What is the role of philanthropy in reducing poverty in the UK?

28th Jun 2016

Lecture given by Julia Unwin

You would expect me to start this lecture by quoting Joseph Rowntree. You wouldn’t be surprised if I mentioned that the founding memorandum of the Joseph Rowntree Foundation commits us to looking at the ‘root causes of social evil’, not its manifestations. Not to fund the soup kitchen in York, but to find out why people were queuing for soup. You would also expect me to talk about the triple legacy bequeathed to the Joseph Rowntree Foundation,

  • the practical legacy of providing housing and care in neighbourhoods, building on the pioneering work that created the model community of New Earswick
  • the legacy of inquiry and investigation, started by those early social researchers, Joseph and Seebohm Rowntree
  • the legacy of social change, requiring the organisations he founded to ‘change the face of England’.                                                                                                             

In other words, we have a historic mission to go where it is uncomfortable, to look at root causes, and to identify what can be done in practice, not just in theory.

That’s a legacy that makes us both practical and bold.

But what you wouldn’t expect me to do is to construct this lecture around the words of a Rabbi who predated Joseph Rowntree by nearly 2000 years, Rabbi bar Hillel, who said:

If not now, when?
Rabbi bar Hillel

There are crunch points in our history. Moments which historians might later call critical junctures.  Moments which we ignore as we get on with our busy lives, but moments which our successors will look back on and say, history did indeed change then. Over the last 10 years our labour market has changed, and changed fundamentally. Our housing market has changed and the role of the state in supporting people and places in poverty has changed too.

And then there are times like this where everything really does change. And change fundamentally. Moments where to ignore the change is neither possible nor right.

June 23rd has changed everything

A decision of momentous, long term importance has happened, and changed everything. A decision, what is more, that was made by many of the people who feel most dispossessed, and who live in some of the overlooked places in Britain. A decision that has laid bare some real and damaging fractures in our society, and which now seems likely to preoccupy all of us for the next decade and longer. A decision which, more than anything else I can recall, has changed us forever. And what is more a decision that seems likely to exact a very high price indeed from the poorest people and places. A decision that seems destined, whatever the longer term consequences, to herald a period of political and financial volatility.

Future generations will judge us on our response to those moments. For those of us who encourage, support, manage and enable philanthropy, we have a particular and urgent interest in understanding those junctures and responding to just such a critical point, a moment where change happens and intervention matters. I'm going to argue tonight that for philanthropy this moment provides both hazard and opportunity. I'm going to say that all of this is going to be deeply uncomfortable, but I believe that the deeply uncomfortable place is precisely where we should be.

And I am going to say that we need both urgency and intention in our response to this important crossroads in history.

Ten years ago when I first joined the JRF we wanted to understand what Joseph Rowntree’s social evils looked like in the 21st century. We spent time in meetings across the UK, commissioning learned thinkers, and organised focus groups of the dispossessed. We discovered that – rather to the surprise of all those who had said the whole concept of social evils was old fashioned - people did want to talk about evil. They used the word a lot and they suggested that every evil they were concerned about was shaped by poverty. Poverty that sapped capability, strangled life chances, deepened  isolation, and magnified difference and division. A poverty that was rapidly eroding, or distorting the very real social gains that had been made since Rowntree’s time.

It was poverty that was the common denominator in so many of the challenges we face as a society

It was poverty that destroyed the lives of families with a disabled child – where the triumph of medicine in keeping a child alive was undermined by the economic reality of raising that child with complex needs. It was poverty that brought dread to older people fearing an isolated old age. It was poverty that divided communities, and made it so hard to welcome the stranger, the migrant, or the refugee. It was poverty that divided generations, and destroyed solidarity. It was poverty that created the educational attainment gap, and it was poverty that eroded so many of the gains of the last few decades in terms of equality. While people rejoiced at the relatively recent emancipation of women, they also recognised that the costs of this were frequently borne by other women leading increasingly impoverished and precarious lives. That while discrimination on the grounds of sexuality was now less overt, and freedoms unimagined by former generations were available, in some of the poorest communities, the gains of equality were undermined by persistent and damaging poverty. Poverty, we concluded, divides communities, pits people against each other and threatens cohesion.

