reports investigatingpatterns of funding on environmentalissues. The latest in the Where

the Green Grants Went series waspublished in 2012.The report shows that less than 3%of charitable grants made in theUK are donated to environmentaland conservation projects, adisappointingly low figure.This is despite the risk thatunchecked climatic changes willprove catastrophic for biodiversity,marine systems, habitat and speciespreservation, as well as public health,

international development, humanrights and the welfare of futuregenerations. The research also showsthat from 2007 to 2010, funding hasplateaued, at around 75m a year.The report predicts that reductions inpublic spending will mean a failure todeliver environmental programmes,leaving gaps that philanthropy cannot llalone. It says that environmental funders,such as those EFN counts as members,

will need to carefully plan ahead.

5

WHERE THE GREEN

GRANTS WENT

Patterns of UK Funding for Environmental

and Conservation Work

Jon Cracknell, Heather Godwin, Nick Perks and Harriet Williams

With a foreword by Chris Cooper-Hohn

JANUARY 2012

www.greenfunders.org

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FIXING THEENVIRONMENTALCRISIS THROUGH

PHILANTHROPYENVIRONMENTAL PHILANTHROPY ACCOUNTS FOR LESS THAN 3% OF TOTAL UKPHILANTHROPIC GIVING. THIS IS A STAGGERING STATISTIC CONSIDERING THE SHEERSCALE OF ENVIRONMENTAL PROBLEMS THE WORLD FACES, SAYS PHILANTHROPISTAND GREEN INVESTOR BEN GOLDSMITH.

BY ALEX BLACKBURNE

People address the environmental

crisis in their own way. Some buysolar panels; some sell solar panels;some educate; some write.But for some people, like BenGoldsmith, money is their weapon

of mass conservation.At just 32, Goldsmith has made a name for himselfas one of the brightest entrepreneurial minds inBritain, and is already a veteran when it comes tophilanthropy. He is a partner at green investmentgroup WHEB, chairs his familys philanthropicfoundation, which specialises in grant-makingto green and environmental causes, and was

instrumental in setting up the EnvironmentalFunders Network (EFN), which brings together150 trusts, foundations and individual donors.In January 2012, the EFN published the fthedition of its Where the Green Grants Wentreport, which analyses the state of environmentalphilanthropy in the UK. The latest edition providedsome real food for thought for Goldsmith.The total amount of money given by trustsand foundations to environmentally-related

work amounts to I think less than 3% of totalphilanthropic giving by trusts and foundations, he

says, citing research conducted by the EFN.Im staggered by that. Given the scale of theproblem that were facing, I nd it amazing thatonly around 75m was spent on environmental

work in total in 2009/10. Its the biggest challenge

I CANT THINK OF A GREATER CHALLENGETHAN FIXING THE ENVIRONMENTAL CRISIS



facing our generation. I cant thinkof a greater challenge than xing theenvironmental crisis.In a 2011 article for Spears, a lifestylemagazine for high net-worth individuals,Goldsmith praised generous philanthropicgiving, but said it all means nothingunless the environment is looked after.He puts the apparent disregard for the

long-term future of our planet and itsinhabitants down to a lack of education:The general problem is that people takethe environment for granted. The stuffthat we consider to be our God-givenright and we consider to receive for freehas no economic value attached to it forthat reason.Goldsmith adds that this problem,failing to value healthy ecosystems andthe services they provide, is a problemthat runs through investment,

business, development, decision-makingand philanthropy.His sentiments are supported by academicresearch. A report from April 2013 byinvestment rms Alliance Trust, Newton

and Schroders claimed that leadingeconomists were failing to account forecosystem services such as climate change,because of the inherent short-termnature of markets.Interviewees, including several chiefeconomists from some of the largestinvestment banks in the world, noted theshortcomings in the ability of existing

economic models to readily incorporateecosystem service impacts.A fundamental problem with economics isthat a forested area of hills near a city is not

valued for the water it provides that cityevery year. Its only when the forest clearedand the city starts running out of water inthe summers that they realise what theyvedone, explains Goldsmith.The root of that problem is the same

when it comes to philanthropy. Peopleassume that the environment will just

always be there and will always keep ongiving, and therefore they look to focus onthe more immediate problems.Its like theyre putting sticking plastersonto the symptoms of environmental

collapse and trying to deal with things atthe end of the pipe, rather than going tothe beginning of the pipe and trying tosolve the cause of some of those problems.Thats the transition that philanthropistsneed to make.But while the current generation of bigphilanthropists are perhaps falling short ingiving to environmental causes, Goldsmith

believes there is room for optimism.Environmental issues have been drummedinto schoolchildren since the 90s, and sorepresent a top priority issue for youngpeople today.The environment, he says, will benetfrom that shift in the long run though

whether things will change as quick asthey need to is another question altogether.Goldsmith has his father, the latebillionaire nancier Sir James, to thank forintroducing him to philanthropy. Sir James,

who died in 1997 when Ben was just 16,set up what was then called the GoldsmithFoundation in 1990. It was from hisfather that Ben inherited his business andinvestment nous.



