The City’s new boom market: philanthropy

Simon Nixon

18 November 2006

Why they want to do so is not the point. Many are motivated by genuine altruism. Unlike those who inherit old money, self-made millionaires tend not to feel the same sense of intergenerational stewardship towards their wealth. Others may be seeking honours or public status, although this seems to matter less to British donors, who tend to be less fussed than Americans about having buildings named after them. Or perhaps, sub-consciously, the mega-rich see philanthropy as a form of voluntary tax — a necessary corrective to maintain support for a capitalist system that has led to wide inequalities. Previous philanthropy booms — in the late 19th century men like George Peabody and Joseph Rowntree gave away huge sums — also coincided with sharp rises in inequality.

What matters is whether today’s philanthropists are spending their money in ways that will make a difference. They’re certainly going about it differently from previous generations. Whereas Victorians liked to put their money into trusts to be trickled out in grants to deserving charities, today’s donors are more hands-on. Being younger and still at the peak of their powers, they want to work closely with charities or run their own projects. ‘They want to see a return on their investment,’ says Nigel Harris of New Philanthropy Capital, which advises donors. ‘They’re looking for a social return. They want to see they’re doing some good.’

Some of them are profiled in Charles Handy’s book The New Philanthropists (Heinemann). There are a smattering of City slickers, but not all are tycoons or even stupendously wealthy. Sir Tom Hunter sold his retail business for £500 million and now devotes his time to giving it away, topping last year’s Sunday Times ‘giving list’ with donations of over £20 million. Sir Peter Lampl gave up business to devote himself to the Sutton Trust, an educational charity. Irish property developer Niall Mellon flies to South Africa every month to supervise the building of homes in townships. What unites them, says Handy, is that they all prefer to be actively involved in their charities, rather than passive writers of cheques.