Philanthropists are not easy to study. There’s no official central database of who gives how much to what, and it’s tricky to tell if major donors who participate in research projects are typical or unusual in some way that might affect the results. But not all the problems in this field are due to the vagaries of respondent participation. Many studies – including some of my own – cloud the picture further by taking a ‘snapshot’ of philanthropy, asking individuals how much time or money they have given in a relatively brief recent period such as the preceding month or year. These studies produce useful data on macro trends but they unwittingly imply, for example, that Warren Buffet is not particularly generous apart from during the year 2006!
We need a new approach that understands the cumulative contribution made by donors and sheds light on how philanthropic behaviour begins, continues or ends.
The study I have just published with the charity Pilotlight, ‘Philanthropic Journeys: new insights into the triggers and barriers for long-term giving and volunteering’ is an initial attempt to understand people’s philanthropic journeys (comprised of their lifetime voluntary contribution of time, treasure and talent) rather than simply their most recent philanthropic acts. We wanted to explore how people got started and why they scaled up their volunteering and giving – or indeed how they started and then stopped.
We used an online survey and in-depth interviews to invite over 200 senior business people to reconstruct their philanthropic actions and attitudes before and after undertaking a structured, supported, time-limited volunteering placement organised and managed by Pilotlight. Our hypothesis was that the right early experience of engaging with a charity or social enterprise sets donors on the right path to a positive attitude to charitable activity and affects their future philanthropic behaviour.
We found that the right early experience does indeed reap great rewards and future benefits for the philanthropy sector. Where respondents had had a successful initial interaction with a charitable organisation, they were twice as likely to be planning to volunteer in the future, there was a 10% rise in their willingness to make significant (£1,000 or more) donations and there was a three-fold increase in their desire to serve as a trustee of a charity. Perhaps more significantly, the experience changed their perception of the professionalism and purpose of the non-profit sector. One interviewee, who had previously been a reactive, low-level giver and lacked confidence in the professionalism of charities, said:
“It’s given me a window on the charity sector which I would never have got before. I would have happily carried on giving my donations or whatever it is, sponsorships, and never really got more involved… What I’ve discovered is the passion and commitment of everybody in all of these charities I’ve worked with. It is incredible and a real lesson to me as a banker.”
Another described a shift from self-confessed ‘totally random giving’ to establishing an inter-generational fund. Looking back at the stalled start to his giving career he noted, “it’s actually quite difficult to give your money and get involved with charities wisely. Once I’d started working with Pilotlight I added up what I gave in a year and it was really quite a significant sum of money, so I’ve become a lot more strategic about my giving. For the first time I worked out a giving plan – over the next 5 years this covers how much I want to give, the people I want to give it to, and at the end of it my goal is to have a fund that will then be invested and generate income that hopefully my children will get involved with and carry on.”
Studying this donor at any particular moment in time would have missed the bigger picture of the journey he was on and – crucially – the intervention that helped him move from being a reactive and episodic giver to a fund holder with a plan. Philanthropic activity is clearly too complex to be encapsulated in any particular moment in time. The life-course approach can take account of how philanthropy develops as a result of interactions within families, schools, workplaces and friendship groups and as a result of absorbing cultural norms, observing influential role models and receiving signals from government, employers and peers.
If we wish to design policies and practices that enable everyone to reach the furthest destination of their philanthropic journey then we need to better understand these philanthropic attitudes and behaviours, and why it flourishes or founders over an individual’s lifetime.
Dr Beth Breeze, Centre for Philanthropy, University of Kent
The UBS Optimus Foundation and the Children’s Investment Fund Foundation (CIFF) are launching the first development impact bond in education. The aim is to improve the quality of girls’ education and attract new investment to this area.
Development impact bonds aim to provide new sources of financing to achieve improved social outcomes in developing country contexts. Investors provide external financing and receive a return only if pre-agreed outcomes are achieved. Funds to remunerate investors would usually come from a donor or government agency. Financial returns to investors are intended to be commensurate with the level of success. An independent evaluator verifies results to determine success and repayment.
‘This is a world first for international education,’ says Michael Anderson, CEO of CIFF. ‘Development impact bonds will focus governments and the aid industry on costing and paying for results … We want to test this model, and we want to show the world it can work.’
Capital made available up front by the UBS Optimus Foundation will go to Educate Girls, an NGO operating in government run schools in Rajasthan in India to enrol and retain girls, as well as to improve learning outcomes for all children. In India, 3.7 million girls are out of school. In Rajasthan, 40 per cent of girls drop out before reaching fifth grade and for those that remain learning quality is low. CIFF will pay for social outcomes achieved by the programme.
With the advent of its new network-based strategy, the Council on Foundations has done a significant amount of reorganizing. Part of that reorganization included the downsizing of its global programme staff and the disbanding of the CoF global philanthropy committee in mid-2013.
