09 May 2019
Climate change and environmental degradation, inequality, poverty, food and water insecurity, lack of education, inadequate healthcare provision - philanthropy plays a key role in tackling the biggest challenges that the world faces today. These are monumental issues and wealthy families are thinking suitably big. From the Gates Foundation reducing child mortality to the Chan Zuckerberg Initiative’s pledge to cure, prevent or manage all diseases by the end of the century.
As Susan Wolf Ditkoff and Abe Grindle state in their Harvard Business Review article, Audacious Philanthropy: “Many of today’s emerging large-scale philanthropists aspire to... audacious successes. They don’t want to fund homeless shelters and food pantries; they want to end homelessness and hunger.”
Indeed, the family offices and asset owners we work with share the difficulties of scaling philanthropic efforts: how can they ensure the best outcomes for the causes that the family hold dear?
Ditkoff and Grindle studied 15 initiatives that achieved dramatic societal change (from the anti-apartheid movement to the US national school lunch program, from achieving marriage equality to the revolutionary Aravind eye hospital) and have created a five-step framework:
1. Build a shared understanding of the problem and its ecosystem - this means researching why a problem exists and how to address it.
2. Set “winnable milestones” and hone a compelling message - you need measurable goals and a compelling call to action.
3. Design approaches that will work at massive scale - which strategies will enable you to achieve impact at scale?
4. Drive (rather than assuming) demand - ‘even if you build it, they may not come’.
5. Embrace course corrections - ensure that there’s allowance for continuous improvement.
Their case studies reveal the importance of collaboration (which may involve the family ceding some control), engagement with government, substantial philanthropic support and, last but by no means least, time - 90% of the initiatives took over 20 years.
Although these lofty heights may be beyond the scope of many families, they still want the ‘biggest bang for their buck’. If we refer to the Global Family Office report the key challenges around philanthropy are listed as follows:
· Identifying good organisations to support (67%)
· Measuring the impact of philanthropic activities (64%)
· Scaling up successful projects (29%)
· Utilising new philanthropic and financial models (15%)
· Finding co-investors or funding collaborators (13%)
The family offices in our network have experienced all these difficulties. One, in particular, spoke about how it was hard work to attract donors. The tried-and-tested charity dinner holds less allure nowadays. There’s a need to stand out and find new ways to attract co-investment which could be through crowdfunding platforms such as Kickstarter or Indiegogo (though there must be a clear project to be invested in). Of course, with so much drive to create the greatest results, the need for assessment comes to the fore. Yet, impact measurement remains a major challenge (as stated by 64% in the Global Family Office Report).
How you measure impact is also a core challenge for sustainable investing. Impact investing is a growing way of making a difference (according to the Global Family Office Report a third of family offices are already involved) and it will be further encouraged by the Next Gen. However, it is frequently seen as a project to run alongside, not instead of, philanthropy. Another way to help alleviate the world’s big problems is by giving the business a social or environmental purpose. This means it is focused on doing good in itself. B Corporations engrain purpose within their businesses, marrying a desire to solve the world’s most challenging problems with making a profit. Similarly, The B team, that includes figures such as Richard Branson and Marc Benioff, is a network of leaders that works to position business as a driving force for social, environmental and economic benefit.
It’s indisputable that wealthy families want to help more than ever before. The Global Family Office Report 2018 shows that the average family gave USD $5 million via the family office to philanthropic causes, with European-based family offices and North American ones giving an average of $6.4 million and $6.1 million respectively. Nearly all said they would increase or maintain their level of giving over the next 12 months. In addition, 69% have a foundation and 33% give outside of the family office. Philanthropy is a core part of the family identity, a way to bring together multiple generations and a means of creating lasting, fundamental change.
As Tim Cook - who takes a different stance on charitable giving from his predecessor at Apple - says: “You want to be the pebble in the pond that creates the ripple for change”.
Susan Wolf Ditkoff and Abe Grindle, Audacious Philanthropy
Paula Goldman, formerly of Omidyar Network https://hbr.org/2016/02/how-a-new-generation-of-business-leaders-views-philanthropy
UBS and Campden Global Family Office Report 2018 https://www.ubs.com/global/en/wealth-management/uhnw/global-family-office/global-family-office-report-2018.html
Asset consolidation processes are always systematically better with Finlight.