Philanthropy and Social Change

Parag Gupta
Founder, Waste Ventures

social change

The Benefits of Philanthropy

It is estimated global philanthropy to developing countries totaled $53 billion in 2008 (CGP, 2008). The question is – can philanthropy tackle our current challenges and those that have yet to arise? Does it hold the key to unlocking social and environmental innovation? Or is it losing its relevance on a dynamic global stage?

As someone who has worked in and around the foundation world for the past nine years as program staff, grantee and consultant, it strikes me that there are three broad buckets of giving in ‘Realphilanthropik’ terms defined by intent and outcome. I draw this distinction to make sure motive, goals, and expectations are aligned (with a healthy dose of self-awareness!):

• Ego Philanthropy

Giving primarily centered on recognition of funding but with little to no social or environmental value generated. For example, in India, the largest single grantee of big-ticket philanthropy is Harvard University. Given Harvard’s $27.6 billion endowment, it’s probably safe to assume the donor’s primary intent is not development! (I’ve only ever seen one name-endowed example that I’ve appreciated.)

• ‘Bang for Buck’ Philanthropy

This giving tends to be more focused on direct intervention or programs that can be easily measured. From soup kitchens to after-school programs, this philanthropy focuses on maximizing quantity and quality with a set amount of capital. In the United States, foundation leadership draw up budgets based on the mandatory 5% release of assets and decide how to extract the most value from the funding.

• Game-Changing Philanthropy

The ‘whatever it takes’ approach to philanthropy – targeting a particular problem or sector and devoting all resources available – grants, investment, advocacy funding, media, operational vehicles and so on – regardless of tax implications. If a philanthropist does not have the resources, she partners and collaborates with whoever she needs to. Arguably, the best example of this would be what the Gates Foundation has done in the health sector, FSG’s recommendations on shared metrics, and the multi-faceted interventions of the Omidyar Networks and the various Skoll entities.

Sector-changing initiatives of course are rare to come by but prior examples include the creation of the Head Start program and Shorebank/ Muhammad Yunus’ impact on creating the global microfinance sector. For new initiatives that strive to change the game, even a carefully crafted strategy and intent is not enough. For example, at Waste Ventures, we understand that if we do not reach 200 cities in India in the next several years, we will have fallen short of our tipping point and will rather be a ‘Bang for Buck’ philanthropy case.

Parting Shot

Looking at it from a lens from the field – what seems to be creating the most change right now is not a carefully business-planned social enterprise but rather spontaneous popular uprisings demanding democratic freedom sweeping through the Middle East. From what I can tell, philanthropy had little to do with this – understandably as authoritarian regimes have shuttered the civil society groups that foundations would fund.

Perhaps though, the change in the Middle East is indicative of a new trend towards the individual, rather than an organization, as the unit of change. In those places void of civil society but in need of social intervention – traditional grants can be replaced by affordable technology, social networking, and individual giving. Giving that can be more nimble, focused, and, in greater in sum.

What do you think the ultimate benefit of philanthropy could be?

- If you run a social enterprise, how do your interventions match these broad buckets?

- Do ‘black swan’-type events like the Middle East pro-democracy protests indicate the diminishing relevance of big ticket philanthropy in the scheme of global change? How can philanthropy play a role in such events?

- Is it worth conducting ‘Bang for Buck’ Philanthropy if it won’t change the system? What if alternatives exist that may in fact create a paradigm shift?

- How can individuals create philanthropic change through collective action and/or through technology?

Join Parag Gupta, founder of Waste Ventures and Talking Trash blogger on Social Edge, in the conversation.

jo davidson

social fabric

Hi Parag to kick things off, I’d like to compare philanthropy and social change to what Wordsworth said about poetry, it’s

"the spontaneous overflow of powerful feelings"

so when it comes to gut decisions, I guess philanthropists just can’t help themselves. For the ultimate benefit, I hope what philanthropy doesn’t do is ‘wander lonely as a cloud’ disconnected from the dots in correcting social and economic inequalities…
- Parag Gupta
  
  social fabric
  
  Thanks Jo for starting us off –
  
  You hit upon two important points:
  
  1. Connecting with need (and hopefully other players to create a synergy of impact) BUT
  
  2. Philanthropy is personal and at the prerogative of the donor – whether they want to spend it on poverty or Daffodils;)
  
  Is there way to channel ‘gut decisions’ though into larger action? So many times, I’ve met new philanthropists who approach giving humbly but are unaware about existing efforts and end up duplicating efforts. Also, does ego affect philanthropy in another manner – the drive to create something new rather than fund someone else’s pet project (regardless of results).
  - jo davidson
    
    changing the game
    
    Yeah Parag there are ways to channel gut decisions in larger actions in market building, impact investing or coordinating efforts with systemic implications etc, and in learning how to run the world, (and having come from the Kennedy School of Government yourself) I thought you might appreciate a quote from John F Kennedy, ‘if a free society cannot help the many who are poor, it cannot save the few who are rich.’
    
