Global philanthropy, or global social investing, is expanding rapidly, a byproduct of the world’s increasingly mobile workforce, the explosion of wealth in the 1990s, and improvements in telecommunications. This new group of investors is not found solely in the upper class of industrialized nations.

In Brazil, India, the Philippines and Mexico, for example, individuals are increasingly contributing to social causes within their own countries. According to a recent study by the Aga Khan Foundation, giving by Pakistanis is four times the amount of foreign aid that Pakistan receives.[2]

A ‘global philanthropy infrastructure’ is now in place – organizations and networks that support and strengthen global giving. This article will examine that infrastructure, highlight recent trends and developments, and discuss some of the issues that need to be addressed to significantly increase the effectiveness and scale of global giving.

For the purposes of this issue, we’ve defined global philanthropy as the use of financial and other resources to target underdevelopment around the world. This includes investments travelling over borders (donors in wealthier nations investing in poorer countries) and funds travelling within borders where the investors’ goal is increasing the prosperity of an underdeveloped region or group of people. For several decades, this sort of philanthropy was the province of a small number of large foundations, but today, thanks to the well-publicized commitments of Stephan Schmidheiny, George Soros, Ted Turner and Bill Gates, individual global giving is receiving a great deal of attention.

Schmidheiny created the AVINA Foundation in 1994 to support the work of civil society groups working on sustainable development in Latin America. Soros has, among other causes, supported education and civil society in Russia and Eastern Europe following the end of the Cold War. Turner, through the United Nations Foundations, and Gates, through his foundation’s work to reduce AIDS, tuberculosis and malaria, have filled gaps left by government and multilateral organizations (the US Government and the World Health Organization, to name two). With their focus on global issues, the four men and their foundations have drawn a great deal of attention to global problems. The UN Millennium Development Goals, announced in 2000, have also helped social investors focus on problems in need of global attention.

In addition to wealthy individuals, other relatively new global donors include multinational corporations. At times driven not by altruism but by the desire for competitive advantage, they have donated money and products and adopted environmentally and socially responsible business practices. Service organizations have also had a major impact on the global stage, sometimes by pooling resources. The Rotary Club’s 20-year, $600 million campaign to eradicate polio, for example, drew on millions of individual gifts.

Support and development

The recent increase in global philanthropy has been supported by new mechanisms for social investment and improvements in infrastructure. Sensing the potential to bring individual donors to the table, various foundations, including Mott, Ford, Hewlett, Rockefeller, Kellogg, Aga Khan, and Bertelsmann, have made strategic investments in promoting global philanthropy. They have established local organizations that support philanthropy, offered training programmes for global donors, and funded research as well as conferences designed to bring donors together.

The oldest donor support organization is the US-based Council on Foundations, set up 55 years ago. The Council promotes global social investment by providing educational and informational resources (particularly on the legal issues involved in international grantmaking) and by lobbying for the reform of US Treasury Department guidelines on international giving.

The European Foundation Centre (EFC), established in 1989, supports a number of geographically focused funders’ networks that enable social investors to exchange ideas and collaborate on projects in specific regions of the world. Eighteen months ago, the EFC launched Europe in the World (EitW), a campaign to encourage European foundations to devote at least 5 per cent of their expenditures to initiatives outside of Europe or to programmes with a global dimension. Ninety foundations have already joined. The Mexican Center for Philanthropy (CEMEFI), established in 1988, promotes social responsibility throughout Mexican society, fostering partnerships between corporations, foundations and NGOs. It now has over 400 members.

That old guard has now been joined by other organizations supporting global donors. In the US, Grantmakers Without Borders, now four years old, was established to help individual funders and small and mid-sized foundations support work leading to social change in the developing world. Hispanics in Philanthropy, also a youth in the field, works to increase resources for Latin American civil society and Latino groups in the US. GIFE (Group of Institutions, Foundations and Enterprises) in Brazil and the Southern African Grantmakers Association, both of which foster partnerships and provide information about best practices, will celebrate their tenth birthdays in 2005. The 11-year-old Asia Pacific Philanthropy Consortium (APPC) seeks to develop and strengthen philanthropy and the social sector in the Asia Pacific region; it has supported projects that explore regulatory and governance issues, resource mobilization, and trends in contemporary Asian philanthropy.