What we found was that even before the global financial crisis of 2008, the fantastic social progress of the boom years had left far too many people behind, and made the lives of some others immeasurably worse. Economic prosperity at the turn of the 21st century had emphatically not helped all to thrive, but had instead introduced a new and infinitely more punishing divide.

What our assembled experts and the communities affected by poverty shared was a deep unease at what our society had become, and how we have so carelessly squandered the gains that were meant to end social evils.

The poverty identified in that process was real, and of course, after a decade of austerity there is no denying that it is with us today.

In 2012 we committed to marshalling all of that evidence, all of that knowledge, to understand what it would take to make the UK free of poverty. In this our biggest  programme yet, we wanted to answer not just the question why, but also the question how? How in our modern, wealthy world can we find a way to end poverty? And if – as we do – we recognise poverty as something that affects us all, what can we all do to end it? 

We could not have known then just how relevant the questions of poverty and place would be now

We should not leap to instant conclusions about the underlying reasons behind the vote to leave the European Union last week. But to identify distrust, disaffection, and anger in the places that felt left behind does not require massive powers of discernment. Nor does it seem to me remotely unreasonable that people who feel they have not experienced any of the fruits of growth, and indeed feel punished by it, should reject the recommendations of those they perceive to be the elite. There was always a risk that the referendum result would be seen by many people as illegitimate if it had been won by the establishment. As things have turned out that same establishment – of which philanthropic organisations are very much a part - should think carefully about why its recommendation was rejected.

We know that public discourse treats people in poverty alternately with pity or scorn. It would be truly wrong if either pity or scorn were used to dismiss the anger of those who feel left behind.

But it would also be wrong to fail to see the impact of this decision – both short term and long term – on the poorest communities. The rapid license for racism and xenophobia has shocked me to the core. So too has the threats to the immense gains made in Northern Ireland, and the withdrawal of investment, energy and political will from the issues which many of us hold dear.

We recognise that the answers to poverty are not held in one place. It would be as foolish to think that everything can be solved by neighbourhood action, as it would be to look to national governments alone to provide the solution. While we know that it is individuals who get themselves out of poverty, it would be naïve to think that individual behaviour alone accounts for levels of poverty in the UK.

It is the interaction of the state, the market and the individual that profoundly shapes how we live and, I will argue later, can also illuminate how we can make a difference.

Let’s start with the role of the state

The role of the state has changed profoundly, even before last week’s events. There is a shared understanding, if not commitment across the political divide, to keep public expenditure well south of 40% of GDP  At a time when few economists predict any significant increase in growth any time soon, this means that reductions in public expenditure will remain part of the environment for the foreseeable future. We can argue about the ratios. We can dispute whether 37.5 or 42% would be more appropriate, or make the case that a different form of redistributive taxation would work better. But the way the state behaves has changed. Power is dispersed, differentially and asymmetrically. The role of the state in public policy has changed. Regulation has replaced delivery; political expressions of concern have replaced intervention. Entitlement and a version of rights have been replaced by conditionality and temporary support.

Civil society has changed too

The powers and impact of trades unions has diminished while that in some other parts of civil society has increased. Who would have predicted that the voice of the lowest paid would also be  articulated, to such good effect, through Citizens UK with their effective campaign for the Living Wage?

The role of the market has been transformed. Global companies, bigger than many nation states, hold information and knowledge, and exert a powerful influence over our lives and the direction of governments. The so-called sharing economy develops new businesses, and uses the power of the digital platform to create wealth –enormous riches for their owners – in ways that we could never have imagined. Air b n b, uber, task rabbit and e bay may have a folksy tone and the sharing word in their vocabulary, but they are major companies trading vast sums of money, frequently operating outside of regulation. Alongside these developments we see a dramatically reconfigured labour market for services, where those who earn least also face insecurity in short-term, part-time precarious work.

Let’s make this clear – this is work that starts low paid, and for four out of five people is still low paid 10 years later. The so called gig economy may bring gains for many but for others it is an extremely casual labour market. The rapid advance of automation and artificial intelligence will only serve to reinforce these longer term trends. 

