Tying in with a recent change to UK tax law, the campaign Legacy 10 launched last week with an event at Tate Britain, to persuade more people to make charitable donations in their wills. The cause couldn’t be more critical.

The campaign has the backing of high-profile figures such as Jeremy Hunt, the UK secretary of state for culture, media and sport; George Osborne, the UK finance minister; Sir Richard Branson, and Jacob Rothschild. It was founded by Roland Rudd, who is now the organisation’s chair.

A change in UK inheritance tax law, implemented by the coalition government, means that from April 2012 any estate that leaves at least 10 per cent to a charitable or cultural cause will be able to take advantage of a cut in inheritance tax from the current 40 per cent down to 36 per cent.

Speaking at the launch of Legacy 10, Osborne stood in front of a picture of Henry VIII and quipped that he hoped it was a coincidence he’d been asked to stand up in front of a portrait of a king who executed the chancellor of the day. Indeed, the mood in the room could hardly have been more favourable towards the current chancellor, who was lauded for his stance on charitable giving since taking office.

If we want a regime in the UK more akin to the American regime of giving, said Osborne, then our tax system around giving must be more similar to that in America. He added that he was “thrilled” that a tax change had encouraged such a movement.

According to the World Giving Index 2010, produced by the Charities Aid Foundation, the US ranks joint fifth globally for giving, while the UK ranks eighth.

The many demands of the many

Aside from tweaks in the tax system, there are plenty of reasons to be thinking about philanthropy at the moment. Since the financial crisis, many people have seen their living standards drop as they are squeezed by pressures such as low economic growth, persistent inflation in the UK, for example, and anxiety over their financial future.

As protests ignite across the Western world, they are berated for not having a clear set of demands. While this may be true, they are perhaps all the more worrying for this reason, as general dissatisfaction with a society is harder to resolve than a specific problem, and can lead to civil unrest.

In the financial world - and working within wealth management particularly - it is all too easy to dismiss such protests as irrelevant and naïve. However, we all live within a society and benefit from the stability of it, which is also one of the most powerful predictors of economic growth. Inequality too is something to worry about for everyone, even those who prefer to “worry about the size of the pie” because at very high levels it is prohibitive of economic growth in itself (by stifling the middle class) and leads to civil unrest, which would worsen this effect.

The question of capitalism

In such times, and with government budgets hard pressed, it is critical that businesses, and wealthy individuals, who are perceived to be “the winners” of the system, engage, both financially and in constructive dialogue. Otherwise, misplaced anger can see the many good things in our society thrown out with the bad.

As a sign of this, capitalism has taken a beating since the financial crisis, which is often blamed on “unbridled markets”. However, arguments which define the giant mess we are in as “left” versus “right“, or capitalism versus socialism, oversimplify it and reduce it to mud-slinging. After all, many practices seen, such as CEO pay which is unconnected to performance and government bailouts, are not traditionally capitalist. In order to protect a capitalist system, it needs to be better understood, and its rewards spread where possible.

“I’m an absolute big fan of capitalism,” said Richard Reed, co-founder of Innocent, adding that we “all know it’s not perfect” but it’s the best system we’ve got. Reed said he “hugely” supports the Legacy 10 campaign, both personally and professionally. Innocent, for example, has a range of policies on sustainability and profit sharing, donating 10 per cent of profits each year to charity.

Small sums can make a big difference

Of course, philanthropy is not a panacea. Government spending in the UK, at around £711 billion (around $1.1 trillion), dwarfs annual spending by charities. As an approximation for this, annual gross income for charities in 2010 was £53.86 billion, according to the Charity Commission. Legacies accounted for £2 billion of the total annual income.

But “even small legacies can make a real difference,” said Simon Jackman, chief executive of the charity Hope for Children, calling Legacy 10 “a really valuable campaign”. In the past, his charity received a gift of £5,000 which gave it “a footing to grow,” he said. In 2009/10 Hope for Children spent over £1 million on charitable activities.

Jackman pointed out that although the voluntary sector receives some £2 billion per year in legacy income, only 1 per cent of legacies in probate include a charity. Furthermore, 28 per cent of all legacies go to 10 high-profile charities, while there are “tens of thousands” of local, smaller charities.

In his mind, this campaign is hugely valuable, because it not only applies to the wealthy, but allows people leaving much smaller estates to make a difference.

Wealthy people, on an individual basis, can of course give larger absolute amounts. They can also take advantage of vehicles such as foundations, thus benefitting from developments in the philanthropy space such as impact giving, which are being spurred on by demand which has proved resistant so far to the flagging economy. And for those who benefit from and want to preserve the best parts of our system, and improve it, it makes sense to ensure more people reap the rewards of it.