Philanthropy at its best is an inventive and collaborative enterprise. Yet, more often than not, foundations and individual benefactors have chosen to go it alone.
A new breed of philanthropist has emerged, willing to partner across sectors, disciplines, and geographic boundaries to achieve their goals.
Many are beneficiaries of the information revolution and the tech-driven economic integration that accompanied it. They want to see globalizations benefits more evenly sharedand its dangers mitigated. While these philanthropists are based in North America and Europe, they are now joined by counterparts who live and have made their wealth in fast-growing economies like Nigeria and Brazil, where growth is robust, but far from inclusive.
Like their Silicon Valley counterparts, they want to change the equation, and they are in a hurry.
Whether from Palo Alto, London, Mumbai, Lagos, or Sao Paulo, these philanthropists are inventive, ambitious, and knowledge-hungry. Theyre willing to take on complex problems — like poverty, climate change, or infectious disease — and to seek new partners and create new models for addressing them.
They see these problems as systems that need to be replaced by new systems.
And, they know that no individual, entity, or sector can do that alone.
While inventive models have been pioneered by wealth creators without staffed foundations, even the worlds largest philanthropies and wealthiest benefactors are following suit, for their philanthropic ambitions outstrip even their resources.
So, when philanthropist Aliko Dangote took up the challenge of eradicating polio in his native Nigeria, he did so in partnership with Bill and Melinda Gates, UNICEF, the World Health Organization, and the Nigerian Ministry of Health.
The Gates Foundation had long since concluded that leveraging others would bring better, faster and more lasting results. When the foundation began its search for cures for the worlds most devastating diseases, it not only teamed up with governmental agencies, but invested in pharmaceuticals that agreed to conduct R&D into the diseases of the poor. The foundation has the capital to compensate for the market failure. The companies have the core capacity for R&D, marketing and distribution. To remove risk, the Gates Foundation guarantees the purchase of the resulting vaccines or medicines in sufficient quantity to justify its production.
It has been an ideal marriage.
Dangote and Gates are telling examples not because it is only the mega-donors who do this. Quite the contrary. It is because the mega-donors also do it. Despite their extraordinary wealth they too know they cannot, need not, and should not fly solo. In their view, doing so would not only be inefficient, but could result in lives lost. And that is an unacceptable price to pay.
They are joined by others who have pursued market-leveraging innovations, created to assure that solutions can be scaled and sustained. Other efforts to put market forces to the service of social goals include the creation of inclusive businesses, social impact investments, and pay-for performance contracts. Taken together they form the beginnings of an impact economy for which the infrastructure is being built by the Rockefeller, Skoll, and Lemelson Foundations, along with Citibank, JP Morgan and the Lagos-based Tony Elumelu Foundation.
- In an inclusive business, social benefit is intrinsic to the companys value chain. Among the pioneers of this strategy is James Mwangi, CEO of Kenyas Equity Bank, which provides financial services to the poor at affordable rates and with flexible payment schedules. Now there is Eco-cash, a new product of the Zimbabwean mobile network Econet founded by Strive Masiyiwa. It allows for cash transfers and therefore commerce wherever there is a cell phone. Masiyiwa and his wife Tsitsi are significant and strategic philanthropists.
- Impact investing is the practice of investing in companies that produce both a social and a financial return, often at below market rates. It is creating a new investment class of small and growing enterprises, which provide such benefits as goods, services and income generating opportunities for the poor. A leader in the field is the New York based FB Heron Foundation, which has the bold goal of investing its entire endowment in enterprises that advance its mission of job creation. The uptake for this brand of philanthropy has rapid in Brazil, India, and elsewhere.
- In entering into a pay-for-performance contract, a city, or other government entity, contracts with a nonprofit to deliver a service, for which the working capital has been provided by private investors. Under this model, the city would repay those investors, with interest, only after the service has been delivered, the promised impact has been achieved, and corresponding savings have been realized. Michael Bloomberg experimented with this innovation when he was New Yorks mayor. The city contracted with a nonprofit to launch a program aimed at reducing recidivism among former inmates, Goldman Sachs provided the capital, and Bloomberg Philanthropies agreed to take first loss, absorbing the risk. The city government will only repay investors if and when the program succeeds. And it will do so with the funds that would otherwise be used to incarcerate returning prisoners.
Using these and other collaborative instruments, philanthropists are harnessing the resources, know-how, and capacity of others to the goals they share. They find willing partners, so willing in fact that, in the end, we may conclude that while philanthropy is a discreet sector, with its own tax status and standards, it goes beyond. It is a set of values and a sense of purpose that spans sectors. And it has given rise to a community of savvy, determined, and caring people who know how to get things done–together. In so doing they may offer the best attributes of each sector:
- The transparency and accountability of democratic governments
- The efficiency and scale of private sector companies
- The agility and responsiveness of NGOs
- The risk appetite of philanthropy
If so, change lasting and positive change can be assured.