The housing market too, is one of entrenched uncertainty, ballooning costs and frequently poor quality

JRF research indicates that poorer people living in the private rented sector are likely to be paying 55% of their disposable income on their housing. And for a six month tenancy at that. This contrasts with the 13% that an owner occupier with a mortgage is likely to be paying.

The poor pay more – for their utilities, their borrowing, their food and their housing. The market prices rise very harshly, and poorer households are paying that price.

So we have a state that seems to be retreating, and a market offering precarious poorly paid work, to people living in insecure expensive housing, paying high costs for their essentials.

Poverty is real in the UK. We have reported on it for years, we have measured it and analysed it and put it under the microscope. Cut and slice it in any way you want, shift the measurements, fiddle with the definitions, year after year we have reported the shocking facts about poverty and we know that it is real. And it causes untold harm. First, of course to people who are poor whose opportunities are attenuated, who are more likely to raise children who themselves become poor, who are excluded from the benefits of our modern society, and prevented from genuine participation. People who face a life of debt and deprivation.

But it is not just about them. Poverty affects us all. It creates risk and uncertainty. It deprives us of skills and contribution. It fuels division, prevents long term sustainable growth. It is the common denominator in many of our social problems – the cause of much distress and misery. People who are poor suffer worse health, they are more likely to be victims of crime, they will succeed less well educationally, but the existence of poverty is not only about them. It is about all of us whose lives are enormously diminished by the continuing scourge of poverty. It limits the development of a truly prosperous country, it inhibits the return to sustainable growth, and it costs both the economy and the government a great deal.

After Thursday’s vote, surely everyone must realise the political and social consequences of overlooking the poorest people and places.

But that harm can be prevented. Poverty is not something like the weather; something about which we shrug our shoulders and accept is part of our lives. It is not even collateral damage for a fast moving economy. It is a conscious choice, and – as Nelson Mandela said – like all manmade problems, is susceptible to a manmade response.

The solutions are in our hands. We know what needs to be done, and we know how to do it.

So what is the role of philanthropy here?

The prevention and relief of poverty is the first head of charity, and has been since Elizabeth I signed the statute. As a society we have made huge progress - reductions in pensioner poverty are a true testament to the power of public policy, yet poverty persists. Millions struggle to make ends meet, including increasingly those in working households. And 1.25 million people are destitute. JRF has been reporting for decades on the growth of poverty, and in the last ten we have been talking about the increasing phenomenon of in work poverty. Should we admit that it may be the first head of charity, but we have failed dismally? Does this demonstrate systemic failure? Does it suggest that the problem is simply too big for philanthropic effort? Should we accept that historic, societal  market failure on this sort of scale is just too big for us to address?

For JRF this will not do

The eradication of poverty is written into our DNA. Our founder Joseph Rowntree counted the number of people in poverty in York at the start of the 20th century. He calculated the amount of money that a working man needed to keep his family in conditions that while modest, were not austere. He published and analysed, and with his son Seebohm, laid much of the groundwork for public policy today. He left some of his considerable fortune with the injunction to ‘find out the reason why’. This legacy we carry today. But he also left a supremely practical bequest: Joseph Rowntree combined a spirit of inquiry, with a bold and realistic focus. In instructing us to change the face of England, he ensured that, for JRF at least, philanthropy is never about the status quo.

But a new approach to poverty is needed - one which recognises the changed reality of life in the UK in the 21st century, and marshals the considerable power of philanthropy to conquer this most persistent, most damaging social evil. Can we be as bold as those early giants of philanthropy like Rowntree, Cadbury and Peabody and say, at this pivotal moment, we are called to do something important, and we will behave differently to achieve it.

In the rest of this lecture I want to argue that we should.

But I also want to argue that our considerable privilege and advantage means that not only should we do so, but we must do it with urgency and a clear intent.

If not now, when?

But first, let’s acknowledge that philanthropy is not, ever, an unalloyed good.

Philanthropy can represent what is best about us. Quite literally the love of others, the use of time, talent and money to benefit others. It is the best possible example of inter-generational wealth transfer, making decisions in one generation to benefit and sustain future generations with no regard for return, popularity or gratitude. The philanthropist as an activist with money, as one such, very wealthy, philanthropist described himself to me.

