In this week’s Forbes online, Monte Burke and William Barret discuss whether celebrity foundations and endorsements serve as an effective form of charitable giving. It seems that the benefit of charitable giving to the star who gives is twofold; not only do they benefit by strengthening their brand (association with ‘good works’ is something we need all our celebrities to do), but by running their own private foundations, they are afforded maximum tax benefits. The article estimates that in a high income year in the US, a celebrity can give $1 million to their own private foundation and get a current tax deduction for all of it.

But how do charities benefit from these celebrity foundations? Burke and Barret disappointingly do not come down conclusively on either side. It would appear that in some cases if funds come primarily from the celebrity (so there are no fundraising costs) and the foundation runs no programmes (they simply make grants to other charities) overhead costs can be negligible. For example, David Letterman’s American Foundation for Courtesy and Grooming handed out $1.2 million to a wide range of charities with overhead expense of just $25. However, at the other end of the spectrum, a foundation created by Rosie O’Donnell, the For All Kids Foundation, gave out $2.9 million in grants last year but spent another $1.9 million on overheads.

To read more visit the Forbes website.

In this article on the Telegraph website William Langley voices scepticism over Bill Gates and Warren Buffett’s pledge to give half their wealth to charity. Langley calls into question the sustainability of this new ‘philanthrocapitalism’, a term that denotes an emerging trend towards blending charitable giving with market disciplines (a trend advocated by Gates and Buffet).

If one looks to the Gates Foundation, which by 2020 is expected to have a GDP higher then 70% of the developing world, Langley argues that while there is no doubt the foundation is saving lives, its long term effectiveness is doubtful. This is because, it is argued “the foundation gives with one arm and takes with the other” (Foreign Affairs). For example, the foundation’s fundraising arm allegedly invests in companies that pollute the environment, exploit poor workers and distort the global financial system. The foundation is also charged with luring health workers and medical resources away from other areas of need that are less glamorous and causes with less famous advocates.

And if this philanthrocapitalism is not the answer, Langley offers a possible alternative by quoting a Guardian contributor,  who argued last month “if the rich really wish to create a better world, they can sign another pledge: to pay their taxes on time and in full… to give their employees better wages, pensions, job protection and working conditions”.

To read the full article visit the Telegraph website.

The directory of Social Change is running a new series, which asks the UK’s leading Trusts and Foundations ‘what makes good grant-making?’ The first installment is by The Nationwide Foundation. Of the elements to their core grant ‘Investor’ programme, they state that they have done well in creating a streamlined application process, in offering substantial three year funding for core and development work that is flexible, by providing extra support to help charities build their organizational resilience, by encouraging and funding partnerships, and by providing grantees with their own reports to enable them to demonstrate the value of their work to other funders.

Nationwide have claimed that they try to take a hands-on approach to funding and it seems this approach is well received by the charities they work with as one grantee stated: “the unusual thing about the Nationwide Foundation is they have taken a genuine interest in what we do, unlike any other funders and we have other organizations who have funded us…and have given me appropriate advice and hints along the way.”

To read more or to follow the series go to the Directory of Social Change website.

German billionaires have criticised the Gates ‘Giving Pledge’ on two grounds. Firstly, they have stated that the giving pledge is too ostentatious, as many German billionaires have given away well over half their fortunes without the publicity and fanfare that comes with a high profile pledge. Indeed, German philanthropy is well exemplified by Dietmar Hopp, the co-founder of the SAP business software company, who transferred some €2.9 billion to a foundation.

The second more alarming criticism of the Gates Pledge is that it transfers power in the US from the state to the billionaires. This criticism is rooted in the fact that in the USA, the rich have the choice to either give their money away or pay taxes. By giving it away, they take the allocation of large funds away from the democratically elected central government and put it in the hands of the individual. This argument has been propounded by Peter Kramer, a Hamburg-based shipping magnate and multimillionaire who claims “what legitimacy do these people have to decide where massive sums of money will flow?” Kramer goes on to say that it is the state, and not an individual who should decide what is good for the people. He fears billionaires may put their funds into projects that represent hobbies and that may or may not be in the common good.

What is your opionion of the Giving pledge?

To read an interview with Peter Kramer please visit the Spiegel website.

This week, David Cameron kicked off the first phase of his Big Society by announcing in Liverpool his plans to unveil a Big Society Bank for the UK by April 2011. The purpose of the bank is to enable big capital to be connected to social projects, charities and community projects. Money allocated to England from dormant bank accounts will go to this new bank with estimates on availability of funds when the bank opens ranging from 400million to 60million. However, some have commented that the bank is unlikely to have sufficient funds to create the empowered local communities that this Government is promoting. Nevertheless in an upbeat statement, Managing Director of Triodos Bank Charles Middleton commented “By forcing high street banks to free up long-dormant deposits and kick-start lending to the social enterprise sector, the future lifeblood of the UK economy, the Big Society can now start to be realized.”

