The UK’s wealthy individuals are giving more to charity than ever before but they still lack a philanthropic culture anywhere near as rich a...

The UK’s wealthy individuals are giving more to charity than ever before but they still lack a philanthropic culture anywhere near as rich as that of the US.

Giving among the most wealthy is up by just under 36 per cent year on year to the highest levels yet seen, according to an annual survey by The Sunday Times.

The top 30 individuals who donated to charitable trusts, recorded in the The Sunday Times Giving Index generated total revenue which topped £453 million ($809 million) this year, up from £333 million in the previous year.

The Charities Aid Foundation estimates that £8.2 billion was donated to charity in 2004. This compares with the £7.1 billion reported in 2003, although CAF has refined its methods of collecting data to better take account of giving among the rich.

Nevertheless, overall giving in the UK still accounts for only 0.9 per cent of the country’s gross domestic product.

Cathy Pharoah, senior researcher at CAF, told WealthBriefing: “Obviously we are delighted that people are giving more to charity but we do believe that wealthy people could still be giving more. The UK still trails significantly behind the US.

There is a long history of giving more in the US, where there is more public celebration attached to giving back to society, noted Ms Pharoah. There is also strong tax incentives linked to charitable activities in the US.

The UK had a strong philanthropic culture during the 1800s but since the establishment of the welfare state, rich people have tended to think that the government has taken care of this with their tax contributions.

Ms Pharoah added: “The situation with charitable giving in the UK is now rather ambiguous. As more wealth accumulates and there is a low tax environment, we should be thinking about giving more.”

Perhaps people in the UK do not want to boast about being do-gooders. But according to charitable organizations, high net worth individuals should revel in the “John Stuart Mill effect” - the feeling of good which one gets from giving money to those less fortunate than ourselves. The City of London could take the lead from some of its more prominent givers, say charities.

Stanley Fink, managing director, Man Group, told WealthBriefing: “When it comes to giving to charity, I don’t see it as an option, and when you have enough it is a great pleasure to give some back. I don’t want to be the richest man in the graveyard; shrouds don’t have pockets.

“One charity I am very involved with is ARK (Absolute Returns for Kids) and it’s mission is to transform the welfare for kids that are victims of either conflict or disease and we raise £10-15 million per year. Any costs are met by the trustees so that 100 cents in each dollar goes to children.”

Mr Fink said children are the theme that links his charitable activities. He also gives to the Evelina Childrens Fund, started by Evelina de Rothschild, and also a school near White City that his charitable work is paying to turn around.

Another forward-thinking example is New Philanthropy Capital, founded in 2001 by a team of City financiers from Goldman Sachs. It aims to apply global investment strategy to examine how charitable sector operates and which charities are most effective.

The NPC group has published extensive reports on homelessness in Britain, palliative care, and the prison system.

Coutts, the UK private bank, has a philanthropic team which integrates charity into wealth management and helps its clients to give intelligently.

Mark Evans, head of family offices and philanthropy, Coutts, told WealthBriefing: “We have set up philanthropic forums which take place up and down the country and during these the level of debate is quite high; people want to learn where their money will be used and how.”

“In the UK people do not want to boast so much about being do-gooders but they can get a vast amount of satisfaction from charitable giving. We deal with city professionals with big bonuses, entrepreneurs with companies that have paid them large capital sums, land owners, lottery winners.”

Mr Evans has noticed some philanthropic trends emerging. People are thinking twice about leaving everything to their children, where as in the past they might have done this without thinking about it. They will want their kids to have a good education and a good start in life but then think it is healthier for them to make their own way.

There is also more to charity than just giving. Wealthy people, many of whom are successful in business, can get a lot of pleasure out of rolling up their sleeves and getting involved in charity, he said.

In some cases charitable giving might be a motivation for keeping a family business together because they meet round a table and decide how and where to donate money, which can happen even after the family business has been sold.

Others may want to leave a legacy, to leave a trust or something behind after them. In other cases they might be touched by a particular cause such as cancer or some natural disaster.

They might want to create a portfolio of different causes, said Mr Evans.

“Sometimes it’s not just about giving cash but also lending. There is potential for people to earn their way out of poverty. Microfinance funds, for instance, allow as little as £100 to be provided, say to purchase a sowing machine, and when the money has been paid back it can be recycled and used again,” he said.

“It is difficult to know where to start alleviating world poverty even if you have £10 million to give away," said Mr Evans.

"The trick is doing this intelligently."