ACF responds to mandatory payout debate
ACF became aware that Lord Rooker, who sits on the House of Lords Commission on Charities, had used his platform at the Labour Conference to suggest that foundations should be subject to mandatory pay-out rates. ACF responded strongly to his comments along the following lines:
"Lord Rooker’s comments are unhelpful. They fail to acknowledge that foundation endowments are an enduring source of support for civil society and that careful stewardship of them allows funders, many of whom have existed for hundreds of years, to take risks, offer long-term support and back causes that otherwise may struggle to gain attention.
"Evidence shows that enforcing a mandatory spending rate could put many funders out of business in a generation. While for some funders this may be the right thing to do, for others, it would fetter their independence in balancing the needs of today’s generation with those of the future. Such an attack on the independence of trustees to decide how best to use their resources neglects the importance of individual charitable mission, attitude to longevity and market context.
"The US context, often used to justify the argument for mandatory payout rates, is very different - with more ongoing philanthropy into foundations, enabling a seemingly higher spending rate, than here in the UK - as well as much more expansive allowances around what counts as charitable spend, which in turn stands as a proxy for philanthropic benefit. A one-size-fits-approach is unlikely to have a net positive effect on spend over the long term, and in the process would risk hampering foundations in their mission to use their resources in the service of supporting others, whether by preserving social good that is under threat or catalysing it where it is absent. "