CoF’s goal in introducing the network-based strategy was to be less ‘transactional’, less of a ‘vending machine’ for specific members needing specific services and more of a catalyst for the building of broad networks both within and beyond philanthropy. CoF introduced ‘network managers’, essentially regionally based positions throughout the United States, and ‘network developers’, based in CoF’s Washington DC headquarters, who work on topical issues rather than within geographic areas. In other words, CoF has adopted the sort of geographic-plus-thematic matrix structure that has been common in multilaterals and international NGOs for years.
In the global arena, the thematic ‘network developer’ role may well make sense, covering topics such as health and education and environment. However, the regional ‘network manager’ role does not easily map onto the whole globe with anything like the high-touch relationship building that the US-based managers will be aiming at.
CoF staff, with the help of many of the former members of the global committee, have been working on developing a new global strategy that matches the overall CoF networking emphasis, but is also well designed for the global development ecosystem. This strategy should be shared with larger groups of CoF members and stakeholders over the coming months.
Challenges for the new strategy
The new strategy is likely to face a couple of significant challenges. The first is staffing. One network developer will have a hard time keeping on top of the headlines of the post-2015 global development goals, let alone the strengths and gaps of individual foundations and the specific coalitions that could be built. It seems likely, therefore, that the global committee will be reconstituted in some form, which would be in keeping with the idea of working through networks. In a real sense, the global committee is CoF’s ‘inner network’, with each of its members in turn connected to several or many other networks.
The second challenge is that there are probably three distinct ‘bands of engagement’ of foundations regarding global philanthropy. The ‘high band of engagement’ comprises foundations set up to work internationally. They are structured and staffed for global grantmaking, and are likely to be sophisticated and well connected with other development actors. The ‘medium band of engagement’ is concerned about global philanthropy, but secondarily to domestic programmes. Its boards, executives and staffs are less experienced and may need initial or refresher trainings about how to grant globally. Their global rolodexes are smaller, and they may be more focused on individual projects than on trying to make a structural dent in a particular global issue. The ‘low band of engagement’ is frankly not interested in global grantmaking – until the day after a tsunami in South East Asia or an earthquake in Haiti, when they want to be able to make a rapid, impactful, duly-diligent international grant to a reputable organization on the ground.
These three bands have very different needs, and ask different things of a philanthropic platform like the Council. The high band would like to see the Council serve as a platform for deal-making with other actors like multilaterals, bilaterals and national governments – indeed this is in line with the heart of the Council’s new networking strategy. The global committee membership tended to be drawn from this band.
The medium band is often looking more for the ‘transactional services’ that the Council is trying to move beyond. What are the mechanics of international grantmaking? What are the tax rules? How does due diligence differ when it is nine time zones away rather than in the same county? Much of CoF’s earlier international grantmaking initiatives focused on this band.
The low band requires nothing at all from the Council global programme most of the time, but does require rapid ‘morning-after’ assistance in the wake of disasters. In some ways this is the easiest group to service, if there has been thoughtful advance planning for disaster response beforehand.
If that were not complex enough, there is also the question of what other development actors want from foundations, and what they look to the Council to do.
The ways that foundations and multilaterals look at one another are succinctly outlined in a November 2012 publication produced by the Council, the European Foundation Centre and the Worldwide Initiative for Grantmaker Support (WINGS) entitled Building On Strengths. Most frequently, multilaterals and bilaterals will be looking for ‘high band’ foundation partners with long-term commitment to specific development areas and the ability to fund nimbly and creatively.
Where does CoF’s comparative advantage lie?
Finally, there is the question of comparative advantage. As the Council realizes in its new strategy, it is not the sole philanthropic actor in most fields. In the global arena, there are other philanthropic platforms, such as the Global Philanthropy Forum and EDGE Funders, which are much more focused on global issues than the Council. The Council’s comparative advantage lies in the breadth and diversity of its membership and its wide geographic coverage of all parts of the US. This breadth and diversity reside mostly in the medium and lower bands of engagement, which include many more foundations than does the high band.
It is not simple to devise a strategy that optimizes all these aspects. The Council has adopted a networking strategy that will be beyond its means and scope if pursued on a global scale, so it needs to depend more on networks without network managers. The Council also needs to be attentive to at least three distinct groups of member foundations (and probably several others). Finally, they need to realize that while the high band foundations attract the interest of multilateral and bilateral partners, they may not actually be the most distinctive comparative advantage of the Council in the global arena.
It will be fascinating to see the Council’s global strategy tackle these elements over the coming months. Stay tuned!
Peter Laugharn is executive director of the Firelight Foundation.
If you work for a foundation rather than an association of foundations, you are, not surprisingly, in the minority at WINGS’ four-yearly forum. But you will have come to the best event in the world to assess the scope and character of organized philanthropy internationally.