    With levers to tip the system in the drive to create something new and with new models of good governance under an umbrella of giving, perhaps the next question is in how to look for ways to bring diverse people with varying degrees of involvement together on an equal footing for collective impact?
    
    Recall back in the early part of the 20th century philanthropy and social change was really just taking off, coming together in a large scale way in the middle of the century, mainly due to the civil rights and peace movements. Like with the changes happening in the Middle East right now – with the financial crisis having impacted the region and some areas severely, causing riots and uprisings that have resulted in the demanding of democracy – capitalism usually trumps democracy, but not so when larger forces are involved. As for the best way to steer gut decisions beyond the pale, it’s good to remember to hang on to tight-knit simple linkages…
    
    I agree duplicate efforts decrease efficiency as a modified effect whether anyone’s ego is in it or not, so if given a choice to avoid backing the wrong horse, I say trust gut decisions, especially when setting up pet projects. Changing the game often requires moving entrenched positions.
DanielBassill

Investment approach to philanthropy

Parag, thanks for setting up this discussion. During the first week of March Sean Stannard-Stockton, CEO of Tactical Philanthropy Advisors , wrote a series of articles that provides some definitions of the different types of philanthropic donor. I think his articles offer some relevant perspective to the information you’ve provided. http://www.tacticalphilanth…nt-approach-to-philanthropy

I think that most of the big problems we face in different parts of the world are complex and will take many years of consistent investment of time, talent and dollars to solve. Finding ways to connect donors with social entrepreneurs on a consistent long-term basis will be one of the great challenges and opportunities of the coming years.

While traditional philanthropy may or may not have had an impact on launching the changes that are taking place in the Middle East, for those changes to grow over time into forms of government and economics that best benefit the people, some form or consistent capital will be needed.

It could be a new web platform like Groupon that connect donors with entrepreneurs or it could be traditional foundations working differently and using the internet to shop and choose where they invest.

However, unless we find a way to make the flow of dollars more consistent and flexible I don’t think the impact will be as great as it needs to be.
- Parag Gupta
  
  Investment approach to philanthropy
  
  Hi Daniel,
  
  I admire Mr. Stannard-Stockton’s work and thank you for point out this very relevant article. I am not convinced that the benchmark for conducting tactical philanthropy is high enough to move the needle on a lot of issues. As Sean states about tactical philanthropy in the post, "… you make a grant if, and only if, you believe that the social impact generated by the nonprofit enterprise will be attractive relative to the grant that you’ve made. This then gets back to whether ‘bang for buck’ or tactical philanthropy is enough or do we need to elevate somehow to ‘change the game’ or engage in strategic philanthropy as mentioned in Sean’s article.
  
  On the other hand, whereas the pure-profit analog would be – don’t invest if there are no good options out there, the same would be disastrous if philanthropists punted on solutions until a catalytic intervention was found.
  
  Is there an in-between? How do we get more philanthropists to such sites like GlobalGiving or other aggregators of projects in need of funding?
  - Jeff Mowatt
    
    Investment approach to philanthropy
    
    Hi Parag,
    
    Now I think of it, this is something which now seems to be happening on my Linkedin group described as ‘Social Business and For Benefit Corporations’. I created this about 3 yeas ago when the concept of changing capitalism to serve social objectives began to gain momentum.
    
    There are now more than 600 members interested in business for social return.
Jeff Mowatt

Impact investment

Curiously it was Sean Stannard-Stoackton who came first to mind when I read this article, remembering that in 2008 I’d first responded to him in his blog which asked ‘Did social enterprise cause the credit crisis?’

What I’d tried to relate back then was the cause driven business approach we’d been taking and hows it started with a critique of debt in free market capitalism and a proposed alternative economic paradigm.

Though I run a social enterprise in the operation sense, the game changing work is that of Terry Hallman who took this for-purpose approach in a proof of concept project to Russia. From a small investment it was to lead to around 10,000 new micro enterprises, as he describes in this interview from 2004.

http://www.iccrimea.org/scholarly/economicdev.html

We were functional in Ukraine from the eve of the Orange Revolution which had been simmering for some years, especially since the execution of an investigative journalist. We were aware of philanthropic contributions to the participants. Meanwhile our efforts focussed on identifying the problems and raising awareness of how this might change. When published the final strategy proposal was to identify how social investment could address a wide rang of social problems and in one respect, improving communications infrastructure through affordable wireless broadband, would support an evolving democratic movement in it’s infancy.

