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Guest voices

Time, Talent and Treasuring donor relationships

May 3, 2022 by Beacon Admin

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Jessica Maybanks explains how enabling philanthropists to provide more holistic support of charities will lead to more impactful donor-fundraiser partnerships.


Relationship fundraising is an ever evolving concept, and broadly speaking most charities understand the critical need to engage supporters meaningfully, through a planned journey of cultivation and stewardship.

The donor journey is especially important for philanthropic supporters, who need to build their knowledge of, and trust in, an organisation before they invest at a significant level. However, over time, even the most professional fundraisers can become blinkered, focusing on a rudimentary process of relationship management that involves a conveyor belt of “box-ticking” activities such as: update reports; event invitations; project visits; periodic newsletters; and networking opportunities.

Whilst these offerings are made with good intentions, too often they are undertaken out of habit, and to make fundraisers feel they have fulfilled their end of the bargain when receiving sizeable donations. The truth is, this prescribed method of stewardship, is a generic assumption about donors’ requirements, and not always the best way of truly deepening a relationship, nor maximising value for a charity. Whilst appropriate and necessary in some instances, events can be costly and time-consuming to organise; donor reports can be an additional layer to already rigorous internal controls; and project visits can be distracting for busy field-staff.

“Effective relationships between philanthropists and charities should be based on a mutual desire to achieve set outcomes.”

At international equine welfare charity Brooke, the Philanthropy and Partnerships team has been scrutinising our traditional, planned route of stewardship, looking at ways to create bespoke partnerships that truly consider funders’ desires, but critically, that add value to the charity beyond financial support. Asking key supporters who were already giving at exceptional levels for further assistance (albeit non-financial) initially felt uncomfortable.

This was perhaps exacerbated by an entrenched, cultural belief that social return is in some way less valuable than financial return, thereby leaving the beneficiary feeling indebted. To create true partnership, inherent power imbalances need to be put aside, and social return/impact truly valued, and recognised for the critical importance it plays in effecting transformation. In summary, effective relationships between philanthropists and charities should be based on a mutual desire to achieve set outcomes, whilst exploring the most effective ways of doing so together.

“We were knocking on an open door when we embarked on conversations about how individuals could help beyond their financial contributions.”

And at Brooke, it was the fundraisers, not our philanthropic partners who needed to adapt and discard traditional ways of working. The charity operates with animals and people in some of the poorest communities in the world, and our supporters tend to mirror our own personality and values: they are compassionate, respectful and humble, and donate exclusively to make a positive difference. As such, we were knocking on an open door when we embarked on conversations about how individuals could help beyond their financial contributions. The strategy started with a comprehensive analysis of organisational needs, involving conversations with various departments.

Examples of sought-after opportunities included:

  1. Campaigning: Asking well-connected individuals to support the launch phase of a new campaign.
  2. Trusteeship: Utilising Board members with specialist skills for some of our international programmes.
  3. Hosting: Patrons acting as hosts for Brooke-led events, as well as opportunities to piggy-back third-party led events.
  4. Media: Help with achieving high-profile press coverage.
  5. Ambassadors: Speaking opportunities at target events, and to target audiences.
  6. Advocates: Influential figures to promote our advocacy and policy messaging.

Within a twelve month period of setting up one-to-one meetings with some of our key supporters (on Zoom or, where possible, face-to-face), all of these needs were met in some way.  Indeed there was an overwhelming enthusiasm at having been asked to act on behalf of the charity, as one of the “home team”. The briefing sessions and preparation that ensued meant that philanthropic supporters became personal champions of Brooke’s work. They shared in challenges and frustrations, but also the highs of: introductions working out; events going well; or new opportunities coming to fruition.

Whilst fundraising is undoubtedly tough, there is a joy that accompanies success, perhaps even more so in the philanthropic sphere, where positive results can be transformational in terms of what a charity can achieve. Sharing in these moments of elation with supporters who have personally invested in the outcomes has resulted in far deeper affinity with the cause, and a far superior understanding of our work than any glossy report or newsletter could ever achieve.

Jessica Maybanks

Jessica is a Philanthropy and Partnerships Advisor at Brooke.

Filed Under: Better Philanthropy, Growing Giving, Guest voices

Government, Community, Philanthropy: a three-pronged relationship for social good.

April 20, 2022 by Beacon Admin

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Andrew Watt explores a three-pronged relationship for social good.

It’s hard to look at any social, political, religious or artistic initiative at any point in our history and not find that philanthropy or philanthropists have been part of it. As drivers, facilitators, partners and investors.

Yet when you read the accounts, whether historical or current, it’s hard to see that recurring theme reflected.

“Why is philanthropy so little considered?”

It’s not often that philanthropy stands alone. At its most effective it’s a partner of government and communities, without whom it could not achieve its aims. Equally, without philanthropy as a driver of ideas, many initiatives of government would simply not get off the ground.

So what does philanthropy provide so consistently that has ensured its continued role? And why is philanthropy so little considered?

Philanthropists are creative. In their personal and professional lives, they are often entrepreneurial, willing to undertake strategic risk to get things done – and accepting that failure, while possible, also brings opportunities to refine and redefine in its wake.

“The dynamism of philanthropy is part of its DNA.”

Philanthropists are driven to make change or intervene to secure impact. It’s not the process but the outcome that matters. Indeed, undue focus on process is one of the reasons that philanthropists take action or intervene. It’s the catalytic aspect of philanthropic action that can drive government and community engagement.

The dynamism of philanthropy is part of its DNA. A strong and strategic partner in government can bring long term sustainability, structured partnerships and funding to the table. Engaged community partners ensure a sense of ownership and relevance. Separately, much can be achieved: together, the impact can be transformational.

If you look around the UK it’s not hard to find examples of this. The regeneration of coastal towns such as St Ives, Folkestone and Margate; projects in Bishop Auckland, Gloucester, Nottingham and many others show the combined impact of creative philanthropy, local government investment in strategic infrastructure and delivery by communities coming together to achieve extraordinary, lasting social and economic change.

In all these cases employment, education, transport and health services have been critical. Government sponsored programmes of investment and local authority support have been essential. None of the outcomes in these areas could have been achieved without the active participation of the state. But all of them share something more – an indefinable sense of well being that derives from the human aspect brought by community engagement and philanthropy.

“Any act of philanthropy is ultimately the result of the passion, drive and perspective of an individual.”

Armenian venture philanthropist, Ruben Vardanyan, has invested in strategic aspects of the infrastructure of Armenia for many years. His intention (and that of his partners) has been to arrive at a tipping point that enables Armenia to look to a sustainable future and successful growth.

But what he has identified along that journey is that, for a community to truly thrive, its members have to have a sense of happiness and wellbeing beyond what derives from social and economic security. Indefinable, yes, but something that government programmes and state sponsored initiatives could not provide.

That human dimension is a critical aspect of philanthropy. Any act of philanthropy is ultimately the result of the passion, drive and perspective of an individual. In conjunction with members of communities (of experience, of interest, geographic or social) success derives from human qualities; intelligence, passion, pragmatism. Individuals form a critical part in driving government action and policy – but policy is not personal. It may be strategic but it’s not intended to be engaging.

“The individuals responsible for developing government policy need to have an understanding and appreciation of the power of philanthropy.”

Policy provides a framework. Strategic investment builds platforms and sustainability. And this is where government is a key partner to philanthropy. By building in conjunction with the entrepreneurialism and flexibility of philanthropic and social capital, government intervention can hope for far greater success.

For this to happen the individuals responsible for developing government policy need to have an understanding and appreciation of the power of philanthropy – and its complimentary rather than conflicting role in relation to government strategy.

Initiatives driven by social and philanthropic investment have an inherent nimbleness and flexibility that statutory programmes don’t. If changes need to be made, they can be enacted rapidly. If one approach fails, a line can be drawn, lessons learned can be applied and another developed.

