Written evidence submitted by Iain More
Associates Ltd (arts 143)
1. This document is submitted by Iain More
Associates Ltd, one of the UK's leading fundraising consultancies
with a particular specialism in major gifts and large campaigns.
We have restricted our comments to addressing the questions of:
(a) Whether businesses and philanthropists can
play a long-term role in funding arts at a national and local
(b) Whether there need to be more Government
incentives to encourage private donations.
2. We argue, with the important caveats
in paragraph 3 below, that:
there is plenty of scope to increase
the funding that the arts receives from businesses and from private
that there are actions Government could
take which would encourage this.
3. Despite this, we believe that relying
on such sources simply to replace former Government funding is
an extremely risky strategy. This especially so in the short to
medium term, and for operational, as opposed to capital or development,
4. Specifically, we recommend that:
(a) DCMS is realistic about its expectations
from the sector in respect of increased short term revenue from
fundraising, especially any revenue raised explicitly to replace
lost government or other statutory funding.
(b) DCMS studies the two recent matched funding
schemes in Higher Education which aimed first to build fundraising
capacity and second to build awareness of the need for philanthropy
amongst the public.
(c) We recommend that those who appoint Trustees
and Chief Executives regard willingness to be involved with fundraising
high on the list of essential attributes of new Trustees and Chief
Executives. We do not mean that these appointees must necessarily
be deeply experienced in fundraising; rather they should be unafraid
to learn and unafraid to promote the vision and aspiration for
their organisations to potential donors. They must also be willing
to give at a level commensurate with their ability so to do.
(d) We recommend that opportunities are created
for Trustees, Chief Executives, operational boards and leading
participants in the Arts, whether actors, museum or gallery curators,
librarians etc to learn about fundraising from those who are already
successful, whether in the UK or abroad.
(e) DCMS offers its support to specific sub-sector
focussed benchmarking activity which, as with the Oxford Colleges
Benchmarking Study which our firm has run for seven years, should
enable leading arts organisations to understand better their own
fundraising performance, to learn and share effective practice
more fully, and to be able to present a thorough understanding
of this across the sector to funders, not least DCMS itself.
(f) The review being conducted by the Treasury
into Gift Aid resists the pressure from some quarters to redirect
Higher Rate Tax relief away from the donor. The current arrangements
are a critical and successful part of the process of raising very
large gifts, and its abolition would be harmful to the sector.
(g) DCMS, together with the Office for Civil
Society (on behalf of the conventional "charity" sector)
and the Department for Business, Innovation and Skills (on behalf
of the University sector) enter into discussion with HM Treasury
about the possibility of introducing into the UK the American
concept of "Charitable Remainder Trusts" in order to
boost capital donations to the Arts, and to consider extending
tax relief to wider classes of assets than the current restriction
only to quoted shares and real property.
5. Iain More Associates Ltd is one of the
UK's leading firms advising not-for-profit organisations on Major
Gift fundraising. Drawing inspiration from the US, but not constrained
by that experience, we have worked with some of the largest fundraising
campaigns in the UK and mainland Europe. We therefore have a keen
idea of what is necessary to effect large scale giving, both by
those who can give the very largest gifts, and those who support
arts organisations with gifts of a few pounds each month.
6. Current and recent clients in the Arts
and Culture sector include the Royal Shakespeare Company on their
£100 million campaign, the National Gallery, the National
Museums of Scotland, the Imperial War Museum, the Chichester Festival
Theatre, the Rose Theatre Kingston, the National Youth Orchestra,
the Theatre Royal Plymouth, RADA and many others. In other sectors
we are advising the University of Oxford on their £1,250
million (£1.25 billion) fundraising campaign "Oxford
Thinking" which has nearly 75% of its target raised, and
Kew Gardens on its fundraising plans. Outside the UK we have worked
with Fondation Alliance Française, Audencia Nantes, Camerata
Ireland in addition to a large number of education institutions.
7. Our practice takes us to the heart of
the philanthropic process. In addition to our work with fundraisers,
we have trained many Chief Executives and Trustees in fundraising,
and interviewed thousands of major donors about their philanthropy
and potential philanthropy.
8. Successful Major Gift fundraising requires
Vision, Leadership and Relationships.
(a) Vision is necessary because donors almost
always give the largest gifts in order to effect change. They
want to do something new or different, something which will help
the organisation to develop and to be transformed. Such gifts
are rarely given for "maintenance" and therefore require
the organisation to have a keen sense of its intended destiny.
This is why institutional Vision and the Leadership's ability
to communicate it is so important.
(b) Relationships are important because donors
of all kinds give to organisations they believe in. They give
most to those they feel most strongly about. At a "mass"
level, the quality of the Membership or Friends programme is critical
in developing these relationships. At a Major Gift level, the
organisation's ability to articulate its vision in a way which
is personal and relevant to the potential donor is vital if the
fundraising is to be successful. Major Donors tend to be leaders
in their own organisations, and they therefore expect to interact
with the leaders of the organisations they may support. This is
why Leadership is critical to this process.