But it can also represent what is worst about us. Philanthropy can be a sort of detached benevolence, protecting investment at the expense of engagement, knowing best and using the power of money to drive change. As a recent critic described us – low risk investment companies channelling a small percentage of our assets into philanthropy. It can be another manifestation of the privileged and closeted elites. Making decisions for others with too little thought of the consequences. Disconnected, illegitimate, out of touch.

We know only too well where criticisms like that take us. We need to earn our space – and we do this by a clear and unequivocal contribution to the public good. We cannot afford to be seen as part of the problem. I’m interested in a modern, engaged, networked philanthropy, which is most definitely part of the solution.

So in the best traditions of the detective solving a crime I look for three things, opportunity, motive and means. We have opportunity. The opportunity of a critical juncture, a time when so much is changing. This gives us an opportunity to intervene.

We have motive because we know that the huge privilege of great wealth requires us to use that money in the very best possible way, and we have talked for decades about the need to make a difference, have an impact.

Are we lacking the means? I am going to argue that we don’t.

Philanthropy has extraordinary power

It has the power to shine a bright light on what is happening, and ensure that there is no place in the UK where poverty, squalor and disadvantage can be hidden, covered up or ignored. The first ingredient of any social change is knowledge, and philanthropy has the capacity to draw attention to the realities on the ground, making sure that the evidence is there, that poverty cannot simply be hidden by different measurement. The uncovering of evidence can happen at neighbourhood, city, and national level. We can ensure that the experience of people living in poverty is documented, and described.

It has the power to enable the voice of those who live in poverty and to ensure that those voices are heard, and listened to. Not met with the oscillating insults of pity or scorn. Yet there is, at the moment, no organisation of the dispossessed. No funded platform on which people can speak about their experience. We can fund the poverty truth commissions, we can support artistic and creative depictions of true lived experience. We can fund the films that tell the real story and challenge the poisonous rhetoric of so much that passes as commentary. We can support the organisations of  the dispossessed.

Philanthropy has the power to enable the challenging alternatives. To disrupt those markets that lock poor people in poverty. We can challenge the market to provide differently. Bright House offers furniture in beautiful and attractive ways. Wonga offers easy access to quick finance. The eye watering bills come later. Civil society has the power to challenge these giants – philanthropy has the capacity to make it possible. The poverty premium is paid by those least able to bear the costs. The wealth of philanthropy can send a powerful market signal that we stand on the side of people and places in poverty, and will support initiatives to reduce costs.

We can attend to the places where poverty feels locked in. Where the public realm feels – and is – degraded, where housing is both squalid and expensive, and where people feel diminished by their environment. We can actively, and long term, support those neighbourhoods and communities which for so many people provide the first defence against poverty. We have done all this before and we can it do it again.

We can make it our organising purpose to get rid of the attainment gap. Those of us concerned with the second head of charity - education – can make it clear that the fact that the attainment gap is visible at the age of three and only increases hereafter is a national scandal. We can recognise that the attainment gap is a cold technocratic label for the systematic destruction of people lives, and their opportunity to contribute.

We can show by our actions, and by our long term sustained investment that there are solutions to poverty. That it is not inevitable and that intervention commands support. We can use our grant making, commissioning and social investment powers to transform the landscape in which poor people live, and so doing make the case for coherent long term and bold but practical responses.

But we can do more

The philanthropic holders of great wealth – those with endowments – own companies. Those companies have moved on issues of climate change. The competition between companies is now to be greener and cleaner, and manage their contribution to the physical environment. Not as much as many of us would like, but they have moved, and they have moved because their investors demand it. We know that low wages sap the economy, and damage cities. We know that employee engagement is the prize for all big employers, and we know that financial anxiety destroys engagement. We know that business loathes insecurity. It is time that we raised, as we did about slavery in the supply chain, the questions of labour market practices, the ways in which companies contribute to their local economies, must all become subjects for the activist investor.

We have the power to mobilise. As philanthropic institutions in Europe did in response to the crisis in the Mediterranean and the huge movement of refugees. As philanthropy did when the Berlin Wall came down and there was a need to support civil society in the former Soviet Union and eastern Europe. As we did in this country when AIDS threatened the health and well-being of our fellow citizens.