As a recurring element in successful change and impact, philanthropy needs to be considered as a core driver by government. Its potential should be a factor on the table in every government strategy unit.

“If philanthropy is to be effective, government departments need to be consistent in policy and approach, understanding the wide benefits of philanthropy.”

Civil servants and politicians need familiarity with examples of philanthropic partnerships that have driven and delivered change in communities. Philanthropy is part of the bank of assets to be drawn on. Beyond familiarity, what can government do to encourage philanthropists to engage as partners? 

A key is to recognise the need to harmonise government policy towards philanthropy itself. If philanthropy is to be effective, government departments need to be consistent in policy and approach, understanding the wide benefits of philanthropy. 

The proposal being made as part of the work of Pro Bono Economics (proposed in Beacon Collaborative’s 2021 research) represents a pragmatic approach to achieving a joined-up understanding of the value of philanthropy and consistency across strands of government policy and departments.

To have one individual – a “philanthropy commissioner” – working across departments and highlighting added and tangible value deriving from philanthropic and social investment could be transformational. It also has the advantage of being both affordable and sustainable.

Understanding what philanthropists need to support their engagement and helping to implement an effective regulatory platform that underpins and does not constrain philanthropy is critical. 

Philanthropic capital typically represents a relatively small percentage of total wealth in financial terms: in emotional terms, however, it represents what is most important to an individual or their family. Philanthropic capital is generally managed from the same platform as a family’s main wealth – so, in terms of self-interest, the benefits to the UK in attracting philanthropic capital and investment could also be significant.

“Partnerships between philanthropy, government and community are complex […]but have the capacity to deliver sustainable impact.”

In short, partnerships between philanthropy, government and community are complex, as are the benefits deriving from them. But, when successful, the outcomes of those partnerships are not only transformational but additionally have the capacity to deliver sustainable impact beyond the cycle of one or two successive terms of office. In some cases, over many generations.

The question, surely, is why, with so many examples of success, we can’t secure more?


Andrew Watt

Director of Third Sector Strategy

Andrew Watt is a director of Third Sector Strategy, a consultancy serving the needs of the third sector in policy, communications, strategic development, community engagement and advocacy.

 

Andrew’s career has been in the social sector for 25 years; in his professional capacity and as a volunteer. His various roles have seen him advocate for fundraising and resource mobilisation across the globe: in Westminster, Brussels, Ottawa and Washington DC., building partnerships, convening and facilitating essential debate.

Filed Under: Better Philanthropy, Bridging diversity, Growing Giving, Guest voices

Philanthropy Right Now: Ethical Coalition

April 7, 2022 by Beacon Admin

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‘Philanthropy Right Now’ is a monthly column for Beacon Collaborative by Marie-Louise Gourlay, Managing Director of Europe for The Philanthropy Workshop. In this month’s column, Marie-Louise Gourlay considers the importance of clear frameworks for donors on their philanthropic journey.


Many sector leaders, thinkers and activists are generous enough to give up their time to come and share with the TPW community. Individuals or teams whose ideas, perspectives and learnings warrant deeper thought, catalyse collaboration and often drive implementation of new best practices for social change.

In sharing, people are clear on the value – believing that their experiences and learnings could benefit the communities they are working alongside.

“We found ourselves mulling over what we were actually trying to do by coming together.”

Last month we held our Global Summit in Toronto; it was the first in-person event in two years. The wider philanthropic community came together to tackle topics focused on the concepts of justice and transformation.

In conversation with a speaker, we found ourselves mulling over what we were actually trying to do by coming together in a community. We wondered whether a more accurate assessment would be to consider how we strive for an ethical coalition. 

Typically, the individuals and groups that come together in coalition have diverse backgrounds and experiences, but come together due to a shared goal. And those are the people that we invite in. A coalition – a growing together of parts.

“To paraphrase one of our Summit speakers, “bruising is a necessary part of transformation”.”

A coalition therefore perhaps offers an opportunity to pursue a shared goal, whilst simultaneously allowing space for differences. We’ve also been looking at how we move forward discussions that started at the Summit, on the concepts of justice and transformation.

And to paraphrase one of our Summit speakers, “bruising is a necessary part of transformation”. This can come as we recognise our blindspots, the historic systems we’re each a part of. Some of us may react with discomfort; others with shame. This is all part of the process that we’re in; and it’s one that takes time. 

One TPW speaker suggested that to avoid only working with people we already have relationships with (thus entrenching existing networks and echo chambers), we should consider the idea of starting out with trust. That is, allowing trust to come before partnership.

“There isn’t always the opportunity for building trusted relationships before work begins.”

A natural degree of scepticism ensued, including questions around due diligence process, and the obvious need to avoid potential harms. The conversation was, however, a firestarter: if we start with trust, how much wider can our horizons be?

With time being an increasingly valuable currency for success, there isn’t always the opportunity for building trusted relationships before work begins. Crises on many fronts are deepening rapidly across the world, and urgency doesn’t feel like a strong enough word for the response it demands. 

At the same time as embracing new relationships and considering new spheres of influence, a wider community will always have a role of support. Community represents a place of belonging, of collective potential, of greater strength, as a forum for learning and for influence.

“It’s critical that we invite others into our space.”

Whilst the core community at TPW focusses on philanthropists and social investors as agents and levers for change, it would be myopic (and counter to our frameworks & values) not to take a systemic approach, assessing what the role of philanthropy is in relation to the other points of leverage, leadership and implementation tackling those same societal issues. 

For that reason, it’s critical that we invite others into our space, to bring myriad voices & perspectives that enable us to apply a more systemic lens to giving.

I wonder how the sector might view itself as an ethical coalition, joined in shared goals, simultaneously cognizant of the differences that mean that together, we recognise our collective potential as a non-homogenous group. We each have our role to play, and without one another, we cannot hope to progress.


marylou gourlay

Marie-Louise Gourlay

Marie-Louise Gourlay is the Managing Director of Europe for The Philanthropy Workshop. Find out more about The Philanthropy Workshop’s activity here.

Filed Under: Better Philanthropy, Guest voices

Philanthropy Right Now: Frameworks for confidence

March 1, 2022 by Beacon Admin

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‘Philanthropy Right Now’ is a monthly column for Beacon Collaborative by Marie-Louise Gourlay, Managing Director of Europe for The Philanthropy Workshop. In this month’s column, Marie-Louise Gourlay considers the importance of clear frameworks for donors on their philanthropic journey.


Next month we’re bringing together the TPW community for the first time in two years at our Global Summit in Toronto. It’s not been without critical decisions on how best to ensure that we can come together safely and with purpose.

As Covid-related restrictions lift, people are looking to us to provide clear instructions about how to interact, what to expect, and how their needs are going to be met. There’s a sense that failing to do this may leave people without a set of parameters to operate within.

If you don’t meet the tacit group codes and norms, a sense of belonging can be elusive, destroying the potential for a successful gathering with lasting impact.

Without mandated guidelines, it’s up to one’s own interpretation and comfort level as to how to act. As this varies from person to person, it can create a deep sense of discomfort and mistrust of those around you.

When the UK entered its third lockdown early last year, I read the book ‘The Art of Gathering: How we Meet and Why it Matters’ by Priya Parker. A lasting takeaway was the need to be intentional about how we come together – not just in terms of content, but in creating a space where everyone feels they can belong.

Parker puts forward the notion that we need to switch ‘etiquette’ for ‘rules’. Etiquette can be exclusive – if you don’t meet the tacit group codes and norms, a sense of belonging can be elusive, destroying the potential for a successful gathering with lasting impact.

Rules, however, can be clearly stated, enabling people to know what the expectations are, and setting the scene for different groups to come together meaningfully.

Providing a framework, whether for gathering, for philanthropy or for anything else, is a necessary starting point to orient anyone in a forward direction. And having established rules – even if you choose to deviate from them – gives you that starting point; a shared understanding, a springboard.