All these organizations are members of Worldwide Initiatives for Grantmaker Support (WINGS), a network of grantmaker support organizations, currently housed at the EFC in Brussels.

Corporate giving

As already mentioned, corporate social responsibility (CSR) comes in many forms. Merck, for example, has made a commitment to donate mectizan, the drug that prevents riverblindness, in perpetuity. The company hopes that the disease can be eradicated by 2007. PricewaterhouseCoopers is sending teams of employees to developing countries to work with NGOs on a pro bono basis on issues such as land mine eradication and the prevention of AIDS in Uganda. TPG, the Dutch express mail company, has formed a five-year partnership with the World Food Programme to help get food to children.

Other corporations have established their own foundations. The NIKE Foundation contributes to the education of girls, Unilever is supporting work on child nutrition in India, and Shell, among other things, helps to finance small businesses that provide ‘energy services’ to households, businesses and communities that lack them.

The infrastructure supporting CSR includes hundreds of organizations that encourage corporate giving and identify best practices. The Prince of Wales International Business Leaders Forum in the UK and Business for Social Responsibility in the US are well known. In addition, there are established players in the South.

Philippine Business for Social Progress has been working since 1970 to promote business sector involvement in social development in the Philippines,[3] while Partners in Change, spun off from ActionAid India in 1995, works with Indian companies. But one of the best known is Ethos Institute, only six years old, the premier CSR organization in Brazil, with over 900 corporate members. As a group, they account for 30 per cent of Brazil’s GDP. Ethos, which works on projects with institutions from all over the globe, is in the process of developing a CSR self-appraisal toolkit for use by the corporate sector.

Networks and peer exchanges

Increasingly, global donors want to develop more strategic and effective means of carrying out their philanthropic activities. In response, a number of organizations have emerged that seek to provide donors with a safe space to learn from each other, where they can talk about their work as well as about more personal issues related to family, wealth and giving. These networks are relatively new. The Global Philanthropy Forum in northern California held its first annual conference, attended by over 300 donors, in 2002. The following year, the Chicago Global Donors Network began hosting meetings and workshops to educate and encourage local international donors. Also in 2003, the World Economic Forum set up a Foundation Leaders Advisory Group to provide advice about how the Forum can best support its members who are donors and increase effective social investing. The World Economic Forum has provided opportunities for donors to meet and share experiences at its last seven annual meetings.

Another type of peer network is the giving circle (see p50) where groups of donors pool funds to support action on a specific issue. The Synergos Institute’s Global Philanthropists Circle (GPC) gives individuals and families the opportunity to network and find partners for collaboration. Its members comprise 50 families from 15 countries, who have travelled together to visit each other’s projects. Together with the World Economic Forum, Synergos produces Global Giving Matters, a bi-monthly newsletter that focuses on global donors and the lessons they have learned (see box on p20).

In order to provide a structured education experience to global donors, the Rockefeller Foundation founded The Philanthropy Workshop (TPW) in 1995. TPW brings together cohorts of 14 philanthropists who meet throughout the year to develop the skills and relationships that will help them become effective donors. During its first years, cohorts consisted mostly of US donors, but recently there have been more non-US participants. In 2001, the Rockefeller Foundation helped launch TPW/Argentina. TPW West, located in Silicon Valley, started in 2002. The TPW donor education programme is now being adopted and adapted by groups outside the US, such as the Bertelsmann Foundation in Germany.

Professional advisers

Professional advisers, including private bankers, estate and financial planners, investment professionals and insurance advisers, all wield significant influence on their clients’ charitable giving. In recent years a number of organizations that promote philanthropy have engaged these advisers with the aim of increasing giving. Those individuals typically know little about global giving, though there are exceptions, notably wealth managers at large banks.

