CNBC Business | CHARITY CROSSES THE DIVIDE

CHARITY CROSSES THE DIVIDE

European philanthropists are starting to emulate their more generous American counterparts, finds Emma Rees

Warren Buffett's decision last year to donate three-quarters of his €31bn fortune to Bill Gates's foundation to end disease in the Third World raised the bar in global philanthropy. The pressure is now on for the wealthy not just to give their wealth away, but to do so in a way that achieves maximum impact for their chosen causes.

In America philanthropy is a way of life, and a high-profile sign that you've made it. US charitable giving is the highest in the world at 1.7% of GDP.

The story in Europe is somewhat different. European philanthropists are less brash and less generous. According to The Charities Aid Foundation, individual giving in the UK is less than half that in the US, at 0.73% of GDP, and even lower in the Netherlands and Germany, at 0.45% and 0.22% respectively.

Mark Evans, head of philanthropy at Coutts & Co, believes Americans have an apparent preference for supporting social services by giving to charity rather than the state. This is supported by the fact that those countries with highest rates of social taxation tend to have the lowest rates of giving and France is a case in point at just 0.14%.

But there are signs that European philanthropy is on the up. The Sunday Times Rich List 2007 reports that the top 30 philanthropists in the UK pledged or donated €1.7bn to charities in the past year. At €11,500 a pop, there is growing demand for The Institute for Philanthropy's workshops, which train fledgling philanthropists, and a number of European private banks have also launched services to satisfy their clients' generous interests.

There are a number of compelling reasons over and above pure altruism for individuals to be charitable. That donations to a good cause are a legitimate way to 'get one over' on the taxman is one, as is protecting offspring from the worst excesses of inheriting vast wealth. Warren Buffet has spoken about leaving his children with enough 'to do anything but not to do nothing.'

While traditionally the purpose of philanthropic gestures was to have a library or gallery named after you, today's wealthy are increasingly undertaking what is being termed 'strategic philanthropy'

"They are dispensing with chequebook charity," says Musa Okwonga from the Institute for Philanthropy. "They often come from business backgrounds, and are treating philanthropy as a second career in which they pursue their goals with the same rigour that brought them success in business or the financial markets."

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