Generous artist inhibited by defamatory statement (7)
I believe the answer is:
liberal
'generous' is the definition.
('liberal' can be similar in meaning to 'generous')
'artist inhibited by defamatory statement' is the wordplay.
'artist' becomes 'ra' (Royal Academician, member of Royal Academy of Arts).
'inhibited by' means one lot of letters goes inside another (I've seen this in other clues).
'defamatory statement' becomes 'libel' (I've seen this in other clues).
'ra' placed within 'libel' is 'LIBERAL'.
(Other definitions for liberal that I've seen before include "enlightened" , "Bountiful" , "Broad-minded in Braille" , "Braille (anag.)" , "Politically progressive" .)