The thing that struck me the most at WINGSForum 2014 (titled ‘The Power of Networks: Building Connected Global Philanthropy’ and held in Istanbul, 27-29 March) was that this was a genuinely global affair. WINGS has come a long way from its roots in a meeting in Mexico in 1998 with 25 countries represented, almost entirely from Europe and North America.
The plenary presentations, for example, were truly from around the world and offered numerous opportunities to compare and contrast. I was especially absorbed by the description by Andre Degenszajn of the corporate character of most foundations in Brazil, which are by and large choosing to be operational, rather than grantmaking, foundations – very different from in the UK. Will this pattern emerge in other countries and with what consequences? Workshops ranged far and wide from philanthropy in Africa to the Middle East and South East Asia. The Olga Alexeeva Memorial Prize honours people promoting philanthropy in emerging societies and attracted a varied and impressive shortlist, with He Daofeng of the China Foundation for Poverty Alleviation winning the prize.
The fact that the Forum was held in Istanbul was a powerful reminder that foundations are part of civil society rather than standing aloof from it. The notorious decision of the Turkish president to ban tweeting made tweeters of the most Luddite of us, to make clear that we don’t like being banned even from those freedoms that ordinarily we don’t value very much, such as speaking truth to power in 140 characters or fewer.
This theme was powerfully addressed by Danny Sriskandarajah, secretary general of CIVICUS, in a keynote speech at the beginning of the conference. He noted that civil space has been in some way restricted in many countries of the world in recent years. Dramatic changes in international development finance herald the end of the era of official aid. While restrictive forms of impact measurement are anathema to creative philanthropy (‘the log-frame has killed the radical idea’), the revolution in data technology properly deployed will empower and engage citizens. His final challenge was the most pertinent to the conference: that philanthropy will need to raise its game in terms of coordination if it is to challenge the networks of power.
Any account of the Forum would be incomplete without mention of the Barry Gaberman Lecture (as he said, ‘it is great to have a lecture named after you – especially if it is before you are dead’). Avila Kilmurray (pictured) of the Community Foundation for Northern Ireland gave a tour de force performance analysing the role of philanthropy ‘in difficult times’ which also served as an exciting calling card for her new role at the Global Fund for Community Foundations.
Finally, as a balding man I am always grateful for any opportunity to wear a wig and WINGS kindly provided me with one by staging a mock trial of associations of foundations on the final day, with me as their unlikely defence attorney (I think it was because I said yes). Their acquittal was much more to do with the quality of the event and its organization by the superbly professional WINGS staff than the ability of their counsel. (Pictured: A bewigged David Cutler.)
David Cutler is director of the Baring Foundation. Email firstname.lastname@example.org
In several diverse settings at the Council on Foundations meeting this week, participants and panellists expressed concerns about potential gaps or oversights in fields where foundations work. During the panel on philanthropy in education the conversation focused for a time on the need to think of students as complete human beings, with social, economic, health and personal needs that must be fulfilled in order for them to be able to engage in and benefit from educational endeavours. Audience members at the panel on the role of philanthropy in the post-2015 global development agenda, being led by the United Nations, expressed concerns on two fronts: (1) that each of the goals under consideration would emerge as a siloed area of activity, possibly connecting philanthropy and development agencies within that field, but missing the interconnected nature of the myriad challenges encompassed in the expansive post-2015 sustainable development goals; (2) that a global agenda might be disconnected from local challenges, capacities, potential and realities.
I’m convinced that these existing and potential gaps in planning, communication and execution are the reasons that philanthropy must remain engaged in critical challenges facing the public. The social, cultural and environmental challenges facing communities and the globe in the 21st century are all interlinked. Interlinked across challenges such as the environment, livelihoods, health and security. Interlinked across regions and national borders. Interlinked from villages up to global systems.
At its best, philanthropy can be the broker that brings disconnected parties and disparate entities together to create new bonds. Without the pressure of elections or markets, and by drawing on the insights and capacities of community foundations and global foundations, philanthropy has the potential to break down silos and connect local insights to global resources. Despite the well-justified concerns that individual students and small localities are overlooked by grand education or development schemes, I left the Council on Foundations meeting optimistic about our capacity to make connections that create change in the world.
Rob Garris is managing director, Bellagio Programs, at the Rockefeller Foundation.
The June Breakfast Club will be held on Wednesday the 2nd of July 2014 hosted by the Shell Foundation in London. Reception starts at 8:15am followed by the discussion at 9:00am.
Why are so few market-based solutions to poverty getting to scale? What can be done so that they can deliver meaningful benefits to the poor? These are the questions raised by the recently released Monitor Inclusive Markets report Beyond the Pioneer. Its findings are in turn examined by the June 2014 Alliance special feature.
