Philanthropic funding must be encouraged now

In 2011, I was asked to chair the Forum on Philanthropy and Fundraising, a partnership between government and the philanthropic community created with the intention of developing philanthropy and fundraising and thus increasing private investment in the not-for-profit sector in Ireland.

This sector plays a crucial role, employs more than 100,000 people and draws on the skills and time of some 560,000 volunteers. It is an indispensable partner to government in the delivery of a wide range of services, from education to culture and sport, and creates an untold quantum of good in culture, recreation, social justice, civil and human rights.

Perfect storm
The recession has produced the funding equivalent of a perfect storm. There has been a 10 per cent drop in the numbers giving to good causes; those who are giving are often giving less. The result is that most charities have experienced cuts in fundraised income of between 20 and 40 per cent. Those organisations in receipt of public funding have also experienced steep cuts as the Government has desperately tried to balance the books. In addition, the two largest philanthropic funders are both limited life foundations: one has already ceased funding and the other will cease in a few years. These two organisations account for some 86 per cent of philanthropic funding in Ireland. The outlook is challenging, to say the least.

The forum came up with a plan to address these issues and to increase the level of private investment in public good from an estimated €500 million to €800 million by 2016. The strategy involved:

A national giving campaign, the One Percent Difference Campaign, to encourage the Irish people to give 1 per cent of their time or money to a cause they care about.

The creation of a social innovation fund to fund well-developed social innovations and to some degree to fund the type of innovative projects and organisations funded by the major philanthropies.

Investment in building fundraising capacity.

Changes to tax and regulation to increase trust in the sector, increase transparency and encourage greater giving.

The major outstanding tax proposal from the forum is to allow the taxable benefit from taxpayers who invest in or who create a charitable trust or foundation to remain with the donor. The intent is to encourage the creation of more philanthropic trusts and foundations – Ireland has one of the lowest numbers of such entities in Europe. The One Percent Difference Campaign has been endorsed by a people including President Clinton, Brent Pope, Clodagh McKenna and more than 690 charities have signed up to the campaign. A certificate and a diploma in fundraising have been created. The Irish Charities Tax Reform Group has worked with the Department of Justice to kickstart the implementation of the Charities Act.

My principal focus has been on the Social Innovation Fund, which I also chair. Government has committed €5 million initially, if that funding can be matched from philanthropic funding. We can persuade business, and in particular the major foundations of multinational companies operating here, to invest in the social innovation fund.

If the fund is to be a success, we must identify new sources of funding. I want to attract new money into the sector and I came up with the idea of reaching out to people who are not tax-resident in Ireland but still have a strong connection to the country. My idea was to offer an increase in the number of days such a person could stay in Ireland up to the international legal limit in return for a €5 million investment in a good cause and a payment of €1 million a year to the exchequer for 10 years.

I made the proposal to the Minister for Finance last year. I led a delegation which presented to the Oireachtas Finance Committee and we had a constructive engagement with them. The committee was anxious that the choice of where the funds would go should not be decided by the donor but by government or an independent body.

I listened to the concerns of the committee and revised the proposal – it now more resembles a levy to fund social investment than anything else. If 10 people sign up we can bring in €50 million in social investment, and €100 million to the exchequer over the lifetime of the scheme. The initiative can raise much more.

No apology
The proposal may seem controversial, but I make no apology. If we do not attract significant investment quickly, we will hit a philanthropic cliff. More than 70 organisations have been funded by the two exiting foundations. If we do not act, organisations will fold, good projects will cease and people will lose their jobs. If anyone has any better ideas I am happy to listen to them.

If not, why not give this idea a chance?