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SWF07: Exploring the future of philanthropy
Running notes from the Skoll World Forum on Social Entrepreneurship in Oxford, UK - Third day/1 (Website - SocialEdge)
Panel moderated by Alex Nicholls of the Saïd Business School.
Helmut Anheier, director of the UCLA Center for civil society, has led a wide-ranging research looking at hundreds of foundations to gain a better understanding of what innovation and creativity means for them. (The PDF is here; BG note: unfortunately they looked only at foundations in the Anglo-Saxon world: US, UK and Australia).
The last significant innovation in this field, he says, happened 100 years ago with the creation of the modern American foundation. We went then from charity (filling gaps in government provision) to philanthropy (a more “scientific approach” to social problem-solving, attacking root causes). In the late part of the XX century, this evolved into strategic philanthropy, process-oriented, with evaluations and impact measurement, borrowing models from businesses; but this is not really a model of philanthropy, it just made it more efficient. What’s next? Anheier suggests “creative philanthropy”, the “unique capacity of foundations to spot innovative solutions to problems, to jump-start them and disseminate them”. Foundations are the players most able do to this because of their unique signature: their endowment gives them independence (from market/shareholders, as well as from the electorate and the political elites). Foundations are among the most independent institutions of modern society.
He gives a few examples of “creative philanthropy”:
- The Carnegie UK Trust with a limited budged (1.4 million GBP) has radically transformed the way in which ageing is seen in the UK and was a major factor in the creation of a government program entitled Better Government for Older People.
- The Rowntree Charitable Trust has been a key player in achieving the passage of the Freedom of Information Act in the UK and, behind the scenes, in the peace talks in Northern ireland
- In the US, the Rosenberg Foundation (San Francisco) over the last ten years achieved major reforms in the child support system in California.
- He also mentions the Knight Foundation, which operates at the intersection of media, politics and society.
Characteristics of creative philanthropy:
- it’s not all about money: it’s also about knowledge, trust
- grant-making is only one tool among others
- these foundations are knowledge-driven (foundations are great repositories of information)
- foundations are in it for the long term, applying a systemic view
- involves partners, networks
- can take risks like no other institutions
- regular review, diverse viewpoints
- multiple strategies aimed at sustainability
- “show and tell” and active dissemination of the ideas
Without arguing that all foundations should become “creative” and put their charitable or more conventional activities aside, what could be the future of foundations?
- Foundations are entrepreneurs.
- Foundations are institution builders, they cannot do it alone, even the richer foundations have to work with others, have to establish some form of coalition, networks, etc.
- Foundations see themselves as risk-takers, but that’s not exact: foundation also often can absorb the risks that others take.
- Foundations are mediators, often appear to be the neutral partner in a project, a “honest broker”
Mark Kramer, the director of FSG Social Impact Advisors, believes that we are on the cusp of a generational divide. Social entrepreneurs today are struggling with the transition, but the next generation will not separate non-profit and for-profit sectors. In the future people won’t see philanthropy as the primary means of solving social problems (which doesn’t mean that philanthropy will disappear).
- One: The current system is not working, he says. In the US the non-profit sector is phenomenal, almost 1 trillion USD a year, 7% of workforce. Yet every problem you look at is in the same or a worse state. It’s not working in terms of the corporate sector either: think of how the auto industry in the US is self-destructing. It’s not happening in terms of government: US spends more on education than almost anybody else but its students rank very low. After coasting for a long time, problems are becoming inescapable
- Two: We see shifts in behavior in both sectors. In the latest issue of the Harvard Business Review, he co-wrote an article suggesting that the social value proposition of a business is a key competitive advantage going forward. Businesses need to consider social issues not only in response to customer concerns, but because that’s the only way to succeed. So companies are turning “green”, looking seriously at the bottom of the pyramid, set social and environmental standards. There is a shift in the behavior of foundations too: defining clear goals, and taking responsibility for how things are evolving. And of course the rise in public-private partnerships.
- Three: there is a big momentum in social investing. And people are beginning to accept the idea of a blended return, of trading some social return for a lower financial return.
- Four: there is a flood of talent coming into the sector. Many people in the last decade have achieved great wealth quickly (dotcom milionnaires, for example) and many of them are looking for the next challenge. These are people that are very comfortable using for-profit tools to achieve social goals. And an increasing portion of graduates and MBAs are turning to the social sector.
- Fifth: what makes high-net-worth donors highly effective? Studies show that most donors started out in philanthropy with skepticism, they didn’t really think that philanthropy was going to make such a difference. Then, at some point, they came across an issue of great personal significance to them, and they decided to take action, and shifted from thinking about giving away money to thinking about how to solve the problem.