The Philanthropy Paradox

The Philanthropy Paradox, a think piece commissioned by Prism the Gift Fund looks at public attitudes and prospects for planned giving, highlighting worrying negative attitudes towards philanthropists at a time when the third sector most needs the support.

The report is based on a survey conducted by NatCen with over 1,200 people. Most interestingly, it highlights a paradox, which is that the majority of people agree philanthropy makes society better, but almost a third do not believe philanthropists themselves are good for society.

“This Think Piece describes and illustrates a paradox that has implications for all who care about building a stronger charitable sector: that the British public feels far more positively about the fruits of philanthropy than it does about those who fund it,” said Dr Beth Breeze, the writer of the piece. In addition, the report reinforces two known paradoxes – that donors tend to benefit alongside those they intend to help, and that wealth accumulation tends to precede distribution.

A disconnect between philanthropy and the donor

It is concerning that there seems to be a disconnect between the impact of philanthropy and the donors making the gifts. There is a danger this could lead to HNW individuals deciding to curb giving to protect themselves. Why would they want to be targeted by media or others in a negative light? In turn, charities are denied those larger private income streams. The advisors to donors need to help their clients navigate this.

How does the private client industry, and their clients, address the paradox that welcomes donations but labels donors as “money grabbing, tax dodgers”? (Terminology used in the survey responses). Clearly education is vital on a number of levels:

Education from primary school age is key to ensure everyone has a responsibility to give. To rely on the British government has been a default position for many years and we can do this no longer.

In terms of UK tax breaks, many individuals are aware of Gift Aid but not the extent of its application.

Advisors need to be educated themselves around all the tax breaks and inform their clients. There is between £500-£750m unclaimed in Gift Aid every year. Why? Clients simply don’t know how Gift Aid works. Gift Aid has a split tax incentive between the donor and the charity. The charity is eligible to claim 25% extra on a donation from HMRC. If a donor pays tax above the basic rate, they can claim the difference between the rate they pay and basic rate on the donation. For example, a donation of £100,000 becomes £125,000 after application of Gift Aid. This would cost a 45% taxpayer £68,750 after making a Gift Aid reclaim on their tax return.

Even less have heard of gifts of shares or property*. The UK government set up The Giving Campaign in 2003. They believe it did help raise awareness of the Gift Aid tax incentive but singularly failed to make donors aware of any other incentives. And almost 20 years on, nothing has changed.

Therefore, educating private client intermediaries on charitable tax reliefs is critical to informing their clients on the full reliefs available to them. And this would apply to the tax reliefs of other jurisdictions, not just the UK.

These tax incentives still mean a donor gives money away that they could have personally benefitted from. There seems to be a huge misunderstanding about these incentives. The British government should actively encourage these incentives and educate the public that not only do they exist, but they are legitimate forms of giving to be encouraged.

Learning from other countries on major donor fundraising

There is much to be learnt about philanthropy from the Americans and Europeans. And where there are better and smarter forms of giving, let’s embrace that and learn from one another. The same conversation about simpler forms of giving, has been taking place with successive governments in the UK for the last 20 years with limited progress.

And the reality is charities rely on both smaller and major donors. British charities have historically been very good at raising funds from the general public – brilliant at direct mail and securing government grants. However, when you look at some of the very large UK charities and their accounts, often you’ll see only about 8-9% of funds are raised from major donors. It illustrates that British charities have a lot to learn from other countries about major donor fundraising.

All forms of giving should be celebrated and encouraged

Rather than castigate and shame these successful and sometimes generous individuals, let’s encourage more of them to give and give more. And advisors do have a key role to play in this motivation and education. The challenge is to align all of society – so that all forms of giving are celebrated and encouraged. In the UK, there is a ~£10bn gap that currently exists in charitable expenditure. Maybe philanthropists and their advisors can help plug that gap or assist in looking at innovative ways of contributing to it.