We’re often asked, “can you just give me some tools?’, or ‘where can I find online guidelines for philanthropy?’.

Often, when people are at an early stage in their philanthropic journey, there can be much trepidation, coupled with low level self-confidence. We’re often asked, “can you just give me some tools?’, or ‘where can I find online guidelines for philanthropy?’.

Whilst the desire to create impact is usually there for new donors, there’s an underestimation both of the time and the complexity of societal systems.

This can mean that some well-intentioned potential philanthropists fall at the first hurdle. It all seems too much; too long; too complicated. And that’s what we, within this sector, need to address.

There’s a journey that all individuals – irrespective of the size of their philanthropy – have to go on, to understand our own role, our personal values and what’s driving us. To explore where and when we can contribute and where and when we should step back and cede power to enable impact.

There’s a journey that all individuals – irrespective of the size of their philanthropy – have to go on.

Conterminously, the sector needs to ensure that we are creating, driving and sharing frameworks and best practice across all of our organisations.

We should be enabling people not only to have a starting point they can launch from, but continued guidance about what works throughout their philanthropic journey.

Complex theory lacking in practical examples, compounded by the jargon that we all use (coming back to tacit understandings, and a sense of exclusion if you don’t ‘speak the language’) is not going to help.

I know I do it – use words that one hopes make one sound like an expert, but in reality, we’re missing the target, building barriers where there should be bridges.

A simplification of the world of philanthropy would be very welcome, bringing an evolving & relevant understanding of how we come together and how we collaborate; one in which we can each take a seat at the table, knowing that everyone’s perspective is vital & different.

[We need to] develop frameworks and guidance which are accessible for all.

We need to step forward confidently and develop frameworks and guidance which are accessible for all. In doing so, we can make use of the multiplier effect of community and collaboration to change systems exponentially.


marylou gourlay

Marie-Louise Gourlay

Marie-Louise Gourlay is the Managing Director of Europe for The Philanthropy Workshop. Find out more about The Philanthropy Workshop’s activity here.

Filed Under: Better Philanthropy, Growing Giving, Guest voices, How to do it

In Defence of Philanthropy; challenging anti-philanthropy narratives.

January 26, 2022 by Beacon Admin

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Dr Beth Breeze OBE discusses why so many fundamental criticisms of philanthropy remain unchallenged in the UK today. She puts forward an argument for why we need to change the narrative around high-net-worth charitable giving.


My defence of philanthropy owes a debt to the Beacon Collaborative. The conversations I’ve had over the years with the people who founded and participate in Beacon have hugely helped to shape my thinking about the constructive role that philanthropy can play in society, and the damaging consequences that unconstructive – and often uninformed – critique can have.

Attacks on ‘big giving’ have become more commonplace over the last decade or so, and they are coming from at least three different directions:

  • Academic Critiques, that view philanthropy as fundamentally undemocratic;
  • Insider Critiques, that castigate givers for picking the “wrong” causes, and;
  • Populist Critiques, that views all giving as a self-interested scam.

The essentials of these arguments are long-standing and contain some seeds of truth: donors are not elected, some giving is more effective than others, and mixed-motives are the norm. What’s new is the unprecedented scale and volume of these criticisms, their instant spread via moral grandstanding on social media, and the lack of any discernible counter-argument.

I understand why philanthropists themselves might hesitate to push back: who wants to hear from privileged people who feel misunderstood? But having worked as a fundraiser for a decade, and knowing how reliant many nonprofits are on donated income, it became clear to me that a defence of philanthropy was needed.

“I understand why philanthropists might hesitate to push back: who wants to hear from privileged people who feel misunderstood?”

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We know that negative reinforcements decrease the likelihood of that action taking place (who will give if giving is seen as proof you’re a tax-dodging egotist?). So, if hyper-criticism of philanthropy risks curtailing donations then it urgently needs a response, because charities cannot run on goodwill alone.

Almost all of us benefit in some way from the work of organisations that need philanthropic gifts of all sizes to fund activity that benefits everyone, such as stronger communities, a cleaner environment, medical advances and new knowledge. Donations that funded vaccines and cures for COVID-19 benefited people of every wealth bracket, the same is true for philanthropic efforts to mitigate climate change.

But the highest price for a world with less philanthropy would be paid by those facing the toughest life circumstances, who fall through whatever public sector safety net exists where they live, who cannot purchase all their necessities in the market, and who are therefore most reliant on the kindness of strangers.

“But the highest price for a world with less philanthropy would be paid by those facing the toughest life circumstances.”

Exposing the unfair generalisations and over-statements in common critiques of philanthropy is, of course, not the same thing as defending every philanthropist and every philanthropic act. There remains a need to root out and expose poor philanthropic behaviour, and to gently help everyone to become more thoughtful and effective in their giving. But nuance is lacking in most critiques.

One name (most often ‘Sackler’), or one word (such as ‘undemocratic’ or ‘tax-subsidised’) is usually enough for critics to feel they have “won” the argument, case dismissed. Yet in no other area of life do we generalise so easily from an extreme case: if we did, no one would visit a GP after Harold Shipman’s murderous acts, or trust any police officer after Wayne Couzens’ terrible crime.

Cleary there is more nuance in the academic critiques, yet ‘democracy’ amounts to more than representative democracy – that’s a very narrow way of conceiving how the public can contribute to the functioning of society: Vote then shut up!

Conceding that some good can, and has, come from private donations – including funding of campaigns to change the laws on slavery, suffrage and same-sex marriage – enables us to move away from the suggestion that philanthropy is a fundamentally illegitimate activity, to focus instead on its improvability. Things can always be done better, but it is a classic mistake to let perfection be the enemy of good, and the price of that mistake will be felt most acutely by those most reliant on private giving.

“‘Democracy’ amounts to more than representative democracy – that’s a very narrow way of conceiving how the public can contribute to the functioning of society.”

Simply noting that philanthropy can be a force for good – which seems unarguable if, for example, you are the parent of one of the millions of children whose life has been saved by philanthropic funding of vaccination programmes and disease eradication efforts – is to invite accusations of being a naïve apologist for the rich.

The fact that many rich donors share concerns about growing inequality, and are in favour of more progressive taxation, is conveniently ignored by those who use philanthropy as a lightning rod to channel all of their concerns about the state of the world today.

Wealthy non-givers are left in peace to indulge in conspicuous consumption or to hoard their wealth, whilst those who stick their head above the philanthropic parapet are shot down.

The field of philanthropy has become a dumping ground for generalised worries and performative posturing: “The world shouldn’t be like this…” is the rallying cry of critics. But it is! So what are we – collectively – going to do about it? Knocking the minority of the wealthy who are generous is an awful lot easier than doing the hard work of re-imagining and re-building social and economic structures.

“‘The world shouldn’t be like this…’ is the rallying cry of critics. But it is! So what are we – collectively – going to do about it?”

Contrary to populist expectations, there are many philanthropists on public record recognising that current structures are not serving society well. Examples of philanthropy invested in challenging the status quo include efforts to support grass-roots social justice organisations, to empower beneficiaries, to tackle inequality, and to expose and reverse class and racial privilege.

Examples of philanthropically-funded efforts to tackle structural economic challenges include the Omidyar Network’s $35 million initiative to ‘Reimagine Capitalism’ with a focus on advancing workers’ rights – a theme also present in MacKenzie Scott’s grant-making which featured a number of labour organisations.

The Ford Foundation’s prioritisation of funding social and racial justice includes alignment with the concept of ‘inclusive capitalism’ to create “an equitable, sustainable future… that works for everyone” according to the foundation’s president Darren Walker, this includes pushing corporations to look beyond shareholder returns to focus on the welfare of employees and local communities.

The belief that philanthropy only ever advances class interests is therefore clearly unfounded, as are many other elements of common critiques of philanthropy. Pointing out the lack of empirical evidence will not necessarily change the minds of those deeply attached to an anti-philanthropy view.

