The Mass Affluent is a segment of the population that has been growing since the 1970?s, classed as the highest tier of the mass market. This trend has influenced Starbucks to make the ?3 latte an everyday occurrence and supermarkets to introduce organic ranges. The consumer market continues to profit from the Mass Affluent, but where are government and charities going wrong? Why are they failing to engage them to make our society stronger?
Who are the mass affluent?
You know them; you may be one of them. They are the people who live in that road just a little away from you, the ones whose houses are slightly better. They are the ones who cruise with P&O rather than Thompsons. In civil society, they are that nice lady who collects for charity, the man who always says ?Good Afternoon? on the walk way and whose company sponsors the local sports team or the energetic young mum who chairs the school governors.
These are people who have been successful in their careers, have set up a business or reached not quite the top but are senior management or professionals. They could be the often quoted three million people who now earn over ?100,000 but they are not millionaires; or they will be the 820,000 Britain?s with a net worth, after their principal residence, of more than ?500,000.
The recent budget changes on legacy giving have provided a real incentive and opportunity for this group to now leave a portion of their wealth to charity. It was a clever and good move by the chancellor to build on the single largest source of individual giving for charities. It also overcomes one of the biggest barriers to giving by this group that is rarely mentioned. The fear that they will be left in penury if they give too much of their wealth away in their lifetime.
Rather like marking a students essay, however, there was more that could have been done. After the rightly positive feedback the chancellor has had, it needs to be said that there were opportunities missed and a serious problem remains. Principally the problem is that we are all living a lot longer and it could be many years before the 10% flood comes through.
After Gordon Brown?s first budget, which gave pensioners a small rise in pence but promised more in later years when things would be better, you could see the former chancellor wince when confronted by Jack Jones who made the observation ?many of my members will not be around next year?.
In a paper published last year entitled ?Step Change in Philanthropy?, Professor Paul Palmer made a number of recommendations for small but significant changes to reengage the mass affluent that overcome the ?pecuniary? problem and would give charities an income stream now.
The first reform would enable individuals to set up ?Remainder Trusts? in which sums of ?50,000 or more could be settled. Crucially,?donors would retain control over the capital and could reclaim it if they wished during their lifetime.
The second reform would be the creation of a new type of charity ? the ?Personal Charitable Trust? ? based on the Canadian and US models. These Personal Charitable Trusts would enjoy the benefits of a light touch regulation, free of many of the onerous reporting burdens imposed on larger charities. They would also offer donors the option of anonymity.
These reforms could unlock some of the ?740 billion held by the 820,000 Britons with a net wealth of more than ?500,000. If just 10% of this sum were realised, then an additional endowment of ?74 billion would be made available for good works.
Charities that have been dependent on the statutory funding spoon need to be weaned off. But as ministers try to keep the Big Society initiative on the road, the chancellor missed the opportunity to give it a serious injection of the money charities need now. The current Big Society initiatives will fail unless charities are given the impetus and resource base to deliver it. Given the economy, this cannot come from government grants and must come from individuals. Let us hope that the charities will still be around in a few years!
We are very honoured to have Professor Paul Palmer, the author of ?Step Change in Philanthropy?, speak at our next Professional Connections workshop. Attend our seminar on 16th November to learn how you can provide a bridge into an active charitable lifestyle for your clients.?For more information view our event listing?or contact us via email.
Source: http://fortitudefp.co.uk/blog/2012/10/25/professor-paul-philanthropy/
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