Interestingly the Davos Philanthropic Roundtable arose subsequently from the ranks of Ukraine’s oligarchy. This was where billionaire philanthropist Sir Richard Branson spoke calling for ‘business to focus more on social problems’

http://pinchukfund.org/en/news/361/

The primary objective of our own business was focussed on those considered disposable, children abandoned to the state and the culture of fear which co-opted locals and visiting NGOs into silence. To illustrate the depth of the problem it would be 5 years before mainstream media, in the Sunday Times were to reveal the story of the place we were not at liberty to name, in Torez Ukraine.

The bank for our buck has been reflected in changes to policy and a subsequent increase in domestic adoption by 40%. We need philanthropic investment to finish the job, with homes for all children – especially these:

http://www.youtube.com/watch?v=bp7t7SGPQ9M
- Parag Gupta
  
  Impact investment
  
  Hi Jeff –
  
  Thank you for sharing! The results sound great. Would be grateful if you could share how you measure results – particularly with advocacy and policy change. Besides potential political issues and tax challenges, linking causation seems to be one of the largest stumbling blocks to attaining funding for advocacy.
  - Jeff Mowatt
    
    Impact investment
    
    Hi Parag,
    
    Not that great considering the scale of the problem. We would argue that to try to measure impact in monetary terms is illusory, that it "ca only be measured ansd calibrated in terms of human beings".
    
    http://www.p-ced.com/1/about/background/
    
    When Muhammad Yunus describes the ‘botoom line’ of Grameen Danone being the number of children removed from malnutrition, we’d say likewise about the provision of family homes. We cannot do it alone.
    
    http://www.everychild.org.uk/…/deserves_a_family
Cathy Clark

Ultimate Benefits are Unpredictable

Hi Parag,

Love the post and the clarity of your three categories: ego, bang for buck, and game changing philanthropy. I have a similar reaction to that I had when reading the Tactical Philanthropy pieces referenced above. Namely, that most really good and really concerned philanthropy does all 3, in a messy, completely unpredictable and absolutely miraculous way (when it works). I think it is nearly impossible, for example, to do really effective game-changing philanthropy without concentrating on bang for buck steps along the way towards solving a social problem. I don’t think you can move the needle on most social issues without having really strong and effective organizations working on various layers of it. And I don’t think there’s any reason to think either that 20, 100, 1000 or 10,000 really strong and effective organizations working in, say education, can be guaranteed to solve educational inequities. It takes policy, it takes advocacy, it takes embarrassing data and public events that drive attention to an issue, etc. It takes many levers to tip a system and we humans are just not very good at predicting factors that drive system change.

But we also have examples of philanthropy doing amazing things beyond the 5% payout to nonprofits through the last 100 years. Read Joel Fleishman’s books. Just one system example: the Ford Foundation creating the domestic Community Development field, which is largely driven by forprofit banks and financial institutions. They also subsidized Grameen Bank for nearly 20 years, making modern microfinance possible today. That was a bang for your buck investment (loans as PRIS) with huge systemic implications, but it took a while. For us to say, oh, but THIS kind of philanthropy is better, seems to me be overly simplistic. That said, of course we need more system-viewing lenses to decide where to put our resources and collective impact models to choose from. Perhaps the most important innovation of the past few years is the idea of a large range of players LOOKING AT THE SAME DATA to decide whether change is effective. If that is a game-changing behavior we want to see more if, I’m with you.

Cathy
- Parag Gupta
  
  Ultimate Benefits are Unpredictable
  
  Hi Cathy,
  
  Thank you for your contribution. To your statement, "a large range of players LOOKING AT THE SAME DATA", I would only add – "and coordinating efforts".
  
  Microfinance took decades to mature. Can we achieve the same in other sectors in less time? At Waste Ventures, we are trying to achieve the same level of robustness and scale for the Base of Pyramid solid waste management sector in approximately 15 years through simultaneous efforts in building commercially viable waste picker firms, disseminating knowledge and expertise to accelerate the sector, and fostering its growth through the right policies from municipality through federal levels. Our learning: advocacy starts NOW not after 10 years of results.
  - DanielBassill
    
    Building Collective Impact
    
    FSG has been putting together quite a few good articles around the idea of collective impact. This idea was in the New York Times last week. You can see the FSG articles at http://www.fsg.org/…/Collective-Impact-in-br-The-New-York-Times.aspx
    
    In their articles the work of building collaboration is supported by intermediary organizations. Finding funding for these is essential because the community building required to get the right group of people to the point where they might agree to formal collaboration, is not easily done.
    