“Many people who are hearing and repeating critiques may well be receptive to a different perspective that acknowledges the improvability of philanthropy.”

As Ben Goldacre wrote in Bad Science: “You cannot reason people out of positions they didn’t reason themselves into”. But many people who are hearing and repeating critiques may well be receptive to a different perspective that acknowledges the improvability of philanthropy, highlights efforts to make private giving more ethical and effective, and explains the positive potential of philanthropy.

It is time to speak up and defend philanthropy.


beth breeze

Beth Breeze

Fundraiser and author

Beth worked as a fundraiser and charity manager for a decade before co-founding the Centre for Philanthropy at the University of Kent in 2008 where she now leads a team conducting research and teaching courses on philanthropy and fundraising, including an innovative MA Philanthropic Studies taught by distance learning.

She researched and wrote the annual Coutts Million Pound Donor Report from 2008-2017, co-authored Richer Lives: why rich people give (2013), The Logic of Charity: Great Expectations in Hard Times (2015) and co-edited The Philanthropy Reader (2016).

Her book The New Fundraisers: who organises generosity in contemporary society? won the AFP Skystone Research Partners book prize for 2018. Beth’s latest book (Sept 2021) is entitled In Defence of Philanthropy and is available here.

Filed Under: Better Philanthropy, Growing Giving, Guest voices

Philanthropy Right Now: What can #Partygate teach donors about trust?

January 19, 2022 by Beacon Admin

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‘Philanthropy Right Now’ is a monthly column for Beacon Collaborative by Marie-Louise Gourlay, Managing Director of Europe for The Philanthropy Workshop.


The success of any relationship, partnership or understanding – whether personal or professional – is surely rooted in trust.

Trust demands patience to grow, yet may be breached in an instant. The word ‘trust’ comes from the Old Norse, meaning to ‘rely on, to make strong and safe’. It’s also found within the meaning of the word confidence – meaning to have ‘full trust’.

The ability to have faith in intentions – to know that a person is who they say they are and will do what they say they will – is critical to the success of any relationship.

“When you trust someone, you know what to expect.”

Mundane though it may sound, psychologists have long posited that being consistent – i.e. exhibiting a dependable and steady set of behaviours and responses – is one of the surest ways of building trust. It is considered among the best qualities a colleague, friend or leader can imbue.

When you trust someone, you know what to expect, and in turn what is expected of you. You’re rarely surprised or taken aback.

Over recent weeks, the allegations of the UK government behaving in a manner opposed to the Covid guidelines they laid out – dubbed #Partygate – have undermined trust in the country’s leadership. If you’re mandating one set of requirements, but conforming to an entirely different set, how can others be expected to believe the guidelines are necessary?

The loss of influence, and thus for the possibility of collaborative action, carries with it a high price for us all. The sense of togetherness to face a pandemic comes a cropper, almost red rover style*.

“The loss of influence, and thus for the possibility of collaborative action, carries with it a high price for us all.”

In an era that requires new answers, we are urgently looking for what’s working and who we can trust to be alongside us in that process.

The old adage ‘practice what you preach’ will never fail to be relevant, whether one is a government leader, or a philanthropist or social investor. Indeed, a key part of the work of charitable funders is not only our individual practice, but also the role of multiplying our impact.

That we can amplify positive social change through signalling what works – and influencing behaviour change in others – is invaluable. But, of course, we can only do this if others trust and believe in us.

In philanthropy, advocating for the practices we are carrying out means not only that people are likely to trust you, but that they can leapfrog to the ‘action’ part of their own work. Trust means you don’t need to re-do the due diligence of others; it enables you to accelerate to action, and in turn, accelerate to impact.

“Trust means you don’t need to re-do the due diligence of others.”

In making decisions on where we choose to fund, and how we choose to give our time and expertise, our choices can often be hastened or slowed according to our level of trust. Most people choose to work only with those they already trust or those who use tried and tested models.

But that suffocates innovation and stifles opportunity. Paraphrasing others, how do we end with trust, rather than always needing to start with it?

Ending with trust opens up our possibilities. It widens our circles. It means we don’t sit so neatly within our echo chambers, perpetually calling on those most like ourselves. Those who will reinforce what we think we know to be true.

“How do we end with trust, rather than always needing to start with it?”

Trust has to be built and sustained for long-term impact, but it doesn’t have to come from those we automatically assume are the most trustworthy. Trust doesn’t mean being involved in every little detail; it means trusting non-profit leaders and community organisers to get on with carrying out the work they know best.

Each of us has paid a heavy price over the pandemic, and trust has been called into question many times. We know we want to give people the space to pilot and to test concepts, knowing things may end in failure and that we can move forward with those learnings.

But if any failure is linked to a breach of trust, a far higher price is paid, and the damage may be irreparable. There is no better time than now to consider how we, as funders, can end with trust.

The question is: how do we change our practices to accommodate this?

*Red Rover is a game widely played in the US where two teams line up, and each player is called upon to break the chain of the other team – in this case, it would be the government vs Covid-19 – and if the player fails to break the chain, they join the opposing team.


marylou gourlay

Marie-Louise Gourlay

Marie-Louise Gourlay is the Managing Director of Europe for The Philanthropy Workshop. Find out more about The Philanthropy Workshop’s activity here.

Filed Under: Guest voices

Good News? Can philanthropy unlock a better media landscape?

January 19, 2022 by Beacon Admin

public interest news header

Jonathan Heawood, Executive Director of the Public Interest News Foundation, highlights the problems of modern media. He asks what we need to do to fix it and shows how philanthropy might be the unlikely saviour.


Do you trust the media? You might trust one or two news sources, but you probably think that other parts of the media are pretty rotten. If so, you’re not alone.

Most of the British public don’t trust most newspapers. A lot of people don’t trust the BBC. Almost no-one trusts social media. We’re so used to this that we’ve stopped noticing how weird it is.

If we don’t trust the media, then we don’t trust the only way we can communicate with each other as a society. This is not a healthy state of affairs.

It is odd to have to say this, but let me say it anyway: we should be able to trust the media.

We should be able to rely on the information we find in newspapers and broadcasters. We should be confident that journalists are acting ethically and in good faith, and that they’re telling all the stories that need to be told.

“If we don’t trust the media, then we don’t trust the only way we can communicate with each other as a society.”

A healthy media ecosystem should provide news that speaks to everyone. Wherever and whoever you are, you should have access to news that provides you with reliable information about your local area, about national and international events, and about issues that interest and concern you.

Unfortunately, at present, there are too many places in the UK that don’t have a dedicated local newspaper, and too many communities who feel alienated from a media that is white, middle-class and metropolitan.

“[There are] too many communities who feel alienated from a media that is white, middle-class and metropolitan.”

More than this, a healthy media ecosystem should provide news that speaks for everyone. We need the media to hold our leaders to account, to reveal wrongdoing and debate solutions. We need a plural media ecosystem, with room for differing views and explanations.

And we need a media that speaks with everyone. For too long, the media has been produced by a small and powerful elite. Most national newspapers in the UK are owned by a handful of billionaires.

Local newspapers, too, are predominantly owned by a few corporate groups, whose interests often don’t align with the communities they serve.


So, how can philanthropy address this problem?

First question first: should philanthropy address this problem? Or should we leave it to the market to sort itself out? 

Well, media markets have always been compromised. In the twentieth century, many newspapers were owned by proprietors who used their outlets to promote their commercial and political interests whilst making healthy profits out of advertising.

Newspapers dominated the advertising economy, because they were the only way that advertisers could get their messages in front of targeted audiences. 

So, proprietors and advertisers had huge influence over the old media. In the days of digital media, these failings have only worsened, because the digital economy is geared towards attention-grabbing content, regardless of its accuracy or value to society.

“This unhealthy media ecosystem will undermine other areas of philanthropy.”