Let’s learn from the positive aspects of philanthropy; garner more encouragement of philanthropy through knowledge around the tax incentives and where appropriate follow some of the great philanthropists in Europe and USA and celebrate their generosity. Britain may be an island again after Brexit but the wonders of modern technology and a post Covid-19 world means the global world of philanthropy can work together.

Anna Josse Co-Founder and CEO Prism the Gift Fund

Prism the Gift Fund (Prism) is a UK registered charity- a Donor Advised Fund- that administers the giving of individuals, groups and foundations making significant gifts all over the world.

Resource Group Leverages Talent to Innovate, Make a Difference

Resource Group is an investment group with an incubator focus working with diverse businesses to capitalize on technology and human talent for value creation. Chairman and CEO Hisham Itani helped shepherd Resource Group from a family business to international investor in R&D and leading-edge solutions. To begin 2021, we sat down with Itani and asked him to share his experience with the company and his expectations for Resource Group’s future.

Resource Group has grown from a family security-printing business to a diversified international investment group. Can you tell us about this journey and the creation of Resource Group?

Behind Resource Group is a legacy business that started back in 1973. When the family business started, security printing was at its early stage in Lebanon. The business was growing, producing stamps, and printing secure documents for both the private and public sector. As soon as I graduated from university, I joined the family business. I saw the potential in the technology sector for the Middle East region.

A growing market for digital security led to further expansion of the business into the region. We pioneered automated personalization with security printing in 1995, paving the way for a steady pipeline of products such as cheque books, fiscal stamps, bonds and others. We introduced years later, secure card-based products and smart card manufacturing to the Middle East and Africa (MEA) while the technology was still at its onset.

Then, in 2005, we took another leap forward when we started investing in Research and Development (R&D). This allowed us to develop new technologies and delve into digital security through secure software solutions. Our R&D investments led to the creation of an in-house secure identification platform and automation software targeting public services.

As a result, the company grew into an international provider of digital secure solutions to telecom operators, financial institutions, corporations, and governments. It is one of the very few companies in the Middle East that develop proprietary solutions for digital identification. Resource Group was born in 2008 to consolidate the growing portfolio of businesses and to incubate more businesses and technology start-ups.

Resource Group won Most Innovative Holding Group Middle East 2020 and you were named 2020 Technology CEO of the Year Middle East. What strategies helped achieve this success?

First and foremost, I credit the persistent effort of our team in developing new technologies that contribute to the digital transformation in the Middle East and Africa. For more than four decades, we have been building our R&D capabilities which allowed us to develop our own technologies locally instead of being limited to importing and adapting systems. This would not have been possible without our determination to invest in local talents and contribute to the wheels of our national economy. Relying on our team, our technical expertise, and our presence in different countries across the MEA region allowed us to become a well-established group in the industry today with a wide portfolio of executed national and regional projects throughout the years.

Also, as we work closely with public entities, we believe that the cooperation between the public sector and the private sector contributes to digital transformation and ultimately helps position the region at the center of innovation.

As a CEO, what are the biggest obstacles you have had to overcome?

Building a business, or leading one, is a complex endeavor. In our field of business, like many others, obstacles are part of the journey. In fact, technology innovation is a process that entails a continuous effort towards creating new solutions that benefit our society. Therefore, when choosing to innovate, we face many challenges because we are trying to find solutions to everyday problems. Hence, as a CEO, the most important element is to focus on the vision. It is the vision that propels you forward.

Creating an R&D center was not an easy project at a time when digital security was relatively new in our part of the world. As a result, we took many risks to be able to drive the business forward. But I have always believed in the potential of technology to positively shaping our lives. And just like in any business, every new idea involves a readiness to face obstacles. We were ready to face the obstacles and take risks to make a difference in our country and the region through the deployment of innovative technological solutions.

There are no big or small obstacles, only a vision and a strong determination to make a difference.

Hisham Itani Chairman and CEO Resource Group

How is Resource Group supporting digital transformation in Lebanon and throughout the Middle East?