A BROAD BRUSH
9. A very broad view of fundraising in the
Arts sector might characterise it as follows:
|Successful areas|| Corporate Sponsorship Trust and Foundation Fundraising Raising funds from Statutory Sources, eg Regional Development Agencies, HLF etc
|Partially developed areas|| Membership/Friends schemes
|Under developed areas|| Major Individual Giving schemes
10. The table above is a gross over-simplification, and
there are examples of arts organisationsTate for examplewhose
major gift fundraising activity rivals that of the best in the
United States. Nevertheless, as a rule, UK arts organisations'
fundraising resources are aimed more prominently at the funders
in the top section of the table rather than those at the bottom.
11. For some organisations, their Friends or Membership
schemes are a source of visitors, ticket buyers and financial
support. For others they are a source of administrative strife.
In the worst independent Friends' schemes (and by no means all
independent ones fall into this trap), the Friends feel they can
run the parent organisation better than its paid staff, and the
result is a breakdown in communication and enmity.
12. Whether poorly or well run, in our experience many
Arts organisations do not think of their Members or Friends as
a source of potential major donors. Yet this is the foundation
of much major gift work in the United States.
13. Because little resource is dedicated to the identification
and development of relationships which could lead to major gifts,
few such relationships are developed. Many of our clients have
a significant pool of as yet uncontacted (and in many cases unidentified)
potential high-level supporters. Yet when we have visited such
people to ask about their philanthropic potential for an organisation
of which they are frequently a paying member, their knowledge
of its aspirations is frequently very limited, and they have rarely
been afforded a serious opportunity to get closer to those at
the heart of the operation. Yet it is just this opportunity which
needs to be developed if major gifts are to follow.
14. Recent work for an important regional orchestra provides
an excellent example. Here we found that whereas basic members'
schemes, corporate sponsorship and trust fundraising were reasonably
well done, almost no attention had been given to high level major
gift fundraising. Such work as had happened had been in the context
of a fundraising campaign some years earlier, and after the end
of the campaign all contact with the donors had been lost. It
is self-evident that this is not the way to build a long term
sustainable high level supporter base. This lack of attention
is ironic because private gifts of this nature are the most flexible,
and sometimes the largest, gifts available to an Arts organisation.
They are unconstrained by Trust guidelines, statutory funding
requirements &c. Instead they are constrained only by the
extent to which the organisation's vision and that of the donor
15. The appointment of Chief Executives and Trustees
who have a clear vision for their organisations, who are willing
to champion that vision and be involved with fundraising. In addition,
both senior staff and Trustees must given in a way which is commensurate
with their ability to do so. There are plenty of examples of such
individuals, but there are more for whom all of this is profoundly
uncomfortable, or at the very least unfamiliar.
16. The development of bold visions which are not just
about the health of the individual organisation, but concentrate
instead on the benefits which accrue to the organisation's audiences
and participants, and the nation more broadly. For example, it
may be very important to refurbish a theatre, but that is not
an end in itself (apart, perhaps, for heritage or historical reasons).
Instead the visions need to concentrate on the outcomes of such
a refurbishmentwhat can be achieved in the refurbished
17. The practice of short term fundraising campaigns,
followed by silence until the next fundraising campaign needs
to cease. Arts organisations need to be building long term sustainable
fundraising operations which engage and nurture relationships
over a long period of time.
18. An increase in resource, both staff and non-staff,
dedicated to the identification, cultivation and solicitation
of major gift prospects. Practice in the US and the UK shows that
one fundraiser can realistically be an "account manager"
for around 100 potential major gift donors at any one time. For
major fundraising campaigns, many thousands of people need asking
personally. This means that if major gift fundraising is to succeed,
appropriate resource should be dedicated to the process.
19. Arts organisations need to understand how well they
are doing in their fundraising. We understand that there is some
activity to measure performance already taking place, but are
led to believe that it is not of the intensity or detail of the
study in which we have been privileged to take part for some years
at the University of Oxford. Almost all colleges now participate
in an annual benchmarking process (funded by a donor) whereby
colleges share with each other information on fundraising costs
and returns. After 10 years' collection of data the result is
a significant increase in fundraising investment and return at
Oxford, driven partly by increased knowledge of what has and has
not worked, the sharing of best practice and incentive either
to catch up or to stay ahead. Measured by return on investment,
it is arguable that Collegiate Oxford is now as effective at fundraising
at Harvard. We believe that some similar study in the Arts sector
could be very productive. It would only work if divided into sub-sectors,
for example regional theatres, free-to-enter museums or other
similar groups of organisations where inter-organisation comparison
would be meaningful.