The Citigroup Private Bank and the UN recently formed a joint venture to promote strategic global philanthropy. In April, Bank clients spent two weeks in Mozambique and South Africa touring agricultural cooperatives, visiting orphanages and meeting with government officials, including the prime minister and the president of Mozambique. According to Claire Costello, head of the Bank’s Philanthropic Advisory Service, the trip was designed ‘to help clients discover what is important to them as they give both domestically and globally’.

Donor advisers, a profession which scarcely existed a decade ago, now flourish. They work directly with individuals, families and corporations to help develop and implement strategic approaches to giving. A few donor advisers, such as The Philanthropic Initiative, the Bertelsmann Foundation, Rockefeller Philanthropy Advisors, and New Philanthropy Capital in the UK, have international expertise. Community Foundation Silicon Valley (CFSV) sponsors programmes and workshops, and distributes a quarterly newsletter, specifically for donor advisers.

Intermediaries

In recent years, a number of intermediary or ‘regranting’ organizations have been established that allow donors to channel funds to NGOs operating in other countries. These intermediaries simplify giving, ensure that the gift is tax-deductible, at least in the US, and take responsibility for finding effective grantees – something that is particularly important for donors trying to reach small, grassroots groups in another country.

Some intermediaries are defined by a geographic focus, such as the American India Foundation and Give2Asia, while others have a topical focus. The Global Fund for Women, for example, which just celebrated its 15th anniversary, has a budget of over $9 million. Last year it made grants to 400 women’s groups in over 100 countries. GFW has served as a model for the Global Fund for Children and the Fund for Global Human Rights.

Community foundations are another means of providing support to local organizations, particularly from the rich to the poor within developing countries. According to the 2004 Community Foundation Global Status Report, produced by WINGS, the number of community foundations outside of the US, Canada and the UK increased by 137 per cent in the years 2000-2004. The report estimates that there are over 367 community foundations in 37 countries. (Mexico alone has 25.) Many have significant endowments. The WINGS study observes that community foundations, often formed in relative isolation, ‘are now increasingly connected – within countries, across regions and internationally’.

While donors to regranting organizations can specify preferred geographic and topical areas but not particular NGOs, ‘pass-thru’ organizations connect donors directly with NGOs. They often perform a measure of due diligence to assure the credibility of the group, and facilitate payments. Such organizations include the Virtual Foundation, GlobalGiving, GiveWorld, GiveIndia and GivingGlobal, the last of which also connects volunteers to groups in developing countries.

These groups usually use the internet to connect donors with groups seeking funding. Want to help street children in Delhi? Donors can now go to the GiveWorld website (http://www.giveworld.org), find an organization working with street kids, make a modest contribution with a credit card, and arrange for a report and photograph to be mailed, all within five minutes, from anywhere in the world.

Some intermediaries have adopted a business strategy and market principles to deliver needed goods in a financially sustainable way. The Acumen Fund, for example, is a venture philanthropy fund investing for social return instead of financial profit. It was formed in 2001 with help from the Rockefeller Foundation. One of its investments has been in a firm that is producing a new generation of insecticide-treated bednets to protect against malaria-transmitting mosquitoes. By ensuring product quality, consumer demand, sufficient delivery channels, and appropriate pricing, Acumen’s investment has helped a company in Tanzania produce 160,000 bednets annually and employ over 105 workers at above-average wages.

Other financial intermediaries specialize in ‘blended value’ investing, promising investors both financial and social return (see p42).

Increasing global giving

The participants in the Roundtable discussion (see p25) identify a number of ways of increasing global philanthropy. In the long term, they suggest that increasing the number of young people who have international experience will eventually increase the number of adults who will commit resources to global giving. In the short term, they suggest certain government interventions as well as quality assurance, impact research, and increasing the social cachet of global donors.