To read more visit the Philanthropy UK website.

The Calouste Gulbenkian Foundation is funding a new research project to support the development of a Financial Services Authority-regulated global social stock exchange that will allow investors to trade exclusively in companies with social and environmental goals. The project being undertaken by the charity CAN in partnership with the Social Stock Exchange is focused on creating a set of rule books (legal and procedural documents that govern the conduct of companies listed on exchanges) for the Exchange that will require companies to be more transparent about their social impact. Chief of CAN, Andrew Croft, describes the venture as “an important step in encouraging investment in companies trading for financial and social benefit”. The end goal of this research is “to help socially-minded companies - essentially market-led businesses that prioritize social mission rather than just profits - to raise equity and gain access to capital in order to fulfill their social goals” Anne Nicholls, CAN.

To read more check out the Social Enterprise Live website.

In the Telegraph this week, Julie Meyer argues that the onus to ‘do good’ in society is no longer with the government, but has instead been taken up very effectively by the business world. This new trend is attributed in part to the rise of ‘mega-social entrepreneurship’ and a growing realization that the world’s best business minds have an important role to play in eradicating the world’s worst societal problems. The trend started before the coalition announced its significant spending cuts, and Meyer highlights in her article numerous individuals and organisations that are having impressive social impact. This includes Hampshire- based Fredrick’s Foundation, the UK’s largest micro-finance organization is led by Paul Barry Walsh (a UK entrepreneur), which has given 3 million pounds worth of loans this decade (it modestly estimates it has saved the UK Government £15 million).

To read more go to the Telegraph website.

This week TSIC CEO, Jake Hayman, has guest blogged for the awesome branding consultancy FutureBrand on the TSIC test for truly dynamic, embedded corporate philanthropy.

To read the blog post visit the FutureBrand website.

Last week, Rena De Sisto (global arts and culture executive at Bank of America Merrill Lynch) makes the case for corporate sponsorship of cultural institutions. She argues that as the British arts community waits for coalition cuts in arts spending, they should look to the private sector for financial support (common practice in the US). Part of these new corporate/arts relationships will involve cultural institutions understanding that the days of executive whim are over, and cultural institutions understanding that by treating funders like valued clients, they will become more loyal. De Sisto states that form a Merrill Lynch perspective, their diverse global portfolio means they have a vested interest in promoting cultural understanding, that art promotes cultural understanding and therefore that their company has a vested interest in supporting the arts.

To read more visit the Guardian website.

Philanthrocapitalism is the current buzzword used to describe the recent resurgence in big giving by billionaires. Gates ‘Giving Pledge’ is set to raise $115bn if all participants fulfill their pledge to give half their fortunes to charity. However, while these are donations by American billionaires, UK donations of this kind could have a substantial impact. In this week’s Guardian, Matthew Bishop and Michael Green identify potential UK billionaires who they think should be joining the Gates effort. High up on the list is Sir Richard Branson who despite noble efforts in international diplomacy (over Iraq) has never given away large amounts of his personal fortune. Is he the individual who could kick start UK commitment to the pledge?

To read more go to the Guardian website.

A new report by the charity consultancy and think tank New Philanthropy Capital (Trusteeship Report 2010) claims that to survive the current recession, charities will need to strengthen their boards. It is argued that the role of a trustee to a charity is as central as a director is to a business and that where cuts must be made across charities activities, trustees are the people to identify priorities, and areas where the biggest return on investment is made. Tesse Akpeki, an OnBoard governance consultant raises the problem of personality clashes between trustees, who have often formerly held senior positions. She says these clashes can often damage the charity, and that these trustees need to become more involved in the work of the charity throughout the year to avoid conflicts of interest. In keeping with the government’s vision of ‘Big Society’, it is argued more people should get involved in volunteering in the charitable sector, and in particular become trustees.

To read the full report go to the New Philanthropy Capital website.

This week, three government funds targeted at social enterprises have had their budgets cut as part of the Coalition’s cost cutting drive. Minister for civil society Nick Hurd and cabinet office minister Francis Maude today announced £11m is to be cut from the Office for Civil Society (OCS) budget as part of the government’s £6.2bn cuts target, and have published an open letter to the sector asking for help reaching the 6.2bn target (the ‘savings challenge’). Peter Holbrook, CEO of the Social Enterprise Coalition has welcomed this challenge to the sector, pointing out the role social enterprises can play in public service delivery. The cuts include taking £111,000 from the Social Enterprise Action Research programme, which was originally set up with £1.3m to support different government departments researching social enterprise solutions to policy problems.

To read more about the cuts, go to Social Enterprise Live.