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A perspective on strategic philanthropy

November 2013

A perspective on strategic philanthropy

Etienne Eichenberger and Maurice Machenbaum, co-founders of WISE

 

Why do people give?

EE: This question is as old as the world itself, probably because it touches on the intimate sphere of any philanthropist. There are no rules or evolution, because it is a personal matter. I like to quote a friend: « Empathy comes from the stomach, generosity from the heart, and philanthropy from the mind. » Generosity can be tied into philanthropy without any value system. But to give means to make decisions: these decisions incur specific demands when expectations increase. The donor becomes a philanthropist when he wants a more structured and proactive process.

 

MM: The Rockefeller family had developed the «three S theory » regarding the meaning of money: « spending, saving, sharing ». Family wealth always has multiple facets. Today, in our ever-changing world which faces many challenges, the philanthropist is increasingly eager to imbue a donation with both quantifiable results and a search for meaning. If you give 100 euros or a million euros, the means that are deployed regarding these two criteria – result and search for meaning – are not always identical.

 

Is there a minimum amount to give in order to be called a philanthropist?

EE: Philanthropy represents only a drop in the bucket of what is needed in humanitarian, social or cultural aid. Donations are always fewer than actual needs. The question of amount is important, but falls short of explaining what a donation is. An entrepreneur told us, « it took me five years to make significant donations. I wanted to make sure that my money would be well spent and that I could have the most impact with the ones I am supporting. » The question, « how to give? » is the essence of philanthropy. The way to give better is a determining factor, and probably as important as the decision to give more.

 

Innovation in philanthropy therefore has to do with the way one gives?

EE: Yes, we believe so. New giving models are at the core of philanthropic innovation. What has changed has less to do with «why, » « how much » and « for whom. » New giving options are available: support associations or social enterprises; making a gift or a loan; defining performance criteria rather than supporting a cause without explicit expectations, getting involved in one’s lifetime rather than through a will.

 

Does this innovative approach make it easier to reach results and social impact?

MM: Experience shows us that obtaining results is a process that begins with the definition of the strategy to support a cause. It is essential to identify the right partners and to agree about target results and the expected impact. As Alan Lakein said, “Failing to plan is planning to fail.” For a long time, not-for-profit organizations exclusively received donations in order to attain certain results. It is no longer taboo to make financial loans or to take shares in social enterprises. Philanthropists also consider that an administrative cost of 10 percent is an erroneous criterion for performance. It is more relevant to analyze and choose associations and social enterprises according to their performance and their real impact, rather than based upon their cost structure solely. “Ten percent or nothing” means nothing.

 

You often talk about “meaning” for philanthropists. Can you explain the idea?

EE: The importance of philanthropy and its concern about impact, reflect the responsibility of those who have succeeded in life, or those with a family estate. Philanthropists are interested in the whole process: can I engage family members, or outside collaborators? What collaborative models have the best leverage? For entrepreneurs, money only has value via projects that are developed or completed. We also know that money can divide generations within a family. Family values or entrepreneurial spirit are not transmitted automatically. It is through lived experiences and through the examples they have that the next generations forge values.

 

How has philanthropy recently evolved?

EE: Philanthropy could be summarized as follows: a need to give of one’s time, to help someone or to give money. In the testimonials that follow, we read that philanthropists often make a commitment by providing their skills. For them, financial support goes hand in hand with a personal engagement that includes acquired skills and their wide network. Venture philanthropy includes many these elements, as defined by the “European Venture Philanthropy Association”.

 

MM: I would like to add a nuance: what Etienne describes applies to some philanthropists. But we also see others who focus mostly on understanding the issues at stakes, on meeting the organizations they support, and on being enriched by such encounters. Our clients often tell us, upon returning from a trip or after conducting a yearly evaluation, about their feeling of having received more than they have given.

 

Are foundations the only vehicle via which to give money?

EE: Foundations are trendy, but we need to put this fact into its proper context. Philanthropy is generally a world of too many solicitations and not enough listening. We see many foundations that are created without a clear definition of their purpose. In Switzerland alone, one new public foundation is created every day! It is a good thing, but we should not neglect other aspects: the definition of objectives and strategy, process, identifying and selecting the organizations to be supported—all these steps require preparation.

 

MM: In this regard the facilitation and the expertise related to our business or the availability of independent structures for donors are new opportunities. At a time when we have so much access to raw information, advice and experience carry a growing importance. Let’s look at the selection of partners: with the Internet, one would think that all the information required to form an opinion is available. But the web lacks the ability to measure the relevance of an organization that wants to improve healthcare in Tanzania, or support street children in Cambodia, without making the beneficiaries dependent on the organization.

 

People speak a lot more about philanthropy. Is this a good thing?

EE: It is important to speak about what is well done. We could summarize the situation in these terms: philanthropists seek more confidentiality (vis-à-vis the general public) but less anonymity (vis-à-vis their peers or the organization they support.) This publication is not common outside the Anglo-Saxon world. You will read testimonials from people who agreed to share what matters to them and how they engage in philanthropy. We are grateful for their trust, and hope that their commitment will inspire others.

 

Source: Philanthropy in Motion, Seven Testimonials about seven ways to get involved, edited by WISE – philanthropy advisors, (2013)

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