And finally we have the power of our institutions. Big investment organisations like foundations, or universities, housing associations or hospitals are anchors in their communities. They hold assets in trust for future generations. They also have long supply chains, which reach deep into their communities. Their procurement decisions, their recruitment decisions, the approach they bring to HR, all have a multiplier effect. And if that effect is part of overcoming poverty, that institutional  power works several times over.

We have the power to convene – to bring people together, to explore new truths, and challenge long held views. We have the leadership to create, and the wealth to support alternatives. This is not just ameliorative, reformist stuff. This approach shifts the balance between the rich and the poor in ways that are fundamentally, and profoundly daring. This approach says loudly and clearly that not only is a continuing high level of poverty a shame and a disgrace, it is something which a civilised advanced society cannot tolerate.

This approach also mobilises people at all levels – the holders of wealth and the holders of knowledge, those with experience and those with enterprise, to say that there is something that can be done. The relief of poverty is an abiding purpose and one to which we will apply our considerable muscle, not because we choose to do so, but because it is essential for the development and continuation of a genuinely prosperous, engaged and democratic society.

At the Joseph Rowntree Foundation we have reconnected with our heritage. We seek to be both bold and practical. Focused on the evidence but also the solutions. Working with partners. We are about to publish the summary of several years’ work answering the question, how do we solve poverty? And we have concluded that it is possible for us to do this. That we can work towards a society where nobody is ever destitute. Where no more than 10 % of the population are ever poor, and that no one who is poor remains so for more than two years. We know that people will become poor: ill health, disability, divorce and unemployment are all risks we all face. They don’t need to be catastrophic.

A dynamic, intelligent, evidence based approach intervenes to prevent poverty.  We need to reduce the numbers entering poverty and increase the numbers escaping. This means slowing the rate of entry through preventative policies, increasing incomes and reducing costs in the short-term so that poverty is not a long-term experience. It also means improving prospects for the longer-term to increase the rate at which people escape poverty. Poverty needs to be addressed across the life stages: ensuring that childhood and the early years provide the best possible start in life to prevent poverty in adulthood; increasing incomes during working life and reducing the costs of essential goods and services; and reducing poverty in later life.

So an opportunity  in the time we are in. The fundamental reordering of our common settlement which is affecting the lives of people in poverty just as profoundly as the Industrial Revolution, and later the massive and ill prepared  de- industrialisation of so many parts of the UK. Changes that we look back on in sorrow for the lack of care that consigned so many people to the scrap heap. We have motive because we know we need to make a difference. We know that we have to have an impact. That none of us want to be accused of funding by whim, or without thought. And motive too because we know that unless we have impact the fragile peace within the communities we support will be destroyed. We have seen the effects of that fracturing recently, and there will be more to come.

And we have the means, because we have powers that very few others hold.

Motive, opportunity and means

But also risk and sacrifice. To focus is to say no to some things. It is to devote your powers to one end, and to do so in ways that mean you cannot do other things. It means attracting opprobrium and criticism from those who feel their project or cause is ignored or underfunded. Disruptive philanthropy may be more effective, but it won’t necessarily garner the tributes we are used to enjoying. It requires difficult  choices to be made, and surprising friends being nurtured.

But, if not now, when?

Will philanthropy alone conquer poverty?  Of course not.

Poverty is caused by a dysfunctional market – by businesses paying and the economy in which they operate tolerating a low price for labour, providing work that is unreliable and insecure, housing that is inadequate, and costs that have spiralled out of all control. It is caused by governments, at UK, national, city and local level, which have encouraged growth without ensuring that it is inclusive. Policies that have eroded and devalued the social security safety net so that it no longer adequately provides insurance against the inevitable vulnerabilities and reversals of life. A series of political decisions have reduced social housing to a residual minimum, all of this empowered and fuelled by a public discourse about poverty that is toxic, ill-informed and ignorant.

In this broken environment, poverty flourishes. Philanthropy has the opportunity to intervene and say: in this country we know how to reduce poverty. We will keep an eagle eye on what is happening. We will fund the things that make a difference. We will ensure that people in poverty are heard, and we will do this in ways that make it impossible for governments and for the market to ignore us.

The power of philanthropy has changed the course of history before. It can do so again. And think how powerful it would be if were to act on this together.