Over the last decade, we’ve seen a remarkable development in philanthropy: the emergence of a global culture of giving among leading wealth holders. Younger generations moving into leadership roles have a globally-oriented education, outlook, work experience, network and civic involvement. They seek to align their resources – whether via donating, investing or entrepreneurship – for a better world.
Four trends, closely intertwined, characterize this global culture of giving: deep involvement, solutions-based approaches, assessing impact, and new ways to fund.
Trend 1: Deep Involvement
Throughout all times and in all cultures, people have always been charitable – it’s in our nature. What’s different now is that the wealthy also seeks to go beyond simple generosity to make philanthropy an important part of their life and their legacy. They’re turning to philanthropy – including impact investing – much earlier in their life. They’re also engaging their knowledge, networks, expertise and partnership capacities. The consequence of this earlier and deeper engagement are profound. When the capabilities of wealth-holders as thought-leaders, advocates and innovators are also connected to their financial resources, the potential is truly exciting.
Trend 2: Solutions-Based Approaches
Increasingly, donors want to be part of solving a problem. That has made them willing to make big bets, to partner with others to get leverage, and to think about the whole system in which the problem exists.
This focus on large-scale, sustainable change creates the need to understand the ecosystem in which a problem exists. Frequently these challenges have existed for centuries, and are tightly enmeshed with other challenges. Such social challenges are often termed “wicked” problems because they have no agreed-upon definition, cause, or solution.
A classic example of this is poverty. What is poverty? Is it only lack of income? What about assets? Opportunities? And is poverty driven by poor health, climate change, lack of education, lack of opportunity, corruption and/or bias?
Trend 3: Assessing Impact
Progress on a wicked problem may be slow, but donors increasingly want indicators that their approach is working. Impact assessment tools can serve several different purposes. The most immediate are tools for accountability. For example, if a donor gives money to an organization to train teachers, did they in fact train the number of teachers that they promised?
Donors also use assessments to inform their decision-making. In comparing two nonprofits that train teachers, metrics can show which is most cost-effective, which produces teachers who continue in the field, and how many students are reached. And in some cases, donors can get metrics on effectiveness – how well did the students learn, and what opportunities did that learning create?
Third, donors are using assessments for “proof of concept” – a way to demonstrate success to others, and start scaling a program by growing it, replicating it, or finding a business or public agency to take it on board.
Trend 4: New Ways to Fund
Many donors around the world are exploring new ways to use money to make change, including limiting the timeline of their philanthropy, social investing, launching social enterprises, and active outreach.
More and more, donors are choosing to do most of their giving while living, or establishing a defined sunset for their philanthropy. Many of these givers feel that actively engaged donors will be more entrepreneurial and successful than a steward. They also express confidence that future generations will create their own philanthropies. In addition, some conclude that more money over a shorter period is better than smaller amounts over a long period – even though cumulatively, the latter may be a larger amount. In particular, climate change funders see a narrow window to prevent catastrophic damage.
Social investing is also a powerful tool for many new philanthropists, ranging from fairly simple decisions like stripping a portfolio of holdings that don’t align with values to making proactive investments with both a financial and a social/environmental return. These impact investments could deploy significantly more capital than traditional giving – by orders of magnitude – to address social and environmental challenges.
Funding social enterprises are also enormously appealing to global donors. Simply put, a social enterprise uses market principles and mechanism to achieve its mission. In some cases, it is meeting a market need for customers who are not well-served by the commercial marketplace. Alternatively, it is supplying a product or service that benefits society.
Finally, global donors increasingly see outreach, advocacy, and communications as part of their philanthropic toolkit. Most simply, the ultra-wealthy build awareness for their causes, or recruit peers as co-funders. Others fund comprehensive public campaigns or seek to influence policy. Social media offers a remarkable new set of opportunities in this regard.
In sum, this golden age for philanthropy engages a widening circle of people with an unprecedented intensity of involvement and new tools for complex issues.
This is an extract of an article on the global culture of giving by Melissa Berman published in The International Family Offices Journal, published by Globe Law and Business. Full details, including of a special Founder Subscriber offer, can be found at http://familyofficesjournaldirect.globelawandbusiness.com/.
(c) 2017, Rockefeller Philanthropy Advisors, Inc.