If we leave the media to market forces, we will see massive pressure on standards, as audiences are sucked ever deeper into the black hole of social media, and news publishers are forced to compete for an ever-decreasing share of advertising revenue with an increasingly desperate diet of clickbait and polarising content. This unhealthy media ecosystem will undermine other areas of philanthropy.

We already know how difficult it can be to support good causes in the fields of immigration, drugs reform and rehabilitation, for example, because of crass and inaccurate media coverage. 

Imagine how much better this would be if we could rely on robust but constructive journalism that was produced by people with lived experience of these issues.

Philanthropy can play a unique role here, identifying market failures, supporting innovation, and focusing on the social value of journalism.

“Philanthropy can play a unique role.”

There are many examples of journalism philanthropy in the United States, where donors support a range of nonprofit newsrooms; provide bursaries for journalism students from under-represented backgrounds; and invest in new approaches, such as solutions journalism.

In the UK, the field of journalism philanthropy is much less developed, with only a few initiatives such as the Guardian Foundation and the Thomson Reuters Foundation.

At the Public Interest News Foundation (PINF), we aim to build this field. That’s why we are working with a range of philanthropists to support high-quality independent journalism.

With the backing of the Neal & Dominique Gandhi Foundation, for example, we are funding independent news providers in London and Birmingham to enhance their coverage of local democracy in the run-up to next May’s local elections. We want to see how journalism drives democracy, so that we can focus our support on the most effective forms of journalism.

With the backing of the Lankelly Chase Foundation, we are creating ‘Transformation Editors’ at a range of publications across the UK. Our Transformation Editors come from backgrounds that are underrepresented in the media. We are giving them the opportunity to set the news agenda at their host publications. They are telling untold stories and building new bridges between newsrooms and the communities they serve.

With the backing of the Joseph Rowntree Reform Trust, we awarded emergency grants to news publishers during the first Covid lockdown, so that they could continue to provide vital information about the pandemic. Alongside this funding, we ran a leadership development course to help publishers build long-term strategies for their organisations. That programme was so popular that we extended it into 2021, and we are now planning further courses for the publishers of today and tomorrow.


But what about the editorial influence of philanthropists?

Some might worry that philanthropic funding for journalism is no different from commercial ownership by individuals such as Rupert Murdoch. If Murdoch can tell his editors what to say, couldn’t a philanthropist do the same? Well, yes, in theory a solitary mega-philanthropist could do this. But, in practice, there’s a lot we can do to mitigate this risk.

“There is huge potential in the UK for philanthropists to help build a new media ecosystem.”

At PINF, we are putting firewalls in place between philanthropists and newsrooms to protect the independence of editors. We are setting out clear expectations on both sides, so that donors and publishers know the rules of engagement. And we are diluting the influence of any one philanthropist by building a rich field of donors, large and small, to help build new forms of journalism that are deeply committed to the public interest.

There is huge potential in the UK for philanthropists to help build a new media ecosystem, in which journalism earns and deserves the public’s trust, and can truly fulfil its crucial role in our communities and in democracy.

If you’d like to learn more about philanthropy and journalism, PINF and ACF are holding a webinar session on 27th January. You can sign up via this link.

Sign up: Philanthropy Funding Journalism webinar


jonathan heawood public interest news

Jonathan Heawood

Founder and Executive Director, Public Interest News Foundation

Jonathan Heawood is founder and Executive Director of the Public Interest News Foundation, the first charity in the UK with a mandate to support public interest journalism. He previously launched and ran IMPRESS, the UK’s independent press regulator. He started his career as a journalist at the Observer newspaper and has also held leadership roles at English PEN and the Sigrid Rausing Trust.

Alongside his day job, he is Chair of the Stephen Spender Trust and a Research Associate on the Norms for the New Public Sphere project at Stirling University. His first book, The Press Freedom Myth, was published in 2019, and he is now working on a book about media pioneers.

Filed Under: Growing Giving, Guest voices

Philanthropy Right Now: The Future of Philanthropy

December 21, 2021 by Beacon Admin

marie-louise gourlay philanthropy right now header

‘Philanthropy Right Now’ is a regular column for Beacon Collaborative by Marie-Louise Gourlay, Managing Director of Europe for The Philanthropy Workshop.


The report of the recent 21% decline in charitable donations by top earners, despite growing wealth, is deeply disappointing, though no surprise.

Talking about, let alone engaging in, philanthropy, is alas, usually a journey of many years. As a culture we share a deep discomfort in discussing money in any of its roles, creating taboos, even when it comes to giving money away.

Even our organisational credit card from a reputable bank, has misspelled our name, calling us ‘The Philantrophy Workshop’. They weren’t in the slightest bit concerned when we pointed it out; so we live with it.

That this mistake includes the noun ‘trophy’ got me thinking – our American cousins celebrate philanthropy far more than we do; with names emblazoned on buildings and widely-publicised patronages of large cultural institutions.

Are those the trophies of philanthropy? Trophy can be synonymous with status symbol, or, per the Ancient Greeks, a memorial of victory – neither of which we aspire to.* But what is it that really incentivises giving? And how do different cultures influence this?

The media’s take on last week’s Law Family Commission report emphasises that for giving to go up, it’s up to the charities to build back trust. That is indeed a part to it, and whilst not condoning the actions of some NGO staff which have served to undermine public trust, we must move forward.

As the late bell hooks wrote:

“For me, forgiveness and compassion are always linked: how do we hold people accountable for wrongdoing and yet at the same time remain in touch with their humanity enough to believe in their capacity to be transformed?”

My own perspective, whilst admittedly too narrowly focussed on the role of philanthropy, comes back to the need for the culture of generosity to be built. And how can this even begin to happen when we lack any degree of open-ness with anything linked to money?

Culture change starts with openness. To be open to listening, learning and sharing with great vulnerability and honesty. To recognise that sometimes we don’t have all the answers inside us already. Coupled with a willingness to challenge our values, assumptions, traditions, attitudes. We also need to address our money shame, for that can often be the cause of debilitating inaction.

Transparency is the core of this; urgently required from every angle. Philanthropists benefit from knowing what others are doing, by being able to learn from peers, to leapfrog often siloed journeys of giving in order to accelerate their own positive social impact.

And for those on the outside looking in, it would be hugely beneficial to have greater visibility over what benefits private capital can provide for public good, enabling the public to benefit from knowing how and where to hold philanthropists to account.

Looking forward to 2022, observing the behaviours that changed over the darkest times of Covid, and knowing that nothing’s ever certain, not least with Omicron infections steeply rising as I write this, reminds me of the basic need to be as transparent, flexible, collaborative and long term as we possibly can be.

Simply put, for philanthropy that means flexible, unrestricted, multi-year funding. Basic – yes. But is it common practice? Alas, not yet.

Traditionally, this is the time of year for giving. Let’s each ask ourselves what more we can – and should – do, and start to build on this, year on year.

*Side note on trophies; not a moment too soon on the new UK legislation banning the import of hunting trophies of endangered and threatened animals.


marylou gourlay

Marie-Louise Gourlay

Marie-Louise Gourlay is the Managing Director of Europe for The Philanthropy Workshop. Find out more about The Philanthropy Workshop’s activity here.

Filed Under: Better Philanthropy, Growing Giving, Guest voices, How to do it

Why match funding works for philanthropy

November 25, 2021 by Beacon Admin

match funding header

Alex Day, Director of the Big Give, writes for Beacon on how match funding is increasingly being used to encourage more philanthropy and as a vehicle for philanthropists to give money away.


Como, Italy c. 100 AD. An Italian lawyer, author, and magistrate named Pliny the Younger receives a visit from his friend’s son. In their conversation, the boy shares with him that he has to travel over 40km to receive his education in Milan as there is not a school in their hometown. 

