Keynote Speech by Michael Hintze on philanthropy

Thank you very much for inviting me to this year’s philanthropy conference.

I hope I can take this opportunity to tell you a little bit about my approach to philanthropy and offer you some personal words, from a donor’s perspective. I mention the word ‘personal’ because as I’m sure you’ve realised from your own experiences, every donor is different. Defining a ‘typical philanthropist’ is as impossible as defining a ‘typical charity’: the 19th century American writer Ambrose Bierce once tried and concluded that “A typical philanthropist is a rich and usually bald old gentleman who has trained himself to grin while his conscience is picking his pocket.” Well that’s the cynical view. I suggest that modern philanthropy is more forward looking.

The complex motives behind giving are just as difficult to define and range from moral and religious obligations to family influence and personal interest. Indeed, Andrew Carnegie donated no fewer than 7,689 church organs which he admitted was simply “to lessen the pain of the sermons” – hopefully not a problem here at Methodist Central Hall… although I notice the organ here is anything but small…

Yet in spite of this apparent multiformity, the underlying theme for most donors is a simple desire to give for the common good and to make the world a better place. The great philanthropists were certainly driven by extraordinary altruism: Shaftesbury, Rockefeller, Cadbury, Carnegie, Leverhulme and Rothschild all had varying beliefs behind their generosity but a mutual, enduring sense of humanity. And there are subsidiary benefits too: there is no doubt that giving away money is satisfying. More than that, the assumption that money can’t buy happiness has essentially been disproven by Professor Michael Horton of Harvard Business School who published research in March 2008 that found individuals report significantly greater happiness if they make charitable donations or give gifts to others rather than spending on themselves. It was found that regardless of how much income each person made, those who spent money on others reported greater happiness, while those who spent more on themselves did not. He is quoted as saying “quote “higher pro-social spending was associated with significantly greater happiness… whereas personal spending remained unrelated to happiness”.

But understanding why individuals chose to engage with a particular cause is crucial for any charity. And central to this is the fundamental free market tenet of supply and demand: philanthropy connects social demand with the supply of private resources. The key for fundraisers is to convince a potential donor of the benefits of shifting their resources away from other uses in favour of a particular charity.

There are three main factors that are important in determining such shifts. The first, and for me by far the most important, is a donor’s personal values and beliefs. I need to be moved and energised by a proposal; I need to be sure of the commitment of the person involved. The second is the general environment in which the donor operates and the third relates to the direct economic consequences for both the giver and the recipient – I will not give unless I know my donation will be cared for and there will be tangible benefits.

My own philanthropic journey began at a very young age. I grew up in an environment that was not uncommon at the time. That environment was built around a series of interlinking communities that started at family level and moved on through immediate friends, the local area, the town and upwards. At every level there was a certain sense of duty. A desire, a will and an obligation to give back whenever it was reasonable and possible to do so. Give early, give often was the mantra. These communities were self reliant, sensitive to need, and above all, successful.

From this background, one that cherished personal responsibility and responsibility to others, grew my perceptions of community engagement. Now, as then, I still feel I have a duty to give: an obligation to return something to society and especially to those people, places and institutions that have helped to shape me through my life. This is the catalyst for my philanthropy today.

Being in a position now that provides me with the opportunity to actually make a difference is a huge honour and one which bears responsibilities. This is a privilege I never take for granted. But with privilege comes responsibility and philanthropy can’t be treated frivolously. That is why I employ a full time member of staff to run the Hintze Family Charitable Foundation. The process for dealing with requests is a well practised one. Every donor has a method to quickly eliminate causes that don’t align with their strategy and I of course am no different. With a few exceptions, I generally pursue a two pronged approach, highlighting causes in which I have a genuine personal interest and identifying those institutions that have in some way benefited me in the past. Those two elements act as a sieve but a large number of charities remain in contention after this process. It is at this point that a charity needs to convince me they are worth my support. How is this best done?

Perhaps the greatest asset a charity can have is an inspirational figurehead. My work with the Prince’s Foundation has been motivated almost entirely by the vision, leadership and incredible foresight of one man – the Prince of Wales. Similarly, the outstanding stewardship of my donations to the Old Vic has been down to the foresight and attention to detail provided by Kevin Spacey, a man whose personal commitment to a cause has been inspirational. Excellent business plans and great organisation provided assurance that good care would be taken of the money donated. And because of this, London has a brand new theatre in the round at the Old Vic with an opening night this week.

But you must ensure that all your staff understands the vision of the charity. From top to bottom there should be an infectious, passionate belief in what they are doing: there is nothing less appealing to a donor than a dead approach or a sullen response. With good staff the charity needs to be as pro-active as possible. As with every commercial concern, passive organisations that simply wait for income to appear will never succeed.

