Philanthropy: a user’s view

Andrew Milner

This Alliance special feature reflects a wide selection of views on the role of philanthropy in society from people who are part of the philanthropy sector – foundation leaders, both younger and more established, heads of grantmaker associations, commentators. And these views will be the ones that are mainly heard at the Council on Foundations’ Philanthropy Summit in May.

But what about those on the receiving end of philanthropy, the civil society organizations that are supported by foundations? What role do they think philanthropy should be playing? Should it be funding the provision of services that governments can’t or won’t pay for? Or should it be concentrating on what John Hope Bryant of US NGO Operation HOPE Inc calls ‘creating a different future’? ..These were among the questions discussed by a group of civil society leaders from the US, Spain, Indonesia, China, Brazil and Hungary.

In Spain, says Jean Claude Rodriguez-Ferrera, Ashoka fellow and founder of Desarrollo Comunitario in Barcelona, ‘the social investment model is still a baby.’ While many people give small amounts regularly to this or that cause, there are ‘very few’ individual social investors on a large scale. There is no tradition of someone who is ‘owner of a company or someone who has lots of family money believing in an idea and investing in it’. Even where people make money and establish foundations, they generally give money out piecemeal rather than pursuing a strategic plan. ‘Normally,’ he says, ‘they do not repeat the donation, thinking that they have to be fair and give small amounts of money to many NGOs.’

The current position: infants, hippies and left-handed NGOs

Corporate giving, he says, tends to be motivated by a sense of competition with others in the sector. Moreover, relations between companies and NGOs are characterized by wariness on either side: ‘NGOs need the companies’ money, but there is distrust and the feeling that “companies must give me money because I am the good one and they are the bad ones, moneymakers with no ethics”. At the same time, companies see NGOs as hippies or left-handed organizations, non-professional and inefficient.’

The concept of philanthropy is a new and often alien one for Hungarians, too, according to Balázs Dénes of the Hungarian Civil Liberties Union, with some wealthy givers but very little sign of ‘middle class donations and social investment’. For this he largely blames the country’s Communist past, as ‘people are prone to believe that the solving of social matters and the supporting of civil organizations is exclusively the duty of the government and state.’ NGOs themselves have also been slow to take the initiative: ‘Instead of reaching out to the private sector, NGOs often expect the state to solve their financial problems.’

Giving as a promoter of positive values

Zhuang Ailing of the NPO Development Center in Shanghai sees what she calls the new philanthropy in China (the previous philanthropy she characterizes as giving only to those connected by ties of kinship, community, etc), which began in the 1980s, as having a ‘growing impact both on the formation of philanthropic values and culture and on people’s lifestyle’. Giving by individuals is becoming more general, and giving by wealthy individuals and the diaspora is growing in importance too. Another significant sign of the increase in philanthropy is the 300 plus corporate foundations registered since the relaxation of foundation registration regulations in 2005.

Among other things, she feels, this increase has ‘gradually reduced the negative image of the new rich in the public mind’. It has also been ‘very important’ in promoting positive values and a culture of giving in China, especially among the younger generation. ‘It will be constructive for the promotion of social harmony and justice.’

However, as in Spain and in Hungary, ‘It is still a very small proportion of the huge population of China who give, no matter whether it’s money, goods, time or wisdom.’

It’s much the same story in Brazil, according to Rodrigo Baggio of CDI. Although philanthropy has been on the rise since the end of military rule in 1985, ‘There is not yet a widespread culture of giving and many Brazilians, particularly the wealthy, have yet to develop a strong “social conscience”.’

He cites research showing individuals account for only 28 per cent of philanthropic contributions in Brazil while just two of Brazil’s 54 billionaires are considered to be ‘socially active’. Such social investments as there are address symptoms rather than causes. Moreover, ‘companies often create their own social initiatives “in-house” and then attempt to outsource the execution of those programmes to NGOs rather than supporting the NGOs directly’.

The US: stuck in a decades old model

By contrast, philanthropy is, as John Hope Bryant of Operation HOPE puts it, ‘fairly well embedded into the DNA of American culture’. However, it is generally traditional in character and, he argues, US foundations still work on what he calls a ‘victim-to-compassion model that is decades old’. Moreover, many foundations and large givers focus on arts and culture when ‘the leading problem in the leading economy in the world is poverty and the growing class divide, enlarged by a teetering education system unable to deliver individuals who can compete on the world stage.’

