Regulator and new website will help make charities more transparent
‘In Ireland some commentators claim philanthropy has an unhealthy influence on public policy decisions. This is more paranoia than reality’
“In the US, philanthropy – which literally means ‘love of mankind’ – is seen as a way of participating directly in solving society’s ills and needs.” Photograph: Getty
Put simply, philanthropy is the application of private resources to the public good. Yet in Ireland philanthropy is often misunderstood or treated with suspicion. To some, it is an elitist activity reserved for millionaires seeking attention or forgiveness, or worse, buying influence.
The reputation of philanthropy here is a world apart from that in the United States. There, it is an everyday occurrence engaged in by all socioeconomic groups. Of the $335 billion worth of charitable gifts made in the US last year, 85 per cent came from families and individuals. Although the Gates Foundation gave $4 billion to alleviate poverty last year, this is dwarfed by the $60 billion contributed by average households. Philanthropy is a very personal response to public problems from all sectors of society.
In the US, philanthropy – which literally means ‘love of mankind’ – is seen as a way of participating directly in solving society’s ills and needs. Some commentators in Ireland, however, claim it has an unhealthy influence on public policy decisions. This is more paranoia than reality. The billions given away in the US in total represent less than 2 per cent of GDP – hardly a threat to the sovereignty of the US government. In fact, philanthropy works best when it is carried out in conjunction with government.
An example of this in Ireland is Music Generation. This $10 million project initiated by U2, which the Ireland Funds supports, provides musical training to more than 26,000 young people across the country and has created 330 jobs.
Five years ago, this was an untried concept upon which, rightly, the State could not risk taxpayers’ money. However, the Ireland Funds, as philanthropists, could take that risk. The project has beaten every expectation and, now that the impact is proven, the State is taking over the funding of Music Generation.
In other words, most of the activities and objectives of Irish charities are aligned with public policy goals. If charities can help achieve these goals more quickly than the State or at a lower cost to the taxpayer, that is an outcome that should be celebrated and not demonised.
Of course, the most essential element for allowing philanthropy to flourish is a healthy, reliable charity sector. People won’t donate unless they trust the recipients. The reputation of charities here reached its nadir in 2013 after a series of scandals which still cost the sector dear. The solution is simple: it is transparency, transparency and more transparency.
For instance, in the case of the American Ireland Fund, we publish our audited financial statements and IRS tax forms each year outlining our full financial details. These figures – expenditures, salaries, grants, etc – are readily available on our website and through independent rating agencies which allow members of the public to judge the effectiveness of charities on an objective basis. This results in a healthy, competitive and effective environment.
The appointment of a charity regulator is a welcome step in giving the Irish public the reassurance they deserve before entrusting their hard-earned money to charities. On Monday, Minister for Public Expenditure and Reform Brendan Howlin announced the establishment of Benefacts.ie. When up and running early next year it will give the public access to the financial and legal details of the 12,000 registered not-for-profit bodies in Ireland. This will enable them to make educated decisions about which charities to support or not. It will also help people appreciate the depth and quality of the work carried out by the not-for-profit sector in Ireland.
We are proud to be co-funding Benefacts with the Department of Public Expenditure and Reform and Atlantic Philanthropies. It is an excellent example of what a public philanthropic partnership, with the State and philanthropists working in unison, can deliver for the public good.
Charities themselves should also be proactive. Just as they assert their value to society, they should point out that none of what is achieved is cost-free, and they should not be afraid to make their numbers and details freely available. In the race for transparency, there are no losers.
So is philanthropy a cure-all for society? Not at all. But it certainly can tackle difficult social issues, identify failures, promote success and be free of the tyranny of short-termism. It also gives the donor great satisfaction at having made society better. For us in The Ireland Funds, we are very optimistic for the prospects of philanthropy in Ireland and will play our part in promoting it.
It’s a privilege to give back. A more transparent sector along with the greater understanding of the power of philanthropy will only enhance that response.
Kieran McLoughlin is president and chief executive of the Worldwide Ireland Funds