Moved by his plight, Pliny writes to his influential friend, Cornelius Tacitus, and promises to contribute funds to establish a school if other parents in the local area also give:

plinytheyounger

“I, am ready to give for the benefit of the municipality, one third of any sum it will please you to assemble… Then agree among yourselves, unite, and draw increased spirit from mine, for I am desirous that what I shall have to contribute shall be as large as possible…”

This is, perhaps, the first-ever documented example of the idea of match funding, and in the words of Quentin Tarantino, “the good ideas survive.”

But match funding as an idea is not just surviving. It’s growing. In the US, for example, 65% of Fortune 500 companies offer a corporate matching donation programme and an estimated $2-3bn is donated through employee matching each year.

The organisation which I run, the Big Give, is the UK’s biggest match funding platform. We have seen tremendous growth in the past 5 years, from raising £9m p/annum on our platform through match funding campaigns to over £25m in 2020. 

Why? Because it works. Match funding is a proven way to encourage more people to give and people to give more. We surveyed over 1,000 donors to ask about their attitudes towards match funding. 84% said they would be more likely to give if their donation was matched and one third said they would give more than they usually would.

Match funding is being applied in a myriad of ways across the philanthropy sector. It has become an increasingly popular mechanism, not only to incentivise philanthropy but also as a vehicle for philanthropists to utilise to make a positive impact. It is my hope that these examples below might inspire you to consider match funding in your philanthropy as a way to achieve greater impact.

Match funding to encourage philanthropy: 

  • Government matching:

The UK government regularly uses match funding as a public/private blended approach, such as the UK Aid Match programme run by Foreign Commonwealth & Development Office. Over the last six years, 64 organisations from across the UK have run UK Aid Match projects in 38 countries, helping around 25 million people. 

  • Endowment matching:

The “Catalyst: Endowments”, a £36m National Lottery Heritage Fund initiative, closed in 2017. It was set up “to encourage more private giving to culture and heritage, and to build the capacity and skills of these organisations to fundraise from private donors, corporate sources and trusts and foundations.”

The results? According to an independent evaluation from the University of Kent, the fund “literally had a catalytic effect on grantees, who describe the programme as having had a ‘galvanising’ and ‘transformational’ effect on their organisations, including cultural shifts’ in terms of attitudes to fundraising.”

  • Corporate matching:

An increasing number of companies offer their employees the opportunity to have charitable gifts matched whether donated directly, through payroll or raised funds. It’s a proven method to build employee engagement and advocacy for the company.

Aviva, which offers up to £1,000 of matching per employee, say “The matching is part of our desire to drive pride in working for Aviva. It’s almost a bonus, a thank you from Aviva, and it makes them feel proud of working for Aviva and gives them a bit of recognition.”

Match funding to disburse philanthropy 

More and more philanthropists are now utilising match funding as a way of disbursing their philanthropy. 

Perhaps the best example is the Big Give where “Champions” can offer to match fund a portfolio of charitable organisations through campaigns which the Big Give runs throughout the year. Their biggest and best-known campaign is the Christmas Challenge but they also run campaigns focused on the environment, child poverty in London in partnership with The Childhood Trust, international and domestic emergencies and women and girls. 

Grant Gordon, Chair of The Childhood Trust, says:

“Match funding through the Big Give has enabled the Trust to deliver valuable resources to our partner charities – improving the lives of young people in London.” 

We are now seeing an increased drive to collaborate within the philanthropy sector. The pandemic has caused us to step out of our silos and work together to support society’s most systemic issues.

Match funding offers a logical way to harness this collaborative spirit by making your money go as far as possible.

One donation; twice the impact.


About The Big Give Christmas Challenge

The Christmas Challenge is the UK’s biggest digital match funding campaign. All public donations made to participating charities via theBigGive.org.uk during the week of the campaign (30 Nov – 7 Dec) will be matched up to a specific amount. In 2020, the campaign raised over £20m for 764 charities. This year over 900 charities will participate. The campaign supports a huge variety of causes.

Match funding is provided by a range of philanthropic organisations, called ‘Champions,’ including the Reed Foundation, Julia and Hans Rausing, the EQ Foundation, Candis, The Childhood Trust, The Hospital Saturday Fund and The Waterloo Foundation, amongst others.

One donation, twice the impact – #ChristmasChallenge21


alexday

Alex Day

Director, The Big Give

Alex has spent the majority of his career in the not-for-profit sector. He has worked for a number of international development and humanitarian NGO’s including Tearfund and Medair. He recently completed a one-year secondment to REED as Director of Social Impact.

Alex holds a BA Hons in Business & Geography from Exeter University and MA in Charity Management from St Mary’s University which included a thesis entitled ‘Impact Bonds: The future of disaster resilience funding?’. He is Vice Chair of Excellent Development, an international development charity specialising in water conservation, and lives in Surrey with his wife and young son.

Filed Under: Better Philanthropy, Growing Giving, Guest voices

Philanthropy Right Now: Democratising Philanthropy

November 16, 2021 by Beacon Admin

marie-louise gourlay header

‘Philanthropy Right Now’ is a periodical column for Beacon Collaborative by Marie-Louise Gourlay, Managing Director of Europe for The Philanthropy Workshop.

The prefix co- can be defined as “with, together, joint” and even “one that is associated in action with another” according to the Merriam-Webster dictionary.

The last blog touched on the importance of community in philanthropy. In recent weeks, the world’s eyes have been watching a small community of leaders making hefty decisions to tackle climate change and justice.

We desperately – urgently – hope it translates into action. But how do we bring people together around the metaphorical table and ensure that all voices are heard in shaping our future? How do we avoid simply reflecting the ideals of the statesmen and -women of the western world?

Ahead of COP26, we saw many within the philanthropy, public and not-for-profit sectors trying to figure out how to be a part of the conversation. Navigating just this one space felt like a microcosm of the challenges of navigating the wider social sector. The complexity and vastness, coupled with the all-too-often siloed and deeply private nature of philanthropy, can mean it’s a quagmire.

Even more challenging, is finding the spaces where all voices are equitably heard. In the now outdated system of hierarchy, meritocracy gets in the way. It gives louder voice to those with longest experience – but these are not always the people with the best ideas. When length of service trumps innovation and bold thinking, something isn’t right.

How do we ensure that there is always space for diverse opinion, knowing it furthers our discussion and expands our thinking? What is democracy if not sharing thoughts and ideas from across the spectrum in order to move us forward? How do we move away from purely intellectualised and theoretical discussion and refocus attention on the communities with lived experience of the issues we are trying to resolve?

People often refer to needing a case study to understand something. To take it from abstract theory, to real life example. In speaking with non-profit partners in Madagascar recently, they shared the distress of climate migration already underway. As men move inland to find work, forced from their homes by severe drought and ensuing famine, women and children are left behind – and we heard of women selling their unborn children in order to buy food and charcoal for their existing children.

And that’s just one example from one region. Do we have to wait until there are more tangible and hard-hitting examples before we move to action? Or can we build deeper trust with the voices from the communities that are closest to the challenges, and believe in the urgency?

The vitality of activists and movement builders is gaining in traction and voice, and they are not afraid to challenge. Space needs to be made to hear their demands. We have heard from philanthropists in the past that activism can feel ‘aggressive’ and can put people off funding such an approach – that narrative needs to change.

We need to listen. And then we need to move.


marylou gourlay

Marie-Louise Gourlay

Marie-Louise Gourlay is the Managing Director of Europe for The Philanthropy Workshop. Find out more about The Philanthropy Workshop’s activity here.

Filed Under: Better Philanthropy, Growing Giving, Guest voices, How to do it

Is responsible investing “fit for purpose”?

October 12, 2021 by Beacon Admin

This article was written by Scott Greenhalgh for Beacon Collaborative. Find out more about the author below.

Responsible investing1 (which I define to include ethical, sustainable, impact and social investment) and the pursuit of profit with purpose has grown exponentially in recent years. It has many supporters who believe business and investment can be a force for good and help contribute solutions to our pressing environmental and social challenges.