Digital transformation is playing a crucial role in shaping the way businesses and governments all over the globe are responding to challenges and potential opportunities. Similarly, digital technologies are affecting societal behaviors, especially today with the spread of the COVID-19 pandemic. This evolving landscape requires constant adaptation to predict future trends and develop the right approaches and solutions that promise a sustainable growth in the long run.

As a company specialized in new technologies, we believe that digital transformation is essential for the growth of society. The future is shaped by the capability to continuously innovate and test ideas. Additionally, our ability to develop our own technologies through the investment in human capital has given us an edge to expand into the MEA region.

Today, Resource Group focuses on innovation by heavily investing in R&D to find solutions for challenges that citizens face in public services and other aspects of everyday life. We support governments in fostering innovation to enhance the citizen experience and provide sustainable solutions. In fact, the role of digital transformation in the public sector has been crucial in fostering innovation and adopting digital schemes and programs. For example, we have certainly witnessed in the last few years ambitious digital plans across the Middle East and Africa launched by governments aiming to address economic, environmental and societal changes.

We have been supporting governmental entities with proprietary solutions for a decade already with the introduction of the first biometric passport in the Central African region. Since then, we implemented several biometric identification projects comprising of e-work permits, e-residency permits and biometric visa systems. We have also supported public authorities in the automation of road traffic processes by developing e-vehicle solutions (including biometric driving licenses, secure vehicle plates and RFID stickers) in several countries in the

MEA region. We have also established secure border control systems, implemented fiber optic deployment projects, and provided fraud risk management solutions to fight the illegal import of mobile devices, among others.

As a business incubator, Resource Group continuously supports rising technology startups and young entrepreneurs to develop their ideas. We provide the right tools and guidance to create successful business models. Our aim is to support the knowledge economy in the Middle East to foster the economic growth in the region and provide more opportunities for future generations.

What advice do you have for budding entrepreneurs?

The most important thing that I learned is that an entrepreneur needs to have a vision and a purpose. My advice is to find your purpose. Go forward to achieve it without ever stopping, no matter the noise around you. The more the challenges, the more interesting the journey. Entrepreneurship is a bumpy road, but that does not mean that one cannot enjoy it.

Also, it is very useful to have guidance and acquire knowledge when exploring new ideas and building new conceptual models. Gaining the bigger picture of what you are getting into and learning about the risks will provide perspective and a competitive advantage.

Finally, entrepreneurs have to have a strong determination to achieve their vision and to succeed, because this is what will keep them moving forward relentlessly. It is the difference that they can make through the achievement of their idea that will keep them motivated and focused.

How is Resource Group responding to the current pandemic?

The world has witnessed a tremendous shift on all levels with the spread of the COVID-19 pandemic. Although many businesses struggled, and many people suffered and are still suffering mentally, physically, economically, and socially, it was fascinating to see technology and innovation accelerate to help societies face this global crisis. At Resource Group, we are using our expertise and technologies to support this rapid shift and find solutions that support governments in their fight against this pandemic. Through our R&D center, we started early last year to develop ideas and undertake tests to help track the virus and keep citizens well informed and updated.

Internally, our main objective was to keep our employees informed at all times and make sure they are adjusting smoothly to the new reality. We put their well-being first because our talents are the core of our business. As a result, our employees are operating remotely in order to minimize their presence at our offices. They are able to work from home to remain close to their children and families in this difficult time.

Our role today is crucial, whether to better safeguard citizens online or to assist organizations and governmental institutions manage their operations more efficiently and shift towards digitization.

What are your future plans for development?

Our priority remains to contribute to the region’s entrepreneurial ecosystem by supporting technology start-ups and entrepreneurs. These endeavors will directly impact the economy and contribute to digitization.

We will also further invest in R&D and focus on design thinking to better understand the current challenges faced by citizens and create suitable innovative solutions that tackle the exact problems.

Additionally, we will create and test new ideas and solutions based on market needs and the current technological evolution, especially with the emergence of new technologies that open up tremendous opportunities for sustainable growth. This is in line with our efforts to support governments in automating their processes and providing citizens with enhanced services.