Hosted by the Shell Foundation, the June 2014 Alliance Breakfast Club will discuss these and other issues arising from the June 2014 special feature of Alliance magazine.
• Judith Pollock, Deputy Director UK, Shell Foundation
• Audrey Selian, founder and director of Artha Platform and guest editor for the June 2014 issue of Alliance
• Suzanne Biegel, Catalyst at Large, and senior adviser, ClearlySo
• Caroline Mason, Chief Executive, Esmee Fairbairn Foundation
Questions to be addressed
• How do the opportunities for intervention look to foundations and impact investors?
• Is it good that investors compete to invest in the enterprises that will be most competitive?
• Are there areas where market-based solutions won’t or shouldn’t work?
If you would like to attend this event or for more information please contact us at email@example.com. Reserve your place by 25 June to attend. The Alliance Breakfast Club is free to attend. However due to the popularity of these events we operate a one delegate per organisation policy.
Earlier this month I was in Brazil, a country preparing itself to host the biggest sporting event on the planet, the World Cup. The sport is what we call soccer, but the rest of the world knows it as football and nobody plays it better than Brazil. The U.S. made it through the grueling two-year process to qualify, but no one expects the team to get very far in the competition. When you see how obsessed Brazilians are with football, you can understand why they’re so good at it. One small indicator: my sister-in-law bought very stylish Brazilian football outfits so her six-month-old twin granddaughters will be ready for June 12 when Brazil opens the tournament against Croatia. If Brazil wins its sixth World Cup, the celebration will be on a scale that’s unimaginable for most of us — it will make the Super Bowl look like a Sunday school retreat.
If you’ve been following World Cup news, you are undoubtedly aware that Brazil’s plan to showcase to the world its culture, growing economic power, and social progress has not exactly gone as planned. Demonstrations, some of them violent, protesting the expenditure of billions of dollars for luxurious new stadiums and the accompanying forced removal of slum dwellers have filled the streets. Meanwhile, the country continues to be plagued by poor health care, inadequate infrastructure, and urban violence. The phenomenon of its football-obsessed citizenry protesting Brazil’s hosting of the World Cup took the government by surprise and has caused a political crisis: there is growing criticism of endemic corruption, and the country’s president, once a shoe-in for reelection, now faces a tough race. The crisis goes even deeper, however, as growing dissatisfaction with politicians and government institutions morphs into a kind of repudiation of politics and business as usual.
As painful as this is for Brazil and Brazilians, it shows how far democracy in the country has come. In 1970, Brazil’s then-military government cynically promoted the Brazilian football team’s march to its third World Cup championship (Mexico was the host country) to distract attention from a wave of internal repression. Years later, as the dictatorship was losing its grip on power, the tactic was exposed in a banned Brazilian film (though no one dared criticize the dictatorship at the time). Today, as a democratic Brazil prepares to host the Cup for a second time (the first was in 1950), people are protesting in the streets, the media is filled with exposés, political parties are battling it out in the media and Congress, and a young Brazilian has made a YouTube video entitled “No, I’m not Going to the World Cup” that has been downloaded more than 4.2 million times.
While countless Brazilians struggled to move their nation away from dictatorship and toward democracy, philanthropy played a role as well. American and European foundations supported dozens of Brazilian nonprofits advocating for human rights and the rule of law, while think tanks critiqued the government’s economic policies. As the dictatorship began to weaken, foundations backed university research and conferences dedicated to the return of democracy. That funding evolved into support for citizen participation in and public debate of constitutional and political reforms.
For decades now, American foundations have supported pro-democracy groups in countries around the world. It should come as no surprise, then, that foundations are providing the same kind of support here in the U.S. After all, Brazil isn’t the only country whose citizens have grown frustrated with politics as usual! Last week, Foundation Center released Foundation Funding for U.S. Democracy, a new data-driven Web platform. Supported by eight leading foundations, this marks the first time that this important focus area of philanthropy has been clearly defined, delineated, and made fully transparent.
Football (soccer), democratic values, and philanthropy are integral parts of the globalizing world in which we live. If the 2014 World Cup teaches us anything, it is that they are connected in more ways than we can imagine.
Brad Smith is president of Foundation Center.
It might seem that some of the tendencies in philanthropy that the Hudson Institute’s William Schambra most dislikes are in retreat. In late March the Hewlett Foundation announced its decision to phase out its Nonprofit Marketplace Initiative, an eight-year, $20-million effort to finance work by Charity Navigator, GiveWell, GuideStar and other groups that provide in-depth information about non-profits’ performance. The assumption underpinning the Initiative was that there is a demand from donors for more such information, but the evidence suggests that only 3 per cent of donors give based on the relative performance of charities.
