Philanthropy

Philanthropy: A New Wave?

The relationship between private wealth, philanthropy and society is as complex and personal as it is rewarding. Philanthropists typically sit outside of the confines of government and business and are often free to direct wealth and influence in ways of their choosing. Yet with wealth comes responsibility, and it is not something worn lightly.

Global philanthropy is changing. The simple act of giving away money to deserving causes, while still at the heart of philanthropic endeavour, is not enough. New ways of giving are emerging, with philanthropists taking the very best of the corporate world and adding discipline to social causes.

While today’s philanthropists may be driven by the same desires as their forebears, wanting to give back to society, they differ in the confidence of their ambition, their international reach, the structures adopted and the discipline of measuring impact. Just as they are often disrupters in the business world, so too are they looking to disrupt social causes. They are in many ways social entrepreneurs.

Philanthropists continue to face considerable challenges, some old and many new.

The calls for support from all corners of the world and society remain as loud as they always have. Choosing the right causes to support takes time, consideration, and research. Adopting the right structure is critical, but too rigid a structure can hold a philanthropist back from achieving their goals. Time and expertise are as important as cash, yet often in limited supply. And measuring the impact of activity often over many years, if not decades, demands a different approach to that of the corporate world.

Yet the rewards are self-evident. The passion and hunger to make the world a better place drives activity. The enthusiasm and enjoyment philanthropists gain from activity is clear to see. While wealth can all too often tear a family apart, philanthropy can bring a family together under a common banner. It is a valuable vehicle to help younger generations accept and manage the wealth they may eventually inherit.

Here, we provide insight into three of the emerging themes from our discussions with philanthropists across the globe and the initial research we’ve conducted so far – how philanthropic activity is structured, the importance of measuring impact, and how families will work together often over many generations to deliver impactful philanthropy programs.

Structured philanthropy delivers firm foundations

Passion rules the heart, yet it is structure that rules the head, and many of today’s philanthropists recognize the need for a formalized framework for their activity.

That framework will vary from country to country and person to person, but there are common and important threads: it is there to provide direction to activity, to provide the basis for measuring impact, enables more meaningful collaboration, and often provides a forum to engage immediate and extended family members.

Structures will naturally vary to include family foundations, donor advised funds, corporate foundations, private ancillary funds, think tanks and not for profit businesses. Philanthropists recognize the need to take time to consider the right vehicle to support activity and their goals, applying the same disciplined thinking as they would in the corporate world.

In many instances, a structure for philanthropic activity will already exist and perhaps will have done so for many generations. That can provide the continuity needed to ensure longevity and scalability but can also hold back activity in a more uncertain world. Many philanthropists recognize the need to continuously review philanthropic structures.

Family and corporate foundations are the most commonly adopted structures, and for good reason. They can help provide clarity on where to direct funds and how to respond to requests for funding. More importantly, they provide the vehicle to engage and collaborate with other foundations, philanthropists, governments and NGOs.

Direct giving continues however to remain popular and effective, allowing philanthropists and their families to support more personal projects, often in communities and causes near to them.

What gets measured gets managed

One of the most significant changes to emerge from today’s philanthropists is the recognition of the need to measure and demonstrate impact. The disciplines of corporate life are transferring into philanthropic endeavour.

Challenges do, however, remain as the nature of philanthropic activity continues to evolve to embrace societal and cultural change across multiple jurisdictions and often over many decades. Despite increasing amounts of data at their fingertips, philanthropists find that the often-rigid measures that underpinned corporate life do not easily translate into philanthropic activity. Individuals may have to ‘unlearn’ and explore new and more fluid measurement metrics that combine short-term goals with longer-term aims.

It is not entirely unsurprising, therefore, that a wide number of measures are adopted depending on the scale of support being offered. These typically include site visits and director briefings, established KPIs, formal reporting structures from beneficiaries, and external validation from third parties.

It is interesting to note that many of the measure’s philanthropists adopt enable them to meet and engage with the causes they support. The desire to visit projects and project staff whether in a local neighborhood or overseas is a clear demonstration of the emotional investment and enjoyment that philanthropists gain from their activity.

Activity channelled through business-led foundations, NGOs and through organizations working with government typically adopt more structured approaches to measuring activity than family foundations. Yet here too they share a commonality. The power of anecdotal feedback, of storytelling and of the voices of individuals who have benefited are all valued measures.

Measuring the return on investment and the return on effort will, we believe, continue to evolve and change as philanthropists have ever greater access to data from the projects and causes they support.

Family first

Philanthropic activity is broadly a family affair. That may be carrying the reigns and building on the activity of a previous generation, creating programs for close-knit family units, equipping the next generation with the habits and skills they will cherish, or creating a sense of identity for large and disparate family groups.

Whatever the driving ambition, philanthropists are willing to go to extraordinary lengths to ensure family members are engaged and informed. It is often an important benchmark of a family’s philanthropic success.

Family members bring new perspectives and ideas to philanthropic activity that can and do further their aims and objectives. Yet individuals may also wish to pursue their passions and interests – the interests of grandparents and parents are likely to be very different to those of their children and grandchildren. Relevant structures need to offer that flexibility to family members to give and support projects that might be very different to the projects historically supported.

An upcoming KPMG report will share examples of large family structures where individual family members can access relatively small pockets of funding to use as they wish, and others where multiple families will join together in a ‘giving circle’ where younger members have an equal voice to their parents.

Conclusion

Philanthropic activity is a very personal journey driven by passion, belief, duty, responsibility and sometimes frustration. Yet whatever that journey, it is driven by the shared belief of wanting to give back to our communities, society and our neighbours across the globe. There is an overwhelming desire, energy and urgency to effect lasting change.

For some, a lasting legacy is important. For others, it is to celebrate the lives of lost family members. For all, there is the recognition that they have been given the unique opportunity to leave the world in a better place.

Over the coming months, we aim to showcase the activity of various types of philanthropists who support many different causes and adopted different approaches. We will share their stories and the lessons they have learned. We will explore the challenges philanthropists face and share guidance for those starting their own philanthropic journey.

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