Philanthropy is booming in the 21st Century


Alliance magazine


One boon of the explosion in global wealth over the last two decades has been an explosion in  philanthropy across the world.

Should there be any doubt the two go hand-in-hand, consider this: 44% of the 260,000 foundations identified in 38 countries and Hong Kong worldwide were founded just in this century, according to Global Philanthropy Report: Perspectives on the global foundation sector, a study from the Harvard Kennedy School with support by UBS released Thursday.

“We knew philanthropy was growing in many countries, but we didn’t realize that trend would be so clear and so global,” says Paula Johnson, author of the report and a senior researcher at Harvard.

Aside from expanding wealth, foundation growth is also fueled by a desire to give back by those who have benefited from economic expansion, as well as changes in legal and policy environments for philanthropy. In China, for instance, a law allowing individuals permission to establish private foundations went into effect only 10 years ago, Johnson says.

One reason for studying global philanthropy—the first attempt at a comprehensive effort—was to document this growth of institutional methods of giving back across the world, from the U.S. to China and the Middle East to Latin America. Although researchers believed more foundations—or similar institutions—were popping up across the world, there was little data before this report to support that idea.

Harvard’s research uncovered global assets in philanthropic foundations in 23 countries and Hong Kong total nearly US$1.5 trillion, and that these institutions distribute about US$150 billion a year. But these funds represent only a slice of existing global institutions that likely exist, so the true impact of philanthropic efforts is undoubtedly larger, the report says.

That’s because even after two-and-a-half years of research, the study doesn’t include all countries and foundations. Just compiling what the researchers got was a feat. Information is plentiful on foundations in the U.S, and Western Europe, but data within most other countries, even those included in the report, is scarce. .
“Far from being a finished portrait, it might be considered a pencil sketch,” the report says—a first step that will be fleshed out to include more details, and more countries, with biennial updates in years to come.

Still, Global Philanthropy offers a long-needed starting point, particularly, as UBS points out, with a US$5 trillion to US$7 trillion gap in funding the U.N.’s sustainable development goals, or SDGs, by 2030. The SDGs include topics like “zero hunger,” “climate action” and “sustainable cities and communities.”

Aside from burgeoning wealth, Johnson says foundation growth has been fueled by a desire to give back by those who have benefited from global economic expansion. “There’s a responsibility, maybe even a necessity among some people, to try and address problems at a local, national, or global level,” she says.

Also, changes in legal and policy environments for philanthropy have fostered this growth. In China, for instance, a law allowing individuals permission to establish private foundations went into effect only 10 years ago, Johnson says.

One conclusion surfacing from the data collected is that many foundations pursue the same objectives, yet they don’t work together. That lack of collaboration limits their ultimate impact, says John Mathews, head of private wealth management and ultra-high net worth, UBS Wealth Management USA.

UBS has observed this trend, and in some instances, has facilitated connections between individuals and families, including an effort to address autism via scientific research and job programs. Mathews believes the bank is positioned to shape a more strategic and collaborative future. “It’ll pay off in big dividends for society if we can get it right,” he says.

The most prominent focus of philanthropy globally is education, followed by human services and social welfare, health, arts and culture, and poverty alleviation. What foundations support often reflects the interests of founders and boards, and, in some countries, national priorities. Latin American philanthropies, for instance, often try to align their priorities with their governments, the report says.

One unexpected benefit of the report is that national representatives who got involved spurred additional research within their countries, allowing the United Arab Emirates, for instance, to do its first in-depth report on philanthropy. In Latin America, researchers have begun to work together, separate from the report, “to do more research on the impact of philanthropy within the Latin America/Pacific region,” Johnson says.

“We’re really happy it’s also been a catalyst for conversations, and new data and new funders in other countries as well,” she says, adding, “the transparency is important. In some countries, people are skeptical of the philanthropic sector. Both at the national and global level, the more transparence we can bring to it, the stronger overall the sector can become.”

This article is by Abby Schultz and originally appeared on Barron’s on 26 April 2018. The original article can be found here.

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