Meanwhile, the summer issue of Stanford Social Innovation Review contains an article by John Kania, Mark Kramer and Patty Russell urging funders wanting to solve complex problems to ‘move beyond today’s rigid and predictive model of strategy’ – the one they themselves advocated so widely – to ‘a more nuanced view of emergent strategy’. Some among the group of ‘philanthropy’s most important thinkers and doers’ invited to comment on the article appear to doubt whether strategic philanthropy is even up to dealing with problems that are merely complicated, or even simple, and others suggest that emergent strategic philanthropy might amount to no more than common sense and good judgement – great qualities, but perhaps not enough to warrant a grand new ‘theory’. Click here to read Schambra’s own comments>
But Schambra sees new threats on the horizon, notably from ‘effective altruism’, which he memorably describes as ‘strategic philanthropy on steroids’. This he sees as potentially at loggerheads with the approach he favours, which he calls ‘philanthrolocalism’ (what are we doing to the English language?):
‘A showdown is coming for those of us who argue that charitable giving should attend first to our own community. We face the challenge of a new movement called “effective altruism” – a radical utilitarian approach to giving that might best be described as “strategic philanthropy on steroids.” In this view, localism is not just a suboptimal way of giving. It is in fact a morally questionable diversion of resources away from those who might benefit most from them.’
While I can see the attractions of effective altruism – the idea that no life is worth more than another and that donors have a moral obligation to use their money to do the most good and save the most lives – the danger that emerges from Schambra’s article is that we will lose our moral compass. He quotes Peter Singer, guru of effective altruism, writing chillingly on infanticide:
‘When the death of a disabled infant will lead to the birth of another infant with better prospects of a happy life, the total amount of happiness will be greater if the disabled infant is killed.’
‘Even I, who have been an active participant in efforts to improve the practice of philanthropy on these same lines, subconsciously recoil when Friedman points out the cost-effectiveness difference between funding guide dogs in the developed world and treating onchocerciasis, a major cause of blindness in the developing world. The first costs thousands of dollars, the latter just a few. While my rational side fully accepts this argument, I have a son who will lose his vision before he is 20 and will likely benefit greatly from having a guide dog. And so I inwardly quail at the thought of all those funds being redirected.’
There are undoubtedly many issues on which Schambra and I would disagree, but his article are always thought-provoking and worth reading. Click here to read the article in full>
Caroline Hartnell, is editor of Alliance magazine.
One of the best-attended sessions at the Council on Foundations conference this week was on foundation involvement in the global development agenda for the period 2015-30. The standing room only crowd was urged by panellists from the Hilton and Rockefeller Foundations, the Foundation Center and the World Bank to get involved both in the framing of the goals and in their execution over the coming decade and a half.
From MDGs to SDGs
Ed Cain, vice president of the Hilton Foundation and himself a former United Nations official, recounted how the current eight ‘Millennium Development Goals’ (MDGs) were put together in the year 2000 by a relatively small group of technocrats, led by Mark Malloch Brown of the United Nations Development Program (UNDP). In effect, they ‘compacted’ the various parallel poverty reduction and well-being movements of the 1990s, for example education for all, child survival, and social inclusion. The MDGs were a robust, unexpected social marketing success, providing a manageable, easily referenced framework for the global effort to reduce extreme poverty. The MDGs shaped how donors funded, how developing country governments structured their national strategies, how NGOs organized their programmes, and how watchdog organizations held authorities to account.
These MDGs were due to be accomplished, or at least to expire, in 2015. Progress on the goals has been mixed. They have organized the global development effort and given it an overall system of targets, but as 2015 nears, it is clear that the work is not yet done.
Thus over the last two years attention has begun to shift towards the next 15-year period, and the crafting of the ‘post-2015’ development goals. Given the importance of the MDGs in past years, this time there is a great deal of attention on how the next round of goals is being crafted. The process is much more consultative, but also more congested with actors, from UN agencies to national governments to civil society coalitions.
What seems to be emerging is that the goals for the 2015-30 period are likely to be called the ‘Sustainable Development Goals’, and that they will place nearly equal emphasis on finishing the MDG agenda of poverty reduction on the one hand, and on sustainability and environmental concerns on the other. A third cluster of goals around good governance is being debated, but it is not certain whether they will stay on the agenda. The goals will be hammered out over the next year, for approval at the UN General Assembly meeting in New York in September 2015. Currently, in the June 2014 ‘zero draft’ document, there are 17 goals, which will probably be slimmed down to a more manageable 12 or so over the next year. While the MDGs were mostly about developing countries, the SDGs are intended to cover all countries.
How have foundations engaged with these global goals?
Foundation funding for MDG priorities has been significant. Foundation Center data indicates that 44 per cent of international support from the largest 1,000 US foundations in 2012 went to issues targeted by the MDGs, totaling $2.6 billion. Foundations have made particularly significant investments in HIV/AIDS, poverty reduction and child survival.