There are a number of other basic things to remember:

For example, do you actually need the money? This may sound trite, and the situation is definitely improving, but you would be amazed at the number of charities that fail to use the resources they already have to unlock capital, expertise or entrepreneurialism. I want to be assured that the need is real.

In addition, donors need to be absolutely certain that the organisation they are giving to has the expertise, the ability and the drive to fulfil the aims they are advertising. All of this has to be seen in a business context: if the business case doesn’t stack up, the approach is essentially worthless. The bottom line is that what every donor is looking for is the effective use of resources. He is looking for a clear, causal link between investment and impact. A hand up works; a hand out doesn’t. Many charities are exemplars of this – the Big Issue is a case in point; others are not and the charitable sector is as varied in this as it is in most other ways. A number of small charities existing on a shoestring and run by volunteers put larger organisations, that have been entirely captured by Whitehall and all the opaque bureaucracy that attends it, to shame. Nobody wants to donate to a black hole. The greater the clarity, the greater the trust. And the more a charity can display competence, integrity and sustainability, the more likely it will be to find backers.

Consider the elementary things that are so often overlooked: for example, if the charity is involved with a capital project or some long term development strategy, are the budgets carefully costed and are the contingency plans rigorous enough to ensure the initiative is viable in the event of a setback?

Are your staff being employed in the best and most effective ways? Care workers are not necessarily impressive fundraisers and vice versa.

Is there any match funding available? To have obtained a pledge of match funding in itself points to a viable and well-organised fundraising push. The prospect of unlocking a large tranche of additional capital through a donation is as attractive to the donor as it is to the recipient –there is excitement in the prospect of one thing leading to another. And match funding is no new idea: Carnegie provided funding for numerous social projects (church organs included!), and was a generous supporter of the New York Philharmonic Society. One year the society's secretary visited Carnegie's mansion to request a $60,000 contribution. Carnegie, on the verge of signing a cheque, suddenly paused. "I've changed my mind," he declared. "Surely there are other people who like music enough to help with their own money." He then suggested that the secretary raise $30,000 from other donors, whereupon he would contribute the other half. The following day the secretary returned to Carnegie's home to announce that he had already raised the requisite amount. Carnegie commended the man, wrote out his $30,000 cheque and handed it over. "Would you mind telling me who gave you the other half?" he asked. "Not at all," the secretary replied. "Mrs. Carnegie." Never be afraid to ask…

One area in any organisation where there is always room for improvement involves the building of relationships. Good relationships rarely appear by accident or without design. Garnering sustainable support requires patience, tact and hard work. The small donor should never be dismissed because in a year or two years’ time you may find that with care, he becomes your biggest supporter. Similarly, complacency should never be tolerated and in chasing new funding you should never forget your current donor base. You cannot expect to retain key donors if there is no basic acknowledgement of their generosity. At the very least, regular reporting of progress, updates on how the donor’s gift is being applied and indications of events being planned are always warmly welcomed.

Try to put yourself in the mind of the donor. Many people are time poor and will not therefore be attracted by any initial contact that suggests a large outlay of time, no matter how well meaning. If he is the chairman of a company based in London will he really have the time to travel to Yorkshire to see a new arts project? Will a working mother really be inclined to spend half a day looking around a community centre before she knows anything about it? It doesn’t matter how worthy or needy a charity is; if it is impossible to find the time to take up an initial invitation, then that one chance is immediately lost.

And for those charities that are looking to cement relationships, think about your offering. If a donor has already bought into the concept, it is fair to surmise he has a belief in the cause and a will to donate. Maintaining this interest is important. Therefore, if you are organising events, ensure they are distinctive and try to create an occasion that will genuinely attract your key supporters. Expense is not so much the key as imagination: yet another bland evening with interminable speeches and rubber chicken does neither party any favours. It’s not good for the diet either!

Make giving fun and inspirational. And ensure that the leader of the organisation is available and willing to speak with the donor personally. If a donor is thinking of making a large investment, it is only polite for the senior contact at the charity to be seen to be interested in the engagement and willing to be an active part of the new relationship. Once a major donor feels comfortable with a relationship, he may often wish to become more involved, hosting events, steering useful contacts in the direction of the charity or simply providing advice. My own example is Ridley Hall, a theological training college in Cambridge that is in dire need of additional accommodation to house a growing number of students. The principal, Christopher Cocksworth, was immediately engaging and went out of his way to make me feel a part of the planning process. I was able to respond by guaranteeing a large tranche of capital costs associated with the new build and arranged for a successful fundraising dinner at Lambeth Palace to provide a catalyst for the capital campaign. That said, one word of advice from me is to think very carefully before appointing trustees as donors are not always the best qualified people to assume the role. Perhaps we should instead look to the States where every major donor becomes a ‘managing trustee’ rather than a ‘working trustee’ as is the case here. It’s certainly an interesting idea.