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His passion for the environment came fromhis uncle Teddy, though, the brother of Sir

James and founder of both the Green partyand the Ecologist magazine (which Bensbrother Zac would later go on to edit).Sir James, too, had Teddy to thank forconverting him to a green way of thinking.The Goldsmith Foundation is now called

the JMG Foundation. But while its namehas changed over the years, it still hasalmost no public prole and a discreteonline presence. However, it continues togive away millions to environmentalcauses each year.The philanthropists Goldsmith mostadmires are Sigrid and Lisbet Rausing.Daughters of billionaire Swedishbusinessman Hans, the sisters are knownin their own right for being two of themost generous and publicity-shy giversin the world Sigrid to human rights

causes and Lisbet to environmental andconservation issues. Goldsmith describesthem as unsung heroes.There are lots of philanthropists around,and certainly those that are most unsungare often in areas such as human rightsand environment, where there are nomonuments to their giving, he adds.A lot of what they do is unseen, buttheyre actually creating lasting, systemicchange with their philanthropy, which Ithink is the ultimate outcome.

Many philanthropists engage in so-calledvanity giving. Indeed, one of the biggestcriticisms of philanthropy is that it allowsthe wealthiest to pursue their owninterests (most notably in the arts) and not

necessarily resolve what is most pressing insociety. The tiny amount of philanthropicmoney given each year to environmentalcauses is perhaps evidence of this.I would love to sit down and chat to someof these philanthropists and get them to

see the scale of the problem were facing,and the fact that philanthropic money is soincredibly potent, Goldsmith says.Tiny amounts of philanthropic money,compared to the money spent withcorporate lobbyists, can make such adifference. You can really movejuggernauts with tiny amounts ofphilanthropic money.Goldsmith is quick to add, however, thatvanity giving is not a bad thing in hiseyes: Look at some of the wonderful

monuments in the cities of the world thathave been built, and some of the nationalparks that have been donated. There arelots of wonderful examples of extravagant,ostentatious giving that have left us with a

fantastic legacy.Thank God for the National Gallery andthe Royal Opera House, which were theresults of extravagant and ostentatiousgiving. I dont think its ever a bad thing; Ithink its denitely a good thing.But philanthropists have not alwaysenjoyed a steady relationship withgovernments. Criticisms of philanthropyfrom politicians stretch way back, withUS senator Frank Walsh arguing in 1912,Taxation, not philanthropy, was theproper way to provide funds to solvesocial problems.Fast forward 100 years and philanthropistsin the UK were outraged when DavidCameron and George Osborne accusedthem of giving away money to charitablecauses as a means of dodging taxes.

Goldsmith argues that the relationshipbetween tax rates, levels of philanthropicgiving, and social outcomes is somethingthat would benet from further research.Its clear that the US and UK havestronger philanthropic cultures in part as aresult of having lower levels of income taxthan some other industrialised countries,and personally I like the idea thatindividuals have the freedom tosupport the things they care about themost, he says.

Its also the case that philanthropic capitalhas a vital role in supporting work thatcriticises the government, such as thelobbying and advocacy work carried outby environmental organisations. It is veryhard for such groups to get funding for thiskind of work from either the governmentor the business community.

At the same time, he points out thatcountries with strong philanthropic culturesoften fare less well in terms of socialindicators and measures of wellbeing.But conversations about philanthropy with

Goldsmith will always come back to onepoint: the staggering mismatch betweenthe scale of environmental philanthropyand the problems ahead.To change the world for the better is theultimate outcome of philanthropy. And thecollapse of the natural systems on which

we all depend some people moredirectly than others is the decidingfactor governing so many other issuesthat philanthropists are trying toaddress, he says.

I therefore nd it odd that the environmentsits so low down the priority list.

www.greenfunders.org

www.whebpartners.com

I WOULDLOVE TO SIT DOWN

AND CHAT TOSOME OF THE BIG

PHILANTHROPISTSAND GET THEM TOSEE THE SCALE OF

THE PROBLEM WEREFACING



SURPLUS WEALTH IS A SACRED TRUST WHICH ITS POSSESSOR IS

BOUND TO ADMINISTER IN HIS LIFETIME FOR THE GOOD OF THE

COMMUNITY 19TH CENTURY INDUSTRIALIST ANDREW CARNEGIE

IF WE COMMAND OUR WEALTH, WE SHALLBERICH AND FREE;IF OUR WEALTH

COMMANDS US, WE ARE POOR INDEED IRISHSTATESMAN EDMUND BURKE

WHAT WE HAVE DONE FOROURSELVES ALONE DIES WITH US;

WHAT WE HAVE DONE FOR OTHERS

NEVER RESPECT MEN MERELY FOR THEIR RICHES, BUTRATHER FOR THEIR PHILANTHROPY; WE DO NOT VALUETHE SUN FOR ITS HEIGHT, BUT FOR ITS USE - AMERICAN

JOURNALIST GAMALIEL BAILEY

Philanthropy

FORMERLYTHEPROVIN

CEOFTHEPUBLIC

SECTORAMERICAN

BUSINESSMAN

DAVIDROCKEFELLER

AND THE WORLD REMAINS AND IS IMMORTAL AMERICAN LAWYER ALBERT PIKE

ISINVOLVEDWITHBASICIN

NOVATIONSTHATTRANSFO

RM

SOCIETY,NOTSIMPLYMAINTAININGTHESTAT

USQUOOR

FILLINGBASICSOCIALNEEDSTHATWERE

Nothing incites to money crimes like great povertyor great wealth American author Mark Twain



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Write for us.

Whether anonymously, under a pseudonym,

or with your name published loud and clear.

Journalism is changing rapidly through a

digital and social media revolution. It is no

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Learn about how and where your money is invested

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The Guide to Philanthropy & Giving 2013