Philanthrocapitalism, a new way of conducting philanthropy that mirrors how the for profit sector conducts business, is more than just a buzzword. Mark Zuckerberg’s new $45 billion charity, Chan Zuckerberg, gives new weight to the word. Like other leading philanthrocapitalists, Zuckerberg plans to identify the most pressing problems and use his tech empire building experience to get results. He’s the latest in a new generation of billionaires reshaping the way they give. Entrepreneurs like Bill Gates and Pierre Omidyar have supported this model of philanthropic investment for years, with Omidyar committing around $780 million to non-profit organizations and for profit companies. Now Zuckerberg joins the fold, promising ‘up to $1 billion in shares in each of the next three years’.
These passionate yet practical leaders are putting philanthrocapitalism in headlines now, but communities all over the world have been using creative for profit solutions to serve civic needs for decades.
Community funded trusts and mutual aid societies are just a couple early examples of philanthrocapitalism. In Cambodia, trust in banks has waned after decades of war, leading people to look for other ways to finance small businesses or buy livestock. They turn to a community bank, or tong tin, a phrase borrowed from a similar Italian system of loans called ‘tontine’. This traditional, unregulated savings-and-loan scheme offers villagers a chance to borrow and win a lump sum from a collective pool.
While tong tin is only as good as its’ members, players find comfort putting their money with people they live and work rather than risk losing their savings to banks that may close at any time.
The New Golden Age
In this day and age, community trust funds have evolved into giving circles, where a group of individuals pool funds and work together to decide which charity or community projects the money should go towards. These giving circles, or investment clubs, tap into a wide network of people who may not be able to spare millions of dollars for a cause, but are committed to making small, incremental change.
Giving circles have increased in popularity over the years. Research estimates that giving circles have donated over $100 million and engaged at least 12,000 people in the process.
Hong Kong based non profit, Synergy Social Ventures, started the Future Funders Giving Circle to tap into Asia’s growing network of wealth and prospects are already looking promising. They lead a program that enables 20 to 30 year old professionals to spend one year learning about different social enterprise models, meeting founders, and volunteering their finance and marketing skills. So far, the Future Funders have funded more than $50,000 into two businesses and have three more in the pipeline. Like tong tin, the Future Funders enables members to support people they have regular, intimate interaction with, thereby increasing the chance of success.
‘It’s a chance you have to take based on the people, product, and your belief that it will make an impact,’ explains Future Funder Lori Ngo.
The future of philanthrocapitalism isn’t solely shaped by the ultra wealthy. According to the Organization for Economic Co-operation and Development (OECD), if the middle class were to dedicate 1 per cent of their spending to charitable activities, by 2030 this could raise as much as half a trillion dollars annually. With age-old traditions in mind, everyday people can continue to band together and make conscious, practical steps towards sustainable social change.
Synergy Social Ventures is a non-profit organization investing in entrepreneurial solutions to global problems.