The rise of the 1% club

[Pledge 1]

Originally posted on Charity Digital

The rise of the 1% club

According to 2023’s Sunday Times Giving List, the UK’s most generous philanthropist is Chris Hohn, who gives 15% of his wealth away to good causes by ensuring his firm Children’s Investment Fund’s profits go to its foundation.

In receiving the accolade from the newspaper, Hohn urged more super wealthy individuals to give a significant proportion of their income to good causes.

“If they could understand, even on a simple level, the joy they could have by sharing it (their wealth), I think they might all be happier people,” he says.

But any giving should be significant and avoid “tokenism”, he adds.

One-way corporates and wealthy individuals can give effectively to charities is to commit to donating a minimum of 1% of their wealth to good causes.

Already this global movement is attracting attention among firms, including in the UK.

Pledge 1%

A notable ‘1% club’ campaign group is Pledge 1%, which is headquartered in the U.S. and aims to inspire “early-stage corporate philanthropy” by giving a “portion of your future success to support non-profits”.

The Pledge 1% campaigns founders include Salesforce, Atlassian, and Rally and its partners include Australian Philanthropic Services, Techstars, and Full Circle Fund.

Thousands of firms have already signed up, including notable technology focused corporates such as Adobe and Weebly. 10,000 members have so far pledged more than $500m (£402.5m).

By committing a proportion of future growth, the more successful a business is, the more money is available for charities. This can be through committing 1% of:

• Profits – perhaps by creating a foundation for example to allocate funds to good causes
• Time – perhaps by setting up volunteering schemes for employees to donate time to charity. Alternatively, businesses can donate skills, carry out pro-bono work, and set up a workforce development programme
• Equity - perhaps arranged by setting aside corporate equity to charities. New businesses can issue and transfer shares to charity at the time they are formed, for example. A simpler way is for company founders and chief executives to offer personal equity pledges that do not require board or shareholder approval
• Product – businesses can also commit to giving through giving products, such as computer software, services, and hardware such as computers. This can be through giving away the product itself or offering free or discounted subscriptions and licences. Many of these dealscan be accessed via Charity Digital

1% for the Planet

The 1% for the Planet campaign group was set up buy Yvon Chouinard, founder of the Patagonia clothing brand. Through this scheme corporates commit to giving 1% of their wealth, either financial, in kind or through promotional support directly to environmental groups.

The group says that extra funding for environmental causes is important as only 3% of philanthropic giving goes to green non-profits.

Since it was established in 2002, its members have given $435m (£350m) to environmental causes.

Calls for more UK corporates to join

In the UK the Directory of Social Change is leading calls for more UK corporates and wealthy individuals to join the 1% club.

Through its 2023 Guide to UK Company Giving report, it analysed data provided by 223 companies. This found that 70 had either given or pledged to give 1% of their wealth to good causes.

Based on their financial records for 2020 and 2021 this commitment equates to £230m.

“When we’re talking about companies who can make huge pre-tax profits each year, relatively small commitments (1%) can have a large cumulative effect (£230 million),” states the DSC.

It adds that “despite the difficulties that companies have faced over the past two years, they continue to inject a significant amount of cash and in-kind donations to the charity sector each year”.

“The 1% Club is a great example of corporate organisations supporting charities and helping those who are facing the most challenging of times.”

Case Study: 1% to housing charities 

Among UK organisations to already join the 1% club is the Nationwide Building Society. Each year 1% of the building society’s pre-tax profits are donated to good cause, including through its own social investment work.

Through its corporate charity and other initiatives, it uses the money to help good causes involved in tackling housing problems, as well as improve numeracy and money skills among young people.

For example, via its community grants programme, awards of up to £60,000 are made to charities, community land trusts and housing cooperatives. In 2021/22 a combined £4m was awarded to 94 housing projects UK wide.