It also has detractors who worry that shareholder primacy and the consequent prioritisation of profit over purpose, at best limits the ability of business and investment to be a force for good and at worst provides false comfort as to the contribution business can make. 

Ahead of the October 2021 Beacon Forum, this article examines some of the key issues in this debate and the role that philanthropists and private wealth can play. 

responsible investing featured image

 

1. The Growth of Responsible Investing

Growth in this sector has been substantial, particularly in 2019 and 2020. 

There has been a circa tenfold increase in the size of the responsible investing market over the past 10 years in both Europe and the US. In Europe, there are now some 3000 publicly traded mutual funds with over €1 trillion AUM and in the US almost 400 mutual funds with c $250billion AUM that pursue a core responsible agenda2. The table below highlights the strong growth in Europe.

responsible investing

In private markets, Phenix 2020 data lists3 some 1600 funds worldwide with $330 billion AUM as pursuing a responsible investment strategy. 

This explosive growth with the range of active and passive funds covering (almost) all investment strategies offers investors and their wealth advisers a huge choice on how and where to invest in both the public and private markets. 

In the UK, in addition to a wide range of responsible mutual funds, there is strong activity in the ethical bond, early stage “tech for good” and social property arena. 

2. Does values-based investing generate financial alpha?

The short answer is “yes, but…”

There are many studies that have analysed the return performance of responsible investment funds. Most show outperformance or at least performance equivalent to that of their “traditional” benchmarks4.

A 2019 Morgan Stanley report analysed performance of some 11000 mutual funds over the period 2004 to 2018 and concluded that investors could expect returns equivalent to those of traditional fund counterparts and that responsible investment strategies offered better downside protection to investors in periods of market volatility. 

Intuitively this equal or outperformance feels right. The environmental and societal challenges we face are throwing up huge opportunities for those businesses that can adapt and/or innovate to provide solutions to these problems.

Similarly, companies that engage positively with their wider stakeholders and actively consider the ESG factors that affect their business have a better chance of building shareholder value than those that do not. A recent McKinsey5 survey of business leaders shows a clear majority agreeing that pursuing ESG programmes creates shareholder value over the medium to long term.

However, the “but” in the “yes, but” above comes in two parts:

First, there are studies that disagree with the conclusion that responsible investing has led historically to outperformance. These studies6 do not dispute that Responsible Funds have outperformed in recent years, but they argue that this outperformance is not the result of the pursuit of a responsible investment strategy, rather the outperformance is the consequence of other more traditional investment criteria being used in the stock selection process by these funds. By the same token, these studies do not believe that responsible investment strategies offer better downside protection. 

The second part of the “but” is that most mainstream fund managers market responsible funds based on the potential alpha or outperformance that they offer. This approach ignores other investor motivations for responsible investing, such as the desire of investors to align their investment strategies with their values and the wish to influence investment funds and businesses to pursue more sustainable agendas. This marketing approach also raises the concern as to what will happen to investor appetite if outperformance were to cease. 

3. Do responsible investment strategies have a positive impact?

Here, I will argue the picture is mixed with quite a few positives and some large (current) concerns.

Let us start with the concerns. There has been much in the press about “greenwashing” or “impact washing” with the accusation that fund managers have over-claimed their environmental or social credentials.

greenwashing?

In part, this reflects the rapid growth in the responsible investing market and the desire for fund managers to have an investment offering that can participate in this trend; put another way, some managers may not have fully developed their impact strategy, metrics and measurement ahead of the fund launch. It also reflects the challenge of measuring impact, the lack of agreed standards and the different interpretations that can therefore be used to define and articulate impact.

A second fundamental concern relates to the question- does the purchase or or divestment by a responsible investor of an existing share (of fund position) have any impact? The sale or purchase of that share will presumably have no effect on the issuing company’s activities and so on the positive or negative impact of that company.

Arguably it is only if there are enough sellers of a (negative) company’s shares, that access to the capital markets for that company is endangered and so the company’s behaviour is forced to change. This question of the impact or additionality of secondary market transactions can be debated at length.

But there are some positives. These include the efforts by regulators to bring greater transparency, for example through the EU Sustainable Finance Disclosure Regulations that are now coming into force7. 

In public markets, data analysis organisations such as Morningstar and Sustainalytics are producing impact metrics and measurement both at a fund and individual (major) company level, enabling comparative performance and changes over time to be measured.

In private markets, there are a number of impact measurement tools in use that allow fund managers to show the impact and changes thereto both of individual investments and aggregated at the fund level. With a few notable exceptions, most private market impact measurement is done by the fund manager and so runs the risk of not being impartial. 

It is important therefore, in my view, for investors to help drive positive change by asking fund managers (and through them the companies in which they invest) to explain in detail how they define and measure the impact they have, how they factor ESG criteria into their decision making and then to hold those managers to account for the impact they report. 

4. Shareholder v Stakeholder Capitalism and will the latter lead to sufficient change?

It is 50 years since Milton Friedman’s essay that argued that the social responsibility of business was to maximise the financial return for shareholders and that decisions should be taken by the directors of companies on the basis of what would be best for (long-term) shareholder value. 

In more recent years, in line with the growth of the responsible investing movement, there have been increasing calls for business to adopt an approach of stakeholder capitalism whereby decisions are taken with a view to their impact on all key stakeholders (for example, customers, employees, the environment, the community) as well as on shareholders. The US Business Roundtable declaration in mid 2019 by the CEOs of major US companies and the manifesto of the 2019 World Economic Forum calling for business to embrace a stakeholder rather than shareholder capitalism model offer important milestones and evidence of this trend among global business leaders. 

Stakeholder capitalism seems therefore to be winning. But will it really make a difference as to how investors and businesses operate? And will that difference be enough to address the challenges we face? These are massive questions that merit careful debate beyond the confines of a short article.

My own view is that much of the current thinking around stakeholder capitalism follows a ‘business as usual” approach that does not go nearly far enough in rethinking our economy, the role of investors and investment and the constraints on their ability to be a force for good. Let me set out my reasoning below:

Company Law

companies act 2006

For the most part company law continues to give primacy to the interests of shareholders. For example, in the UK, the 2006 Companies Act requires directors to consider a range of factors (employees, community, environment) in their decision making in order “to promote the success of the company for the benefit of all its members/shareholders”.

In the US, Delaware law (where many companies are incorporated) also gives clear primacy to shareholder interests. It can be argued therefore that the law limits directors in their consideration of stakeholder interests to those that do not adversely affect shareholder returns. 

Lockstep

It is often argued by responsible investors that commercial success and positive environmental or social impact go hand in hand.

This means there is no trade-off between doing the “right” thing and doing well. Work by McKinsey suggests that this holds true especially over the long term of 5 to 7 years8. Clearly to the extent lockstep exists, the limitations of shareholder primacy can be mitigated.

However, one only has to look at the substantial negative externalities across a range of industries (for example tobacco, social media, mining) to make a powerful case that lockstep is more the exception than the rule, especially over the shorter term and that there are trade-off’s between maximizing social and/or environmental impact and financial returns.

Incentives

For the most part, incentives for directors of companies remain financial and share-value based.

Career progression-related incentives are similarly largely driven by measures of financial success. At the major fund management firms, individual fund manager and fund performance is typically based on benchmarking that fund’s performance against its peer group (we are back to alpha) and growing the AUM of the fund and so the fees the fund generates for the firm.

Even in the world of impact investing, performance incentives based on impact rather than financial success remain relatively rare. Remuneration in the fund management industry therefore reinforces shareholder rather than stakeholder primacy. 

Alternative corporate forms

There are alternative corporate forms that allow for greater balance between stakeholder and shareholder interests. All of these different corporate forms are growing in number, but they remain a small part of the overall private sector.