Erna Witoelar, UN Special Ambassador on the Millennium Development Goals for Asia and the Pacific, takes a more positive view, and feels that in Indonesia philanthropy is playing a ‘a big role’ in tackling the country’s socioeconomic development challenges – ‘extreme poverty, access to basic health and education, increasing infection of HIV/AIDS, environmental degradation, etc. All of these can no longer be tackled by government’s efforts or using government’s resources alone.’

What to do?

‘Business,’ she suggests, ‘can translate strategic and focused CSR commitment into a commitment to long-term social change, and philanthropic CSOs and social entrepreneurs can continue to empower marginalized communities to enable them to face and overcome their development challenges.’

‘Social entrepreneurs,’ suggests Rodrigo Baggio, echoing Witoelar’s implicit point about the need for collective working, ‘have a lot to learn from businesses, and businesses can also learn from NGOs.’ He adds: ‘The most pressing challenges are best tackled together. Rather than each company, for example, operating its own programmes in isolation, companies should work with existing NGOs in order to create partnerships that are more collaborative and yield greater results.’

In Spain, feels Jean Claude Rodriguez-Ferrera, donors must take a more strategic approach. They must become investors and must ‘first think on the social development they want – based on creation of wealth, income equity, basic needs covered, sustainability – and then decide the best strategy to achieve that development.’

A development he would like to see is the creation of new ‘Investment Social Funds’ which would ‘invest in real changing models/programmes – such as those developed by social entrepreneurs. Small investors will participate in any funds they choose and will ask for a financial or social return, depending on the fund.’

His prescription for companies is different. For them he advocates a ‘Base of the Pyramid model, where companies offer low-income people new services, especially designed for them.’ However, he says, this will work only if those on low incomes band together and ‘give themselves more power to negotiate’. In Barcelona, he says, ‘low-income groups have agreements with banks, insurance companies, lawyers and housing companies. All these companies have been visionary, and they are creating new services for these groups and making money with them. For example, DKV, an insurance company, is selling lots of new policies adapted to low-income immigrants.’

In sum, he believes the ‘Base of the Pyramid strategy is the best one for companies, combining social and business interests, and social investing the best strategy for individuals.’

For Balázs Dénes, part of the remedy for Hungary lies with civil society. ‘CSOs have to learn how to ask for funds, and the wealthy have to acknowledge the importance of donating.’

As to philanthropy’s future role in China, Zhuang Ailing expresses the hope that in future ‘every citizen, no matter young or old, poor or rich, well-educated or uneducated, executives or clerks, can contribute whatever they have to help those in need.’ She also hopes for ‘more foundations, especially grantmaking foundations to provide funding to communities and non-profit organizations delivering high-quality, diverse services, and more professionals to contribute their time and wisdom to help non-profits grow sustainably with better capacity and accountability.’

Fixing the Jericho Road

For John Hope Bryant, as for Erna Witoelar, the crucial task for philanthropy is to tackle the related questions of poverty and access to education, which he describes as the ‘ultimate poverty eradication tool’. He believes that philanthropy in the US and around the world ‘has to radicalize its approach’ (he sees funders as too much inclined to fund in their ‘comfort zones’) and address these two issues. ‘In short,’ he says, ‘I think we should focus on an empowerment approach, or entrepreneurial philanthropy (teach a man to fish, and to own the lake too), rather than a hand-out approach (give a man a fish).’

Using the Biblical image of the Good Samaritan on the Jericho Road, he feels that the work of Operation HOPE is not to act as the Good Samaritan and minister to the victims who sit by the side of the road but to fix the Jericho Roads of the world. ‘We call this work the “silver rights” movement, or making free enterprise and capitalism work for the poor.’ Ideally, this should be the work of philanthropy too, ‘here and around the world’.

Respective roles of the state and social sector

How much should government do and how much can and should philanthropy and the social sector do? Balázs Dénes looks at the matter in a practical rather than a theoretical light: ‘It is important to realize that the state, even when the economy is stable and secure, is not capable of providing for all needs.’ On the other hand, he feels that the practice of having NGOs – often funded exclusively by the state – handling important social tasks is a harmful one. ‘With this approach, the government is just shedding its responsibility and in the process establishing and maintaining thousands of incapable NGOs.’

Implicit in Jean Claude Rodriguez-Ferrera’s views, however, is the idea that the role of the state should be restricted on principle. While he acknowledges the state’s role in regulating or facilitating relationships or providing support to valuable initiatives that cannot support themselves, he really sees ‘the social sector as the main actor for social development, and private initiative as the motor for this development’.

