Role of university philanthropy to support places 

Something special is happening in North Birkenhead. This part of Merseyside suffers from some of the highest levels of poverty in the country, with almost half its children living in low-income households. For the last few years, local leaders have been tackling deprivation differently. Youth workers, teachers and council staff have come together in a programme led by residents and targeted at the families that need most support. The place-based collective impact scheme, called Cradle to Career, has boosted literacy rates by two thirds, and has almost doubled the number of families who have been able to step away from social-services support. 

The key to their success? Philanthropy. The programme is backed by the Steve Morgan Foundation, founded by a businessman born and bred in Merseyside who wanted to give back. Patient and flexible investment from the foundation and other charitable backers has expanded public-sector capacity and given the community space to tackle problems creatively. 

Philanthropy like this serves as a catalyst, providing an additional route to regeneration. Truly civic universities can – and should – play a greater role in attracting, consolidating and investing in these sorts of philanthropic funds. 

The UK’s giving gap

The North Birkenhead programme is just one of a series of place-based philanthropic initiatives happening across the country. In Grimsby, tech entrepreneur Jason Stockwood is using the local football club to rebuild a sense of pride and purpose. In Bishop Auckland, Jonathan and Jane Ruffer have donated an estimated £120 million for expanding access to culture and heritage. In Folkestone, businessman Roger de Haan has transformed almost 90 derelict buildings on the seafront into a new Creative Quarter that hosts art and literature festivals. 

As well as their investment, these modern philanthropists bring their networks, their expertise and their love for the places where they live, work and grew up. Philanthropy reaches groups and causes that public funds often struggle to support, and can operate with greater flexibility and patience than money from councils or national government. At its best, philanthropy works hand in hand with public and private investment in a long-term civic partnership.

But these transformative initiatives are too few and far between. The United States is often held up as a philanthropic exemplar: if the wealthiest in the UK gave at the same rate as Americans, £18 billion more would go to charitable causes. But even if giving levels among the richest in Britain were the same as in Canada or New Zealand – countries with similar welfare states – it would generate an additional £5 billion a year. 

The UK’s ‘giving gap’ is underpinned by three trends. 

First, the wealthiest in society are not pulling their charitable weight. The top 10 per cent of households donate half as much as a proportion of their income as the poorest 10 per cent, representing almost £3.4 billion in lost donations. And donations from the most affluent have not kept pace with the growth in their income and wealth. From 2011 to 2018, median donations from the top 1 per cent of earners fell by 21 per cent, despite incomes having risen by 11 per cent. 

Second, too few wealthy donors participate in philanthropy. Half of all donations from the highest-earning households came from less than 5 per cent of that cohort. Meanwhile, 70 per cent of this group donated less than 10 per cent of all donations. A reliance on this civic core of regular donors is unsustainable. 

Third, the geographical landscape of philanthropy is heavily biased towards London. The capital sees four times the value of donations made through Gift Aid compared with the UK average. And more than a third of all charitable funding distributed by the largest philanthropic foundations was directed towards London. 

The philanthropic university

Universities themselves have been on a philanthropic journey, developing their capacity for attracting donations in response to funding pressures Since the 2012 Pearce Report, giving has almost doubled, reaching £1.5 billion from 171,000 donors in 2022. Teams responsible for securing donations at most Russell Group universities now average around 24 members of staff. 

This boost came after the success of the Higher Education Funding Council for England’s matched-funding scheme, delivered between 2008 and 2011, with incentives targeted at institutions that had the least experience in fundraising. In England alone, £143 million in match-funding from the Government triggered nearly £580 million in matched philanthropic donations.

The first role that universities can play in building the philanthropic capacity of their areas is by sharing this expertise. Teams of fundraisers can work with councils and community groups to help them develop their pitches and secure additional funds. Universities can situate their advancement function in a broader civic context – attracting philanthropy to the place as a whole, rather than just to their institution.

Some universities are already going further, bringing together networks of philanthropists with a link to a particular place. The University of Staffordshire is the anchor member of Made in Stoke-on-Trent, one of the first examples of a philanthropic diaspora network. The university serves as a single platform to coordinate and maximise the value of donations, leveraging historical links to the city to invest in projects that secure its future. 

Matthew Bowcock, a tech entrepreneur, is one of the founding members of Made in Stoke. He studied at what was previously North Staffordshire Polytechnic, and his family are originally from the area. He has described his mission in clear terms: ‘Harnessing the fierce pride and loyalty felt by people born or raised in or somehow connected to this city’. 

Alumni networks are a unique connection between some of the poorest parts of Britain and successful individuals around the world. Leaders from business, academia and civil society often spent a few happy years studying in a post-industrial Northern town or a struggling coastal community. These connections can serve as a foundation for philanthropic giving, particularly where the university can clearly articulate the positive impact through their regeneration work.

Charitable Action Zones

At the beginning of the next parliament, as a new Government turns to a spending review, one thing will be clear: the level of need in the UK’s towns and cities outstrips the available level of investment. Carrying on with the levelling-up agenda and addressing regional deprivation will mean using scarce public pounds to unlock additional investment.

In many of Britain’s poorest places, universities are one of only a few anchor institutions with significant capacity and capability. As outlined, they can use this to attract philanthropic investment, leveraging the expertise of their teams and convening their alumni networks. But if ministers really want to realise the potential of the philanthropic university, they should go further.

In places with the highest levels of deprivation and the lowest levels of charitable giving, the Government should launch a network of Charitable Action Zones. These would serve as freeports for philanthropy, targeting incentives and capacity building to specific geographic areas in order to kickstart change.

To become a Charitable Action Zone, a charitable body would have to meet three criteria. First, it should be registered with the Charity Commission and meet their public-benefit test. Second, it should operate in an area that is currently underserved by charitable activity. Third, it should collectively steward different forms of charitable donations on behalf of that place. Universities could comfortably meet all three of these tests, either repurposing existing foundations or forming new charitable vehicles.

In addition to the existing range of charitable tax reliefs, charities that operate within any university-operated Charitable Action Zone would also be eligible for a philanthropy match. This would see Government match donations made into the Charitable Action Zone trust, following a tiered ratio based on their initial endowments and fundraising capacity. One option for funding the match would be to use unclaimed Gift Aid by charities that can be earmarked as ‘tax collected in error’, which in 2016 amounted to approximately £560 million.

Match-giving schemes have significant potential to grow donations reaching charities, particularly from major donors. One match-funding programme found that nearly 84 per cent of individuals expressed greater interest in donating when they found out that their contributions would be matched. The value of a matched donation was found to be up to three times higher than an unmatched donation. And a large share of donors reported having made a higher gross donation knowing that their gift would be matched: 13 per cent of donors had doubled their donations, and 46 per cent of donors increased their donations by up to half.

To ensure the best value for money from Government-backed match investment, Charitable Action Zones should also involve capability building around philanthropy. This is where university expertise in fundraising can be leveraged – teams from higher education could provide training on place-based fundraising strategies, network-mapping exercises, crowdfunding from a larger pool of mid-level donors, and developing corporate partnerships.

Giving back better

Many universities already serve their communities through charitable activities, both aiding fundraising efforts and delivering services to vulnerable communities. But they could do more. By stepping forward and taking responsibility as a philanthropic anchor institution, universities can attract more funds and play a strategic role in how those funds are invested. With or without the backing of ministers, or a policy innovation such as Charitable Action Zones, universities can usher in a better era of place-based philanthropy.