For example, in the US, Public Benefit Corporations are for-profit entities that call for decisions to be based on balancing shareholder and stakeholder considerations and for profits to be based on delivering positive societal or environmental impact. However, these PBCs remain few in number with c 10 publicly listed and some 4000 overall9. PBCs are authorized by laws in many US states and so offer an established and “enlightened” corporate form; rapid expansion of PBCs (and their equivalents in other countries) might allow business to play a far greater role in addressing our environmental and social challenges. 

bcorp logo

The BCorp movement is a well-regarded accreditation process that allows companies to seek certification as a responsible business. However, BCorps do not have the force of company law behind them. In the UK, the Employee Ownership Association lists 730 employee-owned businesses, John Lewis being the largest and most well-known example10. Such businesses will, of course, focus on employee interests as opposed to those of other stakeholders. 

In the impact investing world, most funds seek market-based returns. This leads to them operating within the same constraints as traditional investors. There are however a few funds that place impact first, offering investors a lower but “sufficient” financial return in the belief that this allows the fund to help generate greater impact.

I ran one such fund; the key challenge lies in making transparent the judgments and trade-offs between financial and impact returns. I was also fortunate as the fund performed well (above its’ financial target of 9% p/a net return to investors), so we never had to face the challenge of maintaining impact returns in the face of weaker financial ones. 

My argument is therefore that current legal and incentive structures serve to reinforce a shareholder primacy that limits wider stakeholder considerations to those that do not jeopardise the ability to maximise financial returns. The good news is that alternative models exist; we need to see their widespread adoption.

So, what can philanthropists and private wealth do?

The above article has given a brief overview of some of the key challenges and debates within the responsible business and investment communities. Views will vary on all of the above points and the role that business and investment can and should play in addressing our environmental and societal challenges.

Among the actions that philanthropists and investors might take are the following:

  1. To engage with the debate about corporate purpose, corporate legal form and the opportunities, limitations and challenges of our current economic system.
  2. To scrutinise wealth managers, funds and companies in which one invests to understand how they address the stakeholder/shareholder primacy question.
  3. To engage with the measurement of impact and to push for as much transparency on this as possible.
  4. To consider the trade-offs inherent in investment portfolios and the extent to which one can allocate (part of) a portfolio to higher impact investments.
  5. To consider* whether a change of statute/corporate form or BCorp certification would be helpful in building long-term value and delivering greater environmental and/or social impact.

*in a business the philanthropist controls.


References

  1. Throughout this article I use ‘responsible investing’ as the overarching term for ethical, sustainable, impact and social investment. It therefore incorporates investing that uses Environmental, Social and Governance factors to inform decision-making.
  2. Morningstar Direct 2020 data.
  3. Phenix Capital Jan 2021 Impact Fund Universe Report.
  4. For example see Morgan Stanley “Sustainable Reality” 2019 or an older systematic review “ESG and financial performance: aggregated evidence from more than 2000 empirical studies” by Friede, Busch and Bassen Journal of Sustainable Finance and Investment 2015.
  5. McKinsey 2020 “The ESG premium: New Perspectives on Value and Performance.”
  6. For example, see Scientific Beta 2021 “Honey I Shrunk the ESG Alpha”.
  7. EU SFDR phase 1 became applicable in March 2021.
  8. McKinsey November 2019 “Five Ways ESG creates value.”
  9. Forbes June 2021.
  10. See John Lewis’ Employee Ownership Association

Scott Greenhalgh

After a career in private equity, Scott started working 12 years ago with a number of wonderful not-for-profit organisations that opened his eyes to the scale of social inequality and need in the UK. In 2016, he was fortunate to be able to combine these “two worlds” and lead Bridges Evergreen Holdings from inception. Evergreen is the UK’s first long-term capital investment vehicle for social impact investing. Scott stepped down from this role earlier this year.

The views in this article are the author’s own and expressed in a personal capacity.

Filed Under: Growing Giving, Guest voices, How to do it, Impact investing

Changing Lives; why philanthropy is vital in giving young people a chance.

October 7, 2021 by Beacon Admin

changing lives header

Changing Lives; why philanthropy is vital in giving young people a chance.

‘Changing Lives’ was written for Beacon Collaborative by Daniel Flynn, CEO of YMCA North Staffordshire. Find out more about Daniel below.

Opportunities for young people to change their path in life are not easy to come by, particularly for those without the networks and support to effect change.

There is often an assumption that young people know what they want and have the capacity to make the correct decisions for themselves. But young people do not know what they do not know. How can we expect them to achieve a better life without the relationships and people to help them? 

For those young people with parents that have high social capital, they have one key thing – access. Access to opportunities, travel and vast networks which allow them to make positive choices based on their extensive experiences. Access to try things out, have a go and take that first step. These opportunities are simply not available to their poorer and less connected counterparts. 

Many interventions have attempted to address the issue of social mobility but have not quite succeeded. But where broad initiatives have failed, philanthropy has often succeeded. Philanthropists have the flexibility to apply their funding in a variety of ways, based on what the situation demands. For this reason, philanthropic money can play a pivotal role in changing the life chances of young people. Here are a few tips for how to use your money to promote social mobility and change the lives of young people…

1. Creating the capacity to engage and learn.

For so many young people our educational system does not work. We need to think about how we create the space to learn in different ways – through art, sport, nature and more. The capacity to learn is a gift young people will take with them throughout their life. Let’s make sure they are engaged and understand the value of learning and education. 

      • What you can do: Funding Arts initiatives, nature groups and sports schemes are great ways to build the confidence of typically disadvantaged young people and engage them in learning. 

2. Promoting Travel

Travel changes lives. Culture enriches our soul. The more we learn about our world, the more fulfilled our lives can be. Many young people are trapped by poverty,  but poverty is not limited to financial opportunity. It is also the poverty of never seeing the countryside, never experiencing another culture. Travel promotes equality and inclusion and can often be a turning point in a young person’s life, providing different perspectives and stimulating exploration. 

      • What you can do: Fund a national/international residential. Offer opportunities to visit/meet extraordinary people and places through networks. Sponsor a young person on an oversees placement. 

3. Building Networks

Children of middle-class parents have access to a vast array of people who can help them on their way. Want to be a doctor, lawyer, business owner? Those parents will know someone who can help and will rightly use these networks to help their children. What about children who have no parents – or are carers/care leavers? How do we use our networks for them too? Relationships change people’s lives. How do we increase young people’s social capital to improve their life chances? 

      • What you can do: Offer work placements/work experience. Host events which young people can attend to meet new people. Offer coaching/mentoring. Connect with schools and charities, meeting young people directly to hear their stories and share yours. Open up your business to do a show and tell. Expose young people to your networks and your worlds.

4. Providing Resources

A huge barrier to anyone’s next step in life – particularly a young person’s – is having the resources to follow their passions. Bursaries can provide a huge cushion for young people and can be used in multiple ways to help them progress. This can mean many things, from driving lessons to a laptop, to furnishing their student accommodation. Not having the resources to take your next step is so limiting. Let’s work to change that.

      • What you can do: Provide bursary funding to young people. Make it largely unrestricted so they have access to funds which cover a large area of their need. 

A young person’s future should not be determined by their past. With the right love, support, opportunities and people, every life can be positively changed.

To quote Rupi Kaur…

“We are all born / so beautiful / the greatest tragedy is / being convinced we are not .”


Daniel Flynn is CEO of YMCA North Staffordshire, he has worked in the charitable sector for the last 35 years. His work has focused around social housing and homelessness, and he clearly understands the linkages between design and outcome. YMCA is still the biggest youth based charity in the world based in 138 countries servicing 50 million people every day, He works nationally and internationally for YMCA, working in West Africa and Israel/Palestine. He is committed to the area and loves to see the green shoots of creativity that he believes will unlock the prosperity of all. 

daniel flynn

Filed Under: Better Philanthropy, Bridging diversity, Growing Giving, Guest voices, Themed giving

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