While there is debate about the extent to which tax incentives stimulate philanthropy, overall the regulatory and tax policies that support and encourage philanthropy do make a difference. In some countries government regulations severely limit the growth of civil society, which in turn limits the number and types of organizations donors can give to. Some nations have strict laws relating to transparency and accountability, which increase a donor’s trust in civil society. Certainly it helps to have a government that signals through its rhetoric and policies that philanthropy is important.

Donors might also be encouraged if it were easier to match their interests with effective projects and certifiably reliable organizations. The internet projects described earlier are a start. The Schwab Foundation and Bain took another approach when they started the Global Exchange for Social Investment (GEXSI) in 2001. Among other things, GEXSI in effect serves as a broker between investors and social entrepreneurs, while newly formed ACCESS, currently based at Accountability in the UK, is in the process of developing a reporting standard for civil society organizations that will enable donors to have greater confidence in organizations they are considering funding.

The article by Peter Laugharn of the Bernard van Leer Foundation (p36) makes clear that money is not enough, that if philanthropy is to make a difference, funds must be invested wisely – a message that is reinforced by the comments of Ezra Mbogori from MWENGO in Zimbabwe (see p39). Giving globally – and effectively – is not easy.

Research on global giving is beginning to take place. To give just a few examples, APPC has just finished research on individual donors in six countries (see p33). CAF India has produced a wealth of information on diaspora giving. Papers on global giving produced by a group of academics and practitioners who participate in the International Network for Strategic Philanthropy will be appearing in 2005. Several universities house centres that support research on philanthropy and civil society, though few focus on global philanthropy. Continued systematic research about new approaches to global giving, about impact and how to measure it, and about what motivates donors, will help to expand effective and strategic global philanthropy

Innovative approaches and good information can spark interest, even passions, in some philanthropists, but what is really needed is to create a culture of giving. Global philanthropy should be spoken about at cocktail parties and on golf courses, the same places where business deals are struck. Among the wealthy, it should be awkward or embarrassing not to be involved in social investment. Forbes magazine seems to have embraced this idea. Its October issue now lists not just the wealthiest people in the world, but also the most generous.[4]

In building social cachet for global philanthropists, it helps to have well-known and respected figures like Bill Gates and Gordon Moore, highlighted by Forbes, to set an example. In Mexico, Manuel Arango founded CEMEFI, and he did so in such a public way that other donors were informed and encouraged (see interview on p17). Oded Grajew of the Abrinq Foundation was one of several business leaders to play this role in Brazil, and in the Philippines the Ayala and Lopez families have provided visible national leadership through their philanthropic activities.

In the future, public encouragement of social investors of more modest means will further stimulate global philanthropy, which is increasingly losing its elitist image. More and more individuals, both in industrialized and developing countries, are giving back, and doing so in a strategic, developmental and often innovative way.

1 This article draws heavily on Paula Johnson, Steve Johnson and Andrew Kingman (2004) Promoting Philanthropy: Global challenges and approaches, prepared for the International Network for Strategic Philanthropy.

2 Aga Khan Development Network (2000) Philanthropy in Pakistan: A report of the Initiative on Indigenous Philanthropy Islamabad, Pakistan.

3 PBSP has provided more than $80 million in support for over 5,000 projects that have benefited almost 2.5 million poor households.

4 Bill Gates has given away the largest sum ($28.3 billion), though Gordon Moore of Intel fame has given away a larger percentage of his wealth (64 per cent).

Guest editor for the Alliance special feature on ‘Getting global giving going’

Adele Simmons is President of the Global Philanthropy Partnership and Senior Adviser of the World Economic Forum. She is also a member of the Board of the Synergos Institute. She was President of the MacArthur Foundation from 1989 to 1999. She can be contacted at adelesimmons@mindspring.com

Dan Nielsen is Executive Director of the Global Philanthropy Partnership. He can be contacted at dan.nielsen@global-philanthropy.org