Celtic Cubs Should Dig Deep
by Conor O'Clery
Reprinted from the Friday 22 April 2005 issue

Kingsley Aikins tells Conor O'Clery [of The Irish Times] that the wealthy Irish could be more philanthropic

Not so long ago, the very rich in Ireland could be counted on the fingers of two hands, and the readers of newspaper society columns would have a good shot at naming them all. But today, there are about 500 people in the Republic worth over €100 million, according to Kingsley Aikins, president and CEO of the Worldwide Ireland Funds, citing information from Irish banks.

There are also about 25,000 Irish people worth about €5 million. In fact, he says when one takes into account the value of property, Ireland now has over 100,000 millionaires. So why should anyone abroad give money to Irish causes any more, given that vast wealth being accumulated in Ireland?

Trina Vargo, founder and president of the US-Ireland Alliance, struck a chord with many people on both sides of the Atlantic when she wrote last month in The Irish Times that Ireland no longer needs charity from Americans.

"A lot of people say to me that no one is going to give money to Ireland any more because Ireland is such a rich society," says Aikins, interviewed in Boston, where The Ireland Funds has its headquarters.

Donors in America believe in the cause, "but they do also say to us, 'what are the Irish doing, what's happening in Ireland?'"

His response is that philanthropy is not about nation-to-nation, but about people giving to people, and in all societies, there is great need and great wealth. Givers also like to support something that is successful, he says.

"Harvard University has $21 billion (€16 billion) in the bank, so why would anyone give money to Harvard? Yet they get more than any other university. The answer is that people love to give to strength rather than weakness."

For many years, good causes in Ireland have been largely supported by US taxpayers, and by individual philanthropists mostly living abroad. The biggest single giver by far, Atlantic Philanthropies, has funded dozens of causes and helped raise Irish universities to international standards, with donations totalling some $800 million in the last decade.

Atlantic is now focused elsewhere and universities have to accelerate their own fundraising efforts. The number of big givers in Ireland itself is growing, but Aikins believes passionately that there should be more philanthropy in Ireland, and that the Government should encourage private philanthropy with greater tax incentives.

He will address such issues at a seminar for the not-for-profit sector, organised by the Ireland Funds in UCD on April 26th.

Some 25 trusts and foundations have already come together in Philanthropy Ireland Ltd, and its members contribute some €30 million a year.

The Ireland Funds, which raises money in 11 countries, supports peace and reconciliation, community development, education and the arts, and does not have a single focus of giving, as its multiplicity of donors like to identify their own causes.

Philanthropic giving by the new wealthy should be accelerated as "all over the world, governments are finding it harder to fund at the same level as previously in three core areas, education, care and the arts, and there are gaps that have to be replaced by philanthropic activity."

The charitable sector in Ireland is not sufficiently organised, monitored, controlled or regulated, he says. As an example, he points out that in Ireland tax incentives apply only to cash donations, but most gifts from American-based donors are in stocks, on which the giver doesn't have to pay capital gains tax.

"We sell the stock immediately and we get the cash," said Aikins who advocates the introduction of a similar tax incentive in the Republic.

With the likelihood of Irish people amassing more wealth in the future, Aikins advocates that people use "donor-advised funds", where money is professionally managed by banks or organisations like The Ireland Funds.

Irish people known to have become wealthy are being "hit up every time they go to the hairdressers", but with a donor-advised fund, they can refer applicants to a professional contact, he says. In the US, the biggest concentration of donor-advised funds is in Fidelity Bank, which has contributed more than $4.7 billion to tens of thousands of US not-for-profit organisations, in virtually every field of interest in the past 14 years.

The donor-advised funds "combine tax benefits with the ability to support a favourite charity on a flexible timetable".

They are a relatively new concept in Ireland, "but it's early days yet and you will see this phenomenon growing," he forecasts.

Ireland has some way to go to match American philanthropy as a proportion of national income. In America, one dollar in every 50 in the US economy goes to non-profit and the US donated $240 billion last year through tax-exempt charitable organisations.

"Ireland is a very generous nation, but is not a very philanthropic nation and that's the shift we're trying to make," he says.

However, the psychology of Irish people who have become wealthy in the last 10 to 15 years is changing. "They're younger, they have been focused on making money, they haven't had time to step back and think, 'What am I going to do with it?' They can give it to their kids, but many say they don't want to as it could destroy them."

He cites Warren Buffet, the world's second richest individual, who advises wealthy people to give their children "enough money so that they could do anything, but not give them so much that they will do nothing". But giving money wisely is very hard. It requires an awful lot of vetting, checking, assessing and reporting back.

Wealthy people in Ireland can set up trusts, but the legislation needs to be changed, he says.

"It's very old fashioned. The kids have to receive the money when they are 21, or else you pay 6 per cent a year after that."

Ireland, he believes, is ahead of Europe in developing a philanthropic culture as "old Europe is much further back than Ireland because there is a sense in France and Germany that the state pays for everything".

The focus of the conference would be the massive intergenerational exchange of wealth that will take place in the next 20 years and "the actual theatrics and mechanics of asking somebody for money". The key is that giving becomes a habit.

"When people start giving, they give over their lifetime," he says.

"Someone starts with $5,000 and looking back they have given $10 million."

The reasons for giving are people's desire to bring about change. Might it not also sometimes be to get their name on a building or for social or tax purposes? The important thing is that they give, he replies, adding with a laugh: "You know that old line: 'Whatever you say boss, it sure tickles the hell out of me.' We just want to get money and put it to good use."

© Conor O'Clery, The Irish Times
Reprinted from the Friday 22 April 2005 issue