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20 December 2014

City Philanthropy

Tag(s): Business, Languages & Culture, Philanthropy
As we approach Christmas it seems appropriate to discuss philanthropy. I recently attended lectures on the subject of City Philanthropy at the Guildhall. They were held on so-called Giving Tuesday.Giving Tuesday is intended as an antidote to Black Friday and Cyber Monday. Black Friday is the day following Thanksgiving when American retailers do so much business as the Christmas shopping season traditionally begins that they move into the black for the year having apparently been unprofitable for the previous 11 months. Cyber Monday is when this season continues with record online bookings. So Giving Tuesday is designed to make us feel sated by our consumption and give something instead.

City Philanthropy is a three year-project funded by the City Bridge Trust. It aims to promote more effective philanthropy among City professionals earlier in their careers and position the City of London as a leading global centre for philanthropy.  The City Funding Network was launched in July 2012 to provide a network for young City professionals to socialise around philanthropic opportunities.  Young Philanthropy is an initiative to introduce young professionals to a career of giving and a future as leading philanthropists. The Bread Tin forms giving-clubs where a group of young people work with an individual donor to set up a charitable project.

The lectures in the Guildhall Library by Cathy Ross of the Museum of London and Rhodri Davis of the Charities Aid Foundation were part of the regular series held at the Library. Cathy Ross had curated an exhibition on City Philanthropy held at the Charterhouse in 2013.

She spoke of four themes: wealth, visible poverty, the charitable impulse and links to business.
  1. Wealth. For most of its history the City has generated huge wealth. Much of this was given to establish new institutions such as schools and hospitals or to the poor and destitute. Examples from the Tudor era include Sir Roland Hill who gave vast amounts to the poor or Sir Thomas Gresham who established the Royal Exchange as a semi-philanthropic venture and founded Gresham College.
  2. Visible poverty. Until the development of the overground and underground railways rich and poor mixed together in great numbers in the City. Thus extreme poverty was clearly visible within its boundaries. Illustrators recorded graphic images showing the contrast. One of the worst areas was Billingsgate which, as a port, housed both low waged labourers and an underclass.  There were many attempts to mitigate this, led originally by the church with schools, hospitals and soup kitchens, and later more secular giving took place with efforts by both the very rich and the general public through Mansion House funds and their like.
  3. Charitable impulse. Between the 1480s and the 1660s London accounted for 34% of all the donations in the country. The reformation brought a clear change. Prior to that the Catholic faith had encouraged the rich to give alms to secure their personal salvation. Post-reformation Protestant charity was more about making a difference in one’s lifetime. Then later came the Dissenters for whom charity was an important strand in their belief system and then the Jews who used private wealth for public good.
  4. The effect of Business. This is an almost unique development until the great philanthropists in the US. The question was how to make your money work for long term good. This was not so much a separate activity as the idea that charity is the other side of the coin for business.
There were various stages of development;
  1. Religion. E.g. St Dunstan’s in the East founded St Dunstan grammar school as a religious institution in the 15th century.
  2. Leadenhall Market. Former Lord Mayor Richard 'Dick' Whittington gifted Leadenhall to the City in 1411 and Lord Mayor Simon Eyre replaced the manor hall with a public granary, school and chapel in 1440, as a gift to the citizens of London. Thus secular alternatives to religious charity developed as wealthy merchants made donations to the City of London Corporation for the benefit of the general public.
  3. The Livery Companies emerged as a vehicle for charity. As they were legal entities in perpetuity it made it more likely that an intended purpose would be achieved. Whittington, four times Lord Mayor and three times Master Mercer, left half his estate to the Corporation and half to the Mercers. The Mercers’ maiden can still be seen on properties owned by the Mercers e.g. in Covent Garden.
  4. Trusts were also developed as a secure vehicle for charitable purposes. John Colet, Dean of St Paul's, founded St Paul's School in 1509 and placed the administration in the hands of the Mercers' Company, the Trustee. Thomas Sutton left his wealth in a huge independent trust to found Charterhouse. Similarly Thomas Guy left a huge fortune, £220k, in an independent trust to found Guy’s Hospital.
  5. In the 18th century companies were set up as business institutions that would make money while doing good works. Not all of these were successful and the Mercers nearly came a cropper with one venture.
  6. In the 19th century these links became stronger particularly in the building of social housing. The Peabody Trust was founded in 1862 by the American banker, diplomat and philanthropist George Peabody, who wanted to "ameliorate the condition of the poor and needy in this great metropolis". It still owns and manages 27,000 homes housing 80,000 residents. Some firms, set up to build social housing for workers, returned 5% to investors.
  7. In 1837 Angela Burdett-Coutts became one of the richest women in England when she inherited her grandfather’s fortune of around £1.8 million made in owning Coutts bank. She preferred direct philanthropy handing out sums of cash. She was criticised for this because people felt it caused poverty by encouraging dependence.
  8. But philanthropy was not the preserve of the rich. The general public were encouraged to give through flag days and Mansion House funds.
Rhodri Davies is Programme Leader, Giving Thought, at the Charities Aid Foundation.  His talk was more generalised and less specific about the City of London. Traditionally merchants would compete for the best eulogy at their funeral. This was a prime motive for philanthropy.

Those who create their own wealth are more likely to give it away than those who inherit. They are more confident that they can make it again and don’t want to saddle their heirs with too much wealth, hence The Giving Pledge of Bill Gates and Warren Buffett. Those who inherit wealth are less confident of their ability to create it but also have a sense of obligation that they are stewards of the family estate and should not consume it. Some of those who make their fortunes also recognise the part that luck plays.

“My wealth has come from a combination of living in America, some lucky genes, and compound interest. Both my children and I won what I call the ovarian lottery. (For starters, the odds against my 1930 birth taking place in the U.S. were at least 30 to 1. My being male and white also removed huge obstacles that a majority of Americans then faced.) My luck was accentuated by my living in a market system that sometimes produces distorted results, though overall it serves our country well. I’ve worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions. In short, fate’s distribution of long straws is wildly capricious.” Warren Buffett

Baron Maurice de Hirsch, 1831-96, was a wealthy banker who also loved horse racing. His policy was to give away any winnings. His horses were among the most successful  of their day,winning most of the classics and he reputedly gave away £20m in his lifetime.

Such men thought it better to give during their lifetime because ‘you benefit as well’. Andrew Carnegie said “He who dies rich dies disgraced.”

Whether Christmas is for you a religious celebration, a pagan festival, or just the chance for some time off work and a few drinks and mince pies, it is always a time when we remember and think about our family and friends.  And in my case it’s a time to think about my regular readers. There’s little point in platitudes about peace in a dangerous world but I can still wish you and yours what you would wish for yourselves.

Copyright David C Pearson 2014 All rights reserved

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