But these are difficult times. Everybody in this hall must be aware of the continuing turmoil in the markets and the resultant challenges we are ALL facing. In just the last few weeks we’ve seen the two main sub-prime mortgage lenders in the US being rescued in one of the biggest bailouts in history. We’ve seen the demise of Merrill Lynch as an independent entity and the bankruptcy of Lehman Brothers, in what Alan Greenspan called a “once in a century type of event”. AIG, the biggest insurance company in the US, has been virtually nationalised to save it, too. The giant mortgage lender, Washington Mutual has been sold. Here, Northern Rock has been nationalised and HBOS is being taken over by Lloyds TSB. The OECD predicts that the UK will be in full blown recession by the end of the next two quarters, house prices are slumping and manufacturing output is in decline. The situation is truly tumultuous and this transformation of the financial landscape looks set to continue. Credit conditions remain extremely tight and make no mistake, the seismic events witnessed in the City will be also felt across the third sector. Charities will need to be prepared for a challenging period. Challenging, though not impossible. This is the time to make extra efforts to broaden your pool of supporters, even if they are not immediate givers. A broader pool makes for a better bet in difficult times. And just as businesses are making countless calls to stakeholders and investors, so too should charities be taking the time to strengthen links with core donors. It will be a time to reflect and re-appraise, to re-engineer your key themes and re-enforce your fundraising strategies. Now is the time to think about crafting careful messages to reflect the times: charity has never been more important, especially for the vulnerable so don’t become moribund: work harder!

And in spite of the downturn, philanthropy remains ultimately flexible, responsive and robust. This is due to its diversity and its lack of stultifying, costly bureaucracy. The great philanthropists have consistently maintained their giving through turbulent as well as good times and there is no reason to think the present situation will be any different. This collective resilience is in marked contrast to central grants which can be permanently eliminated at a whim. Evidence of this was only too clear last Christmas when letters from the Arts Council arrived on the doorsteps of nearly 200 organisations telling them that funding would completely cease within four months. It is obvious that predominantly relying on one funding stream is folly, whatever the source. Dispersed private resources may increase or contract but they will never disappear altogether. And those who give, ultimately do so because they feel they have an obligation or a desire. In times of crisis, neither obligation nor desire dissipates. Yes there will be a downturn in donations but to assume a meltdown is wrong.

The defining criterion for charity is that it should come from within: English translations of the Bible have consistently interchanged the words “love” and “charity”. I may now be in a position to give rather more than I used to and, as I mentioned, I am honoured to be able to do so. But everybody has a duty to give back where they can. Everybody should feel a basic need to return something to society, at whatever level. The fact this is not a natural, default position is essentially a post-war phenomenon and we need to reclaim the empowering spirit of community and charity that characterised previous generations epitomised by George Bernard Shaw when he said “I am of the opinion that my life belongs to the community, and as long as I live it is my privilege to do for it whatever I can”. This is not an idealised view of the past but rather an acknowledgement that disparate populations in uncertain times would do worse than looking back for cohesive inspiration: history is not a pejorative but a guiding precedent. And nearly 70 years of heavy state intervention has, in my opinion, set a very bad precedent indeed. From the best of intentions has grown a swaggering behemoth of government handouts creating complacency in some areas, subservience in others and the ravaging of a community spirit that championed selflessness, charity and collective care. This has to change. There is such a thing as society but it’s just not the same as the State. A bloated state that funds both charity and culture to such an extent is surely the most inappropriate way of dealing with either. A recent report by the Policy Exchange vindicates this view with one of the main conclusions highlighting an extraordinary lack of willingness amongst givers to support local charities. As the Rev. Cecil Williams says: “So many people say they want to save the world: just try your block will you?” Yet why should they if the perception is that a local or domestic need can be satisfied through a towering grant from the taxpayer? Shouldn’t the individual be trusted to choose where his charity should go? Why are his hard earned alms better distributed via a stupendously wasteful bureaucracy over which he has absolutely no influence? Giving back forms the basis of a civil society and I have no doubt that a sea change in perception as well as government priority is the only way the charitable sector will reach new levels as with the current high levels of tax and spend it is difficult to know how another model can be imposed. The glorious diversity of philanthropy celebrates and promotes pluralism and counterbalances the tendency of government towards centralisation and bureaucracy: long may it reign.

In the meantime, let us all try to rise above current difficulties and realise that defeatism is not the way forward because as George Burns quite rightly said, “when you stop giving and offering something to the rest of the world, it’s time to turn out the lights”.

Thank you very much.

to read more articles from this briefing click on the links below..
Kerry Rock   Robin Thomas   Virginia Fisher   John Studzinski   Michael Hintze