By: Cathy Scalzo
Philanthropy Australia’s New Gen team recently put together a whirlwind, whistle-stop study tour of organisations in London and Geneva dedicated to philanthropy, impact investment and building the effectiveness of social organisations. We have all returned with much to reflect on. Here are just a few of the key trends we observed.
Foundations in the UK and Geneva are willing to deploy the full array of assets and tools they have at their disposal to bring about social change. The challenge lies in identifying which tool is best suited to the particular social issue you are trying to address. Even those foundations that have pioneered social finance and impact investing emphasise the importance of granting and philanthropic risk capital in addressing intractable social issues. In an era when governments are cutting social budgets, grants have become gold dust. In response, UK foundations are increasingly favouring untied, longer term funding that supports good organisations to be even better. Foundations are funding capacity building and the development of commercial and human capital to ensure social organisations are investment and service-delivery ready; and that they have the data they need to support and improve their programme delivery. The Foundations we visited were strongly in favour of funding advocacy, as well as engaging in advocacy themselves to support the social issues that mattered to them.
Many of the foundations we visited are working towards aligning their investments with their social goals. This was a challenging and complex task being approached in different ways. Divestment was not the path for every foundation. Some instead sought to use their influence as shareholder activists, while others were working towards UNPRI or setting aside a pool of capital for impact investment. Many of the foundations would use a combination of these strategies.
There was widespread support for collaboration but also an acknowledgement that true collaboration was hard to do well - it requires patience, humility, strong existing relationships and an alignment of purpose amongst collaborators. Information sharing and a high level of transparency were considered key ingredients for ensuring the right approaches to social problems were being supported.
The collection of data and the use of evidence-based approaches remains important to foundations but only to the extent that data is used to deliver better outcomes for beneficiaries. There was a strong belief that proportionality was important. Foundations were trying to avoid heavy-handed impact measurement tools for low impact projects and complex impact measurement and bureaucracy that discouraged transparency and diverted charities from their real work.
Risk was a key concept for many foundations and other organisations committed to building the capacity and effectiveness of social organisations. We were encouraged to think about risk relative to the size and scale of the social challenges we face and the potential to leverage impact - the greater the potential impact, the greater the risks we need to be willing to take. In this way, philanthropy can be seen as social risk capital – it can be used in the face of uncertainty to pilot new ideas in accordance with a theory of change. Philanthropists needed to see themselves as calculated risk takers – willing to grant when government won’t and bear the risks that others can’t. Social investors too must be calculated risk takers –willing to invest when traditional investors won’t and willing to accept lower or even no returns in exchange for social good and building the capacity of organisations to have greater impact.
Dec. 11, 2015
Tags: new generation of giving
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