Global Philanthropy & Foundation Building

With more billionaires in the world than ever before – there were 691 at the last count, compared to only 423 in 1996 and with 388 of them self-made – more money is being donated to charity than ever before.

Greater global wealth combined with ever more unfair distribution of that wealth has led to many of the world’s leading business figures giving much of their money away, with the Bill & Melinda Gates Foundation alone having donated a massive $31 billion to various causes. Other notable business figures heavily involved in philanthropy include eBay founders Pierre Omidyar and Jeff Skoll, Google pioneers Sergey Brin and Larry Page and Intel co-founder Gordon Moore, to name but a few.

The rise in philanthropy brings with it huge opportunities, with contributions being made from film stars, celebrities and public officials (New York’s Mayor Bloomberg has made several contributions from his vast fortune). Many of these have specific causes they give to (refugee campaigner Angelina Jolie has given many gifts to refugee organisations), while the media now looks to grade wealth not just on what people earn but also on what they give away.

An efficient modern industry

Philanthropy and the giving of money from the wealthy to the few has been popular since the time of Andrew Carnegie, John D. Rockefeller and William Wilberforce, some of the earliest exponents of donating, all of whom were hugely successful and able to make a real difference to the world. It is felt that the new generation of philanthropists also have the opportunity to achieve this, but to do so will need to lose the image of amateurism that still surrounds philanthropy, becoming a modern, efficient global industry.

The US is the present leader in the field of philanthropy, with a higher proportion of hospitals, libraries and universities funded by private donations. However, the philanthropic spirit has been increasingly fostered throughout Europe and the United Kingdom, with money donated to school academies, concert halls and religious groups. It does however remain clear that philanthropy could learn much from the business world.

It is expected that global philanthropy will eventually come to resemble capitalist economy, with a common objective amongst the new breed of philanthropists to make it more like the ‘for-profit’ sector, using the skills that enabled so many of them to make their fortunes in the first place.

It has been suggested that there is an overriding need for formal infrastructure within global philanthropy, for the equivalent of stockmarkets, investment banks, research houses and management consultants. Philanthropists need to behave more like investors, looking to gain the maximum possible leverage and maximise their social return.

Investment-oriented model

There are said to be two basic types of philanthropist, the hands-off ‘social investors’ and the more hands-on ‘venture philanthropists’. The earliest charitable foundations were built by entrepreneurs who followed the second model, with the likes of Carnegie and Rockefeller following the investment-oriented model.

Unfortunately, this has not generally been the rule, with many charitable foundations described as “autocratic, ineffective, wilful, elitist, cloistered and pampered.” Problems reported in terms of how these institutions operate include a lack of transparency, poor flow of information, failing governance, overpaid directors and expensive offices. On top of this, many of the ‘backers’ behind foundations are becoming increasingly concerned over what their assets are being put towards, seeing little point in making a return on their investment if the cause is not just.

Leverage

The new generation of philanthropists need to be clear of what they are striving for in order to be successful. The Gates Foundation has already achieved this, aided by its huge size and vast funds, by focusing on six key areas: infectious disease, HIV/AIDS, tuberculosis, reproductive health, global health strategies and global health technologies. The key for success is to use all funds donated to the greatest possible benefit.

Partnerships are favoured for maximum effectiveness by many of the leading philanthropists; with newcomers to the field piloting new models for provision that can subsequently be adopted by governments and made available more widely. This leads us to one of the key advantages enjoyed by private donors; the ability to take risks. With no one to answer to, they play a useful role as providers of start-up risk capital for government services.

Networking