On the other hand, foundations were not actively involved in the forging of the MDG agenda in 2000, and most foundations did not explicitly adopt the MDGs as an organizing framework in the way that multilaterals and bilaterals did. The European Foundation Centre endorsed the MDGs in 2005, but it was not entirely clear what this endorsement meant in practical terms.
As for the Council on Foundations, Hilton’s Ed Cain was told as he joined the CoF global committee around the midpoint of the MDG period, ‘CoF doesn’t do the MDGs, we’re content-neutral.’ CoF’s global focus was more on helping grantmakers understand the rules and mechanics of international grantmaking. While certain individual foundations were deeply invested, particularly in specific MDGs, foundations have not been strongly engaged collectively in the global development agenda.
This is a missed opportunity, because some of foundations’ strongest comparative advantages – being able to combine a long-term view with short-term dynamism – would be very useful in both the articulation and the implementation of the development goals agenda.
Foundations and the SDGs – what entry points?
In May, the Hilton Foundation has awarded $1 million to UNDP and the Foundation Center to improve the effectiveness of philanthropy’s contributions to the post-2015 development agenda, and to enable government and the UN system to effectively engage with a wider range of stakeholders, including civil society and the private sector. The Ford Foundation has added $500,000 to this effort, and other foundations are invited to join in.
The CoF panel identified a number of entry points for foundation involvement:
• the crafting of the goals themselves (though this is already a crowded field);
• participation in a foundation ‘collaboration advisory group’, which looks at how foundation funding can be used smartly to help advance the goals;
• funding research, particularly on how the goals can be successfully implemented;
• funding the involvement of civil society organizations in the SDG process at the country level;
• funding projects promoting awareness and support of the SDGs in industrialized countries.
Brad Smith of the Foundation Center made a strong plea for data from foundations, starting with detailed information on grants made within the framework of the MDGs and SDGs. Beyond these grants, foundations can also share information on their strategies, programmes, research, evaluations and landscape assessments. These will be of value to other foundations but also to the broader community working on these goals. ‘If foundations improve our data tracking capacity,’ Smith noted, ‘this will allow us to produce significant aggregated data, and sit at the table in dialogue with other major actors.’
The turnout at the CoF session indicates a strong interest on the part of the CoF membership in this important global issue, and bodes well for the building of a robust foundation collaboration in support of the new Sustainable Development Goals.
Those foundations interested in getting involved in this collaborative can contact Ed Cain at the Hilton Foundation or Karolina Mzyk at UNDP (Karolina.firstname.lastname@example.org).
Peter Laugharn is executive director of the Firelight Foundation.
If you did, you still have a chance to catch up. The EFC has published highlights and photos from many sessions on its website while our Latest from Alliance blog highlights a wide range of different perspectives on the conference.
We typically ask conference bloggers to report on ‘any aspect of the event that they find particularly interesting or surprising’ – and it’s always interesting to see what they do choose to write about. This year we have:
• Star blogger Maite Garcia-Lechner of the European Cultural Foundation, who blogged extensively on engaging with social media, the value of philanthropic investment in community development, and the power of storytelling.
• Terry Odendahl of Global Greengrants Fund reporting on the Impact Island team’s session ‘Sea Change or Hard to See Change? Are Foundations Making Enough of a Difference?’ where Terry seems to have had fun ‘finding out how we really do our work, by analysing the ‘”Do Good Foundation on the Island of Trouble”’ – though it has to be said that the headdresses were not up to standard this year.
• While Filiz Bikmen looked at recipes for building successful networks through ‘searching for the masterchef’.
• The conference title was ‘Rethinking Europe’ and the European project was the focus for Jenny Hodgson of the Global Fund for Community Foundations, Chandrika Sahai of the Peace and Social Justice Philanthropy Network, and Maribel Königer of ERSTE Stiftung.
• Inevitably Ukraine was never far from the discussion. There was a session devoted to foundations’ role in Ukraine specifically as well as a more general one on foundations in conflict situations, and Ukraine was a big focus for the session on women’s role post conflict, both reported on by Caroline Hartnell of Alliance. See also an interview with Madeleine Rees of the Women’s International League for Peace and Freedom and Caroline’s post celebrating the EFC’s first woman chair – 25 years on and about time!
• Finally, a view from the other side of the Atlantic, from Andrew Ho of the Council on Foundations, who reflects on the challenges to successful public-philanthropic partnerships, which seem to him more complex in Europe than in the US.