Erna Witoelar disagrees. In her view, philanthropy should not in the longer term step in where the government fears – or is unable – to tread: ‘It’s the government’s responsibility to improve the welfare of all of society, to ensure that basic social services are reaching all the population.’ But she acknowledges that state actors sometimes just cannot cope with social and economic challenges such as inflation, insecurity, conflicts and disasters, poor infrastructure, and high unemployment, which means that there’s ‘a huge need’ for civil society to fill the gaps temporarily to enable government ‘to catch up on its governance capacity to provide social services to all’.

‘In younger democracies,’ she goes on, ‘the best people are not always elected as leaders, since money politics and corruption are still playing a big role in the supposedly democratic processes.’ Where this is the case, ‘philanthropy should be giving the example of “best practice of a good job”’.

Can there be too much philanthropy?

‘I don’t think so,’ says Erna Witoelar. ‘In a developing country, we can use all the philanthropy/social investment we can generate to catalyse the access of more people to basic social services.’

But Jean Claude Rodriguez-Ferrera feels there could be too much philanthropy if it’s based on a mistaken strategy or sees its role purely in terms of money: ‘Philanthropy means not only giving money but sharing ideas, sharing know how, creating models, designing new products. Maybe there is too much money in the market, but there will never be too many ideas.’

Is there an ideal role for philanthropy?

‘Ideally,’ feels Erna Witoelar, ‘philanthropic efforts and social investments should be well coordinated with the appropriate government agency or local government to ensure aid effectiveness and project harmonization. This will increase the coverage and decrease overlapping of projects, and in the long run will ensure “development for all”.’

Ultimately, she feels, donors will be guided not only by principle per se but because they see their long-term interests bound up in such an approach: ‘A sustainable community (in health, education and income terms) creates a stable and sustainable economy – with smaller disparities and wider peace and security – which in turn creates a good growth environment for business and the middle class.’

Similarly, the ideal for Rodrigo Baggio is ‘a Brazil in which government, NGOs and businesses work collaboratively to build a stronger and more democratic society. Civil society and philanthropic organizations play a key role in holding other sectors of society accountable for their actions. All three have something important to contribute and must work together to build a healthy nation.’

Baggio also adds a plea for more international funding for Brazil and for Latin America more widely: only 11 per cent of cross-border funding from the US goes to Latin America, compared with 19.3 per cent for Sub-Saharan Africa and 18.1 per cent for Asia,[1] yet more than 40 per cent of Latin Americans continue to live below the poverty line ‘and governments in the region don’t have the resources to tackle these issues alone’.

Creating a different future

John Hope Bryant takes up Baggio’s theme of coordinated action, but in a more thoroughgoing and from-the-ground-up way. ‘We need to radically re-imagine the possibilities and the challenges before us,’ he argues, ‘and then take a coordinated new approach.’ This would involve ‘rallying the largest and most innovative funders together around two to five top-tier problems facing the nation, and the world, such as poverty and education, in an effort to be impact players, with a bias towards empowerment. Let the state take the lead around vitally necessary safety net services, and yes let’s provide filler support when the state fails, but philanthropy should focus on creating a different future.’

What has this whistle-stop review of civil society views of philanthropy shown us? For one thing, most of the people we spoke to feel that though philanthropy is on the increase in their country or region, the habit of giving has not yet struck deep roots and philanthropy is still falling far short of its full potential. Even where it is more established, as in the US, it is failing to produce the kinds of general social benefit that it might because it is either going to the wrong places or not being used in a strategic fashion.

Though there is no short or generally applicable answer to the question of what philanthropy’s role should be, the most common view among those we talked to is that it should involve collaborative action on the key questions of a given society or region rather than isolated attempts at a short-term fix. Funders, investors – on whatever scale – business, government and NGOs all have their roles to play.

1 International Grantmaking Update, Foundation Center, October 2006.

Alliance would like to thank the following for contributing to this article:

Rodrigo Baggio Founder and Executive Director of CDI, Brazil
Balázs Dénes Executive Director, Hungarian Civil Liberties Union
John Hope Bryant Founder, Chairman and Chief Executive Officer, Operation HOPE Inc, USA
Jean Claude Rodriguez-Ferrera, Ashoka Fellow, Founder and Director of Desarrollo Comunitario, Spain
Erna Witoelar UN Special Ambassador on the Millenium Development Goals for Asia and the Pacific, Indonesia
Zhuang Ailing Founding Chair and Executive Director of NPO Development Center Shanghai, China

Andrew Milner is Alliance Associate Editor. Email

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