20. Realism is needed about the extent to which permanent
endowment can be sought. The University experience is directly
relevant here. It is only after a decade or more of active fundraising
that University donors are gaining sufficient confidence in the
organisations they support to be comfortable endowing them with
permanent capital. To start with it is far better first to build
confidence by raising gifts for definable, and often, visible
21. While recognising the very great difficulty that
we all face in the light of the current public finances, it is
naïve to think that private donors will simply step into
the breach. As the UK university sector has moved towards a US-influenced
fundraising model, fundraisers in Higher Education have spent
20 years encountering the argument from donors that "I pay
my taxes." This attitude is slowly changing, but it is a
long term process, and donors are extremely sensitive to the idea
that in giving they may be absolving the government of its responsibilities,
even in straightened times. Thus fundraising messages for the
Arts sector need to concentrate on the positive, on development
and on the future. They must not concentrate on what the government
used to do, and can no longer afford to fund. DCMS needs to be
careful to encourage philanthropy, but not to give the impression
that such philanthropy is simply displacing the government's now
unaffordable previous support.
22. We recognise the difficulty of arguing for increased
resource at present. In 2005 the then Department for Education,
through the Higher Education Funding Council for England, ran
a scheme which matched pound for pound for three years increased
resource committed by Universities themselves for fundraising.
This was successful in increasing overall fundraising activity
in Higher Education, not least because those funded had to commit
to continued investment. The success of this initial scheme laid
the foundations for the current scheme, running from 2008-11 which
is matching actual donations. This scheme has resulted in considerable
further investment in fundraising capacity. DCMS might consider
something similar for the Arts.
23. There is a review of Gift Aid currently being undertaken
by HM Treasury under the auspices of the Gift Aid forum. The Arts
sector's opposition to the idea of a Composite Rate of reclaim
is well known, and we share that opposition, on the grounds that
there is an intimate link between the gift of taxed income to
a tax exempt organisation, and the rate at which tax was paid
by the donor. Gift Aid gifts are given net of basic rate tax,
and it is at that rate that tax should be reclaimed.
24. Higher Rate Tax relief on Gift Aid should be maintained
in its present form. Our long experience of discussing very large
gifts with donors (in excess of £10,000, but with considerable
numbers in excess of £1 million) tells us that there are
only two figures that a donor at this level is interested in.
The first is "how much will the charity get?" and the
second is "how much of my after-tax income with this gift
cost me?" To a 50% tax payer, the message is simple, s/he
can fund a £1 million project at a cost of £500,000
of their taxed income. Thus the fundraiser is asking for a £500,000
gift. If Higher/Additional Rate Relief were abolished or reduced,
then the amount that the fundraiser will need to ask for will
rise in order to fund the same project. This would not be a constructive
25. Research in the UK and elsewhere has shown that while
the tax regime rarely influences the decision as to whether to
give, it has profound influence on how much, when and by what
means gifts are made. Gift Aid gives the UK one of the world's
most generous (if somewhat arcane) systems of tax relief on income.
Yet the UK lags behind not only the United States, but large parts
of Western Europe on its tax relief on gifts of assets. Two specific
measures could change this significantly.
(a) Increasing the asset classes eligible for tax relief when
given to a charity. Currently quoted shares and real property
are eligible, but, with the exception of certain gifts of arts,
other assets are excluded. We understand that this is largely
because of HMRC's resistance to the principle of having to establish
a value such a gift. Yet the Capital Taxes Office of HMRC does
this frequently for probate purposes. We propose that additional
classes of asset should be included, with, initially, a minimum
value eligible for tax relief in order to limit the administrative
burden for HMRC. In this respect this would mirror the introduction
of Gift Aid in 1990, with the floor for donations steadily lowered
until Gordon Brown abolished the floor in 2000.
(b) The introduction of a system of "lifetime legacies."
There is not space here to explain fully the technical details,
but there are significant advantages for both donor and charity
which have been shown in the US and Canada to be an important
vehicle for encouraging larger and earlier gifts. The European
Association for Planned Giving, the Charity Tax Group and the
Council for Advancement and Support of Education amongst others
have both been arguing for this provision for some time. The Select
Committee and DCMS should add their voices to the call for this
giving vehicle. The Director of the British Museum wrote on this
subject in the Times in November 2008. Referring to this type
of arrangement e said "Tax relief for lifetime giving
will encourage donations by benefiting the donor, but crucially
it will also benefit the public, giving them access to examples
of human cultural achievement. If we do not encourage a national
culture of giving to all British institutions, collections will
remain static and lose contact with the modern world. For 250
years, government has been a generous supporter of acquisitions
by public collections, but it can no longer do so alone. As part
of its drive to foster wider philanthropy it must now move to
encourage private individuals to play a bigger part in enriching
our collections, so that our generation can make its gift to the