Sadly we did not in the end feature any blogs from the enthusiastic Mozaik Foundation team of five who had agreed to blog for us – for the very good reason that, in addition to hosting the conference, they were totally taken up with initiating projects for the relief of the suffering of the victims of Bosnia’s devastating floods. For more information and to make a donation, see here>
How to stimulate the venture stage of the impact investing market with fresh ideas has stubbornly remained an open question. However, an answer in the form of corporate venture capital that considers impact (or corporate impact venturing) has started to present a convincing response.
Similar to in 2013, respondents to the 2014 JP Morgan/GIIN impact investor survey identified the ‘lack of appropriate capital across the risk/return spectrum’ and the ‘shortage of high quality investment opportunities with track record’ as the currently most limiting characteristics of the impact investing market. In fact, only 11 per cent, or USD 5 billion, of the capital invested by the 125 respondents was committed to start-ups and venture stage businesses. This is less than one-sixth of the capital invested by global companies in start-ups via corporate venturing over the same period, which amounted to USD 29.4 billion in 3,995 deals.
Over the past 50 years, corporate venture capital has helped corporations to capitalize on their profound industry expertise and move from early insights into emerging trends to actual investments that end up generating the new products and services that power core business. The pursuit of impact is now being added to this formula: sustainability is increasingly driving value creation, and assessing joint opportunities for financial and social returns is the new way forward. This venturing approach is very ambitious in terms of scale and impact. The USD 5 trillion Base of the Pyramid market, the USD 546 billion global virtuous consumer segment, the multi-trillion dollar market for green growth and a rising circular economy, combined with a modernizing welfare state, are mega trends creating massive investment opportunities and the possibility to achieve sustainable growth, social impact and corporate profits.
The pathways for sourcing business innovation are also being updated. Fundamental to this shift is the changing role of corporate philanthropy and traditional corporate social responsibility (CSR): the bolt-on approach that is compliance driven, costs money, and produces limited reputational benefits is gradually coming to an end.
Acting on the opportunity has nonetheless proven challenging for many. At a time when sustainability considerations loom ever larger for global CEOs, and in the minds of consumers and regulators, many executives report that they are stuck on their climb: the path to transformation is not yet readily discernible. To help address this issue, Impact Economy, the global impact investment and strategy firm, released Driving Innovation through Corporate Impact Venturing: A primer on business transformation in March 2014. The good news is that corporate leaders do not need to have all of the ideas themselves. With CIV, they can build on the proven channel of venture capital in order to source the innovations now needed, marrying corporate venture capital with positive social and environmental outcomes.
Corporate impact venturing is also relevant for philanthropic institutions, which have thus far played a key role in providing the seed capital that has been helping to build the impact investing market. Fresh potential partners are now coming on stream. Take the field of education, for example, which is both a classical domain of philanthropy and a particularly strong future focus for early-stage investors as per the JP Morgan/GIIN survey referred to above. 64 per cent of respondents plan to increase their exposure in education, with none intending to decrease it, and another third of later-stage investors are expecting to increase their allocation as well.
Education is a foundational field of modern philanthropy, and plays an important role in corporate philanthropy and CSR. Corporate impact venturing is a next logical step. TakePearson, which is present in more than 70 countries and aims to be the leading learning company worldwide. In 2012, Pearson launched the USD 15 million Pearson Affordable Learning Fund, which focuses on providing K-12 education at the Base of the Pyramid. The Fund’s goal is contributing to ‘Education For All’ via for-profit investments that drive both impact and profits. As a company, Pearson achieved USD 1 billion of revenue in developing markets for the first time in 2011; the Fund can now help it access the next key innovations in education at the Base of the Pyramid. This is important given its declared objective of becoming a truly global player. Other similar examples are emerging every day.
Corporate impact venturing offers a powerful way to promote corporate opportunities without neglecting corporate responsibility. The prospect of doing well and doing good at the same time has never been greater. As the market gains scale, companies undertaking impact investing can complement philanthropic investments and help build the pipeline of later-stage opportunities desired by many impact investors.
Maximilian Martin is the founder and global managing director of Impact Economy and the author of Driving Innovation through Corporate Impact Venturing.
At the annual Council on Foundations conference, one of the key moments to focus on international questions has always been the global philanthropy dinner, and in particular its keynote. This year, that keynote was given by Lester Salamon, director of the Center for Civil Society Studies at Johns Hopkins University.
Salamon is a chronicler of civil society activity both within and outside the borders of the United States. He is a key figure in bringing overall frameworks, models and numbers to the diverse and changing world that is global civil society, and he led the team which authored Global Civil Society: Dimensions of the nonprofit sector. Typically, Salamon’s work has helped describe the vibrancy and importance of civil society as a force for social good.
Salamon’s talk at the CoF dinner took a somewhat different direction, emphasizing the poor linkages between civil society and capital, and looking at possibilities for improving capital flows to non-profits. What Salamon calls a potential ‘revolution in social purpose finance’ is described in his new book, Leverage for Good: An introduction to the new frontiers of philanthropy and social investing.