    I think that until there are organizations that "aggregate" data and links to like-kinded organizations, it will be difficult for others to use such portals to build relationships, share ideas, and work together to attract philanthropic investment.
    - Parag Gupta
      
      Building Collective Impact
      
      Hi Daniel,
      
      Thanks for this. As someone who put together the initial World Economic Forum councils on Social Investment and Social Entrepreneurship, I can empathize with getting the right players to the table. Perhaps this is not as subjective as people may think as I’ve found people within a sector generally know who the movers and shakers are (and aren’t afraid to share!)
      
      I have found many different "aggregators" of information. The question I have is, in the age of information, which "aggregators" does one use? How is this determined by the end user? Is there a way to channel these? Perhaps a "kayak" of different sites?
      - DanielBassill
        
        Building Collective Impact
        
        Parag,
        
        I think at least three factors will determine what aggregators people choose to use.
        
        a) based on interest or geography – if aggregation focus on an issue, or a geography, they can provide more specialized and in-depth information than if they provide a wide range of information on all topics and all places.
        
        b) promotion and network building – if the information just sits there waiting to be found it’s less likely to be used than if the aggregation host is actively churning the information via internet media/forums/ and local conferences and networking events. Those who have access to capital for promotion and event organization will tend to have a headstart on those with few funds/resources
        
        c) benefit to visitors – if the aggregator is actively connecting the people who are represented in the information being collected to each other, and has success in drawing volunteers and donors through the portal to the organizations seeking these types of resources, the site will grow. Imagine how many more people would be using Social Edge forums if there were case studies showing how someone had been "discovered" by an investor as a result of his/her networking and information sharing on the forum
        
        d) time on task – many aggregators will come and go because they cannot find the resources/commitment to keep doing this for many years. Those who can stay alive and constantly evolve based on changing technologies will build a network of trust/friends and a core group of users.
        
        In the Collective Impact material I’ve been following its clear that without support from philanthropic or social investors it is very difficult for an aggregator/facilitator/network builder to do all of these things very well.
Mark Emanuelson

Long live philanthropy

For centuries, philanthropy has been a very important source of capital for social enterprise and programs. Carnegie established libraries. Gates focuses on vaccines. Philanthropists provide a needed boost to social causes where governments have failed or need help. In many cases, philanthropy is goal oriented given the source of the funding originates from successful businesspeople. In all cases, it provides a value to society and should be encouraged, celebrated, and rewarded.
- Parag Gupta
  
  Long live philanthropy
  
  Many thanks Mark for your contribution. While philanthropy should be encouraged, how do we enhance its impact? Also, is philanthropy goal-oriented? Or driven by personalities and/or personal relationships? No doubt, some of have been successful in applying the same rigor they do in their successful businesses to grant-making but many times, I’ve seen philanthropists take off their business hat and put on another one as they decide to fund glossy pictures of impoverished children holding sad-looking puppies (to overstate my point). How do we enhance principal-agent relationships in philanthropy that make capital markets so effective?
Lakshmi Narayana

Philanthropy and Social Change – Development with Sustainability and Quality

Social change is inevitable matching to the skills, needs and vulnerability of the targeted groups. Though Government is doing their best in reaching the targeted groups with services and support systems, still there exist gap. This gap is more significant in the developing countries than their counter parts in developed countries. So, for all of us, there is no option except to accept philanthropy as a supporting system for the needs.

It is the fact that in view of Liberalization, Privatization and Globalization (LPG)and commercialization, the process of philanthropy took some change. Another fact is that philanthropy us playing key role with out boundaries.

I am moving with the NGOs and Communities in India and networking for the philanthropy from various sources both National and international. In spite of the chage, still lot of scope is there in getting the philanthropy for the right cause and needed targeted groups.

In view of the chage in the general systems and thinking, even the receivers should raise to the occasion with required systems,targets, indicators, documents etc. Once this match or relationship is established then it certainly works for Win-Win situation.
Ruth Ann Barrett

Yes, we can.

Parag, your comment "Perhaps though, the change in the Middle East is indicative of a new trend towards the individual, rather than an organization, as the unit of change" is what caught my eye. In a way that is what the Web is all about with even the personal and professional being blurred. We followed this orientation and created a Website (earthsayers.tv) around sustainability, but not around organizations (although we track them) but highlighting the voices of sustainability. We are aggregating then curating the content from channels ranging from YouTube to Fora.tv to TED. How this orientation can (or should) influence philanthropy is addressed by you, later, when you ask, "can individuals create philanthropic change through collective action and/or through technology?"

Yes.