Salamon started by reviewing the state of non-profit finance in the US. He noted that the non-profit economy totals about $1.3 trillion, of which $504 billion comes from the US government, and $681 billion from fees. Only 10 per cent of non-profit revenue comes from philanthropy, and only 2 per cent – about $32 billion – comes from foundations. Thus, while non-profits are by far the largest recipients of foundation grantmaking, foundations are a small part of the overall non-profit finance picture.
While $1.3 trillion seems a significant size, Salamon continued, non-profits are capital-starved, often able to address only small parts of the social challenges they exist to combat, and living hand to mouth financially. Many non-profits are unaware of the most significant capital markets, and, according to Salamon, ‘non-profits often don’t understand the difference between operating income and capital’. Non-profits face competition from for-profits; Salamon showed how the non-profit share of many social services has declined in recent years, even in areas like home healthcare that were pioneered by non-profits. Further, the non-profit brand seems to be losing ground in many areas to the for-profit social enterprise.
Salamon sees promise in the explosion of actors and tools seeking to mobilize private resources for public good. Among the actors he emphasized were capital aggregators, secondary markets and social stock exchanges. He noted that capital aggregators, such as the community development finance institutions (CDFIs) in the US, have accumulated $300 billion in the last decade, compared to the $700 billion of assets held by foundations. Within the foundation community itself,
Salamon noted the phenomenon of ‘philanthropication’ through privatization of state assets, which has resulted in the creation of 88 new well-endowed banking foundations in Italy and 200 ‘conversion foundations’ in the US, mostly in the health sector. The new tools available include a wide variety of loan arrangements, social impact bonds and guarantee funds.
While the ‘let’s move beyond grants alone’ discussion is by no means new at CoF conferences, it was very useful to have it presented in a macro perspective. What role will foundations play in trying to link non-profits to these quickly multiplying sources of finance? This will call for a new sophistication and flexibility among foundations, and, as Salamon pointed out, ‘new partners, new financing mechanisms, and new skill requirements’.
The challenges to non-profit finance in the global South are even greater than those described by Salamon for the US. The government-financed revenue streams are typically much smaller in most developing country contexts, and fee-based programmes can be a challenge for non-profits that are serving the most vulnerable or which do not have products that are easily commercialized. It would be very useful to review Salamon’s ideas for bringing more abundant capital into the civil society sector, specifically with low-income countries in mind.
The new strategy of the Council on Foundations seems to be to reach out more to specialized networks for expertise, rather than trying to have deep expertise on many topics in house. This is probably a wise choice regarding this complex and rapidly growing area of non-profit finance, particularly in the developing world. It will be interesting to see how the Council seeks to forge linkages, information channels and working groups that will equip foundations to play a more active role.
Peter Laugharn is executive director of the Firelight Foundation.
7 June, aboard United Airlines flight 484 from Denver to Washington DC:
As the Council on Foundations annual meeting, entitled ‘Philanthropy Exchange’, takes place in Washington DC this week, many Council members are looking for clear evidence of the change that has been promised as the distinguished 65-year-old Washington institution adapts to the realities of a networked world in which information flows freely and once-exclusive organizations like the Council are struggling for a relevant value proposition that will capture the imagination of the next generation of foundation leaders.
Despite plenty of confusion and some consternation about recent changes at the Council on Foundations, the one thing that everyone in American philanthropy seems to agree on is that the Council is the sector’s single most influential representative in Washington DC.
But the Council has a long-established policy of bipartisan neutrality on political issues of any substance, except for regulatory policy that affects philanthropy itself. That policy of self-interest has been challenged by only a few Council members and some outside critics, but the policy and practice remain firmly entrenched because the non-profit sector, which depends on philanthropy, has been afraid to used its considerable influence to push its funders to harmonize their missions with their investments, especially when it conflicts with the dominant political economy. Thus the Council has not been pushed successfully by its members or by the beneficiaries of its members, to take an unambiguous position on the most critical public policy matters of our time, even overwhelming ‘trump card’ issues such as climate change.
Despite the fact that many leading Council members have invested billions of philanthropic dollars in campaigns to mitigate and adapt to climate change, the Council itself has never been pressured to take any initiative itself on the issue in Washington.
Last week the Obama Administration, finally after decades of costly delay, announced that the US will reduce carbon emissions from power plants by 30 per cent by 2030. Some say it’s too little, too late. Others, who deny that climate change is happening, still insist that it’s too much, too fast. But most Americans agree with scientists, and with Obama, that extreme weather events show that it’s time for the US to act on climate change.
We shall soon see whether the newly network-adapted Council will be embraced by its membership, and become more nimble on public policy issues of global importance to all of philanthropy.
Chet Tchozewski is a board member of Chino Cienega Foundation.