The generation of new funders known as ‘philanthrocapitalists’, including not just Bill Gates but others such as Jeff Skoll and Rohini Nilekani and Jamie Cooper-Hohn of the UK’s Children’s Investment Fund Foundation are very big players on the funding scene.
How important are they? What are the upsides and potential downsides of working with them? Alliance talked to Christine Edwards, Akwasi Aidoo and Lyndall Stein, who will be panellists at a session asking ‘Can philanthrocapitalism save the world?’ at the 9th International Workshop on Resource Mobilization, to be held 25-28 June in Bangalore, India.
‘Is there an agreed upon definition of philanthrocapitalism?’ wonders Christine Edwards of Australia’s Myer Foundation, a question echoed by Akwasi Aidoo when he observes that ‘their defining features are not easy to sum up’. As a working definition, Christine Edwards uses ‘the application of market/business principles, through the use of capital and intellectual resources, to achieve impact in the non-profit sector’.
The new elephants
Meanwhile, she thinks that the advent of the philanthrocapitalist – however defined – will be significant for a number of reasons. There are now many more wealthy people and there is a greater move generally towards donors wanting to give and see the effects of their giving in their lifetimes – she cites recent tax changes in Australia which have enabled the development of new mechanisms to facilitate giving by living donors. And many more people are ‘moving into philanthropy from the corporate and business sectors. Obviously, they bring with them new ways of applying resources to enable growth … a lot of these investors are young, and bring with them an approach that looks for returns, and that is analytical in weighing up risks and potential.’
Akwasi Aidoo calls them ‘the new elephants in the room’ and adds his own historical perspective. He sees them as successors of the people who established grantmaking foundations in the first place. They played a significant role then and, he believes, ‘in their new apparition, they are equally significant … they help to raise fresh and vital questions about philanthropy and its pursuits: how can we be more efficient? How can we leverage more for lasting results and impact? How can we sharpen our theory of change? How can we collaborate and partner beyond our familiar comfort zones?’
Experience of working with them
Both of the respondents who had experience, direct or indirect, of working with them had positive experiences to report. Lyndall Stein of Resource Alliance said that ‘Concern Worldwide, which I recently worked with, benefited from a generous and innovative grant to address health systems and in particular mother and child health issues from the Gates Foundation. It was impressive because of the scale, $44 million, but also because Gates works from a real understanding of the complexity of addressing health.’
Similarly, says Akwasi Aidoo, TrustAfrica has ‘co-convened African policy experts and practitioners with the Bill & Melinda Gates Foundation, and we have a fantastic co-funding partnership with Humanity United for strengthening the work of civil society in Liberia. The experience with these foundations has taught us many more good things about innovation than our lives without them would ever have taught us.’
For Christine Edwards, the fact that it usually involves a commitment of expertise or intellectual capital, in addition to funds, is one of the most important elements of the philanthrocapitalist approach. ‘One of the best things … is that it demonstrates that giving is more than about giving money. This makes sense because a philanthropist’s business experience, access to other people’s resources, capacity to influence, and available time can all be used to bring about change. Engagement is more than money alone. It is a commitment, and effort, time and energy are very rich resources as well.’
She adds a caution: ‘There is nothing wrong with wanting to see outcomes, but there are a lot of ethical issues in a relationship where one partner has more resources than the other. This is going to become one of philanthropy’s biggest issues to face: giving in ways that encourage outcomes, value accountability and transparency, and at the same time allow for distance, separateness and potentially failure.’ She notes that ‘these issues are not in the realm of philanthrocapitalism alone: they are shared in all models of giving.’
Jumping through hoops?
Even if they could save the world, do they want to remake it according to their own preferences? It is often said that philanthrocapitalists want to dictate, are too set on applying what they know to areas they don’t know, and brush aside the corpus of accumulated experience and learning of the non-profit sector. On these questions, the views of the respondents who had direct experience of working with philanthrocapitalists differed markedly.
No, on all counts, says Akwasi Aidoo: ‘They set us thinking outside the box, and bring a refreshing “investment” concept to grantmaking and programming that makes it much easier to dialogue with grantees about results (dividends) in a creative manner … it’s not a hoop to jump through at all.’
Lyndall Stein, however, feels they ‘are too committed to rigid measures; they impose rather than working with organizations and people on the ground to develop appropriate and useful measures. They also sometimes misunderstand how much rigour and expertise already exists in the sector – in international NGOS, think-tanks, academic institutions and government specialists.’ She adds, ‘much of the accountability seems like control. It misunderstands the nature of power, and the complex and organic way in which social change happens.’
In particular, philanthrocapitalists’ insistence on playing the game by rules they lay down can undermine the mission of the non-profits they support, says Stein: ‘There are many examples of this already and genuine anxiety about the tradeoffs that are being made. The best collaborations happen when there is trust, mutual respect and genuine shared opportunities to learn from mistakes.’
Akwasi Aidoo, by contrast, believes that their approach is conducive to successful and trusting collaboration. Everyone, he feels, has an agenda, implicit or explicit. He prefers to see the philanthrocapitalists as having ‘a much clearer and focused theory of change driving their programming. That makes it much easier to dialogue and debate the rationale, assumptions and principles that motivate their programming, thereby making any resulting collaboration a lot more trusting and transparent than is otherwise the case.’
The empowerment question
‘I have not seen many examples that see empowerment as a serious factor for success,’ says Lyndall Stein flatly. Again, Akwasi Aidoo takes the opposite view: ‘Their approach tends to stress scale and the long term, both of which help to address the challenges of empowerment. As we know, disempowerment often has a long trajectory with complicated dynamics which take a long time to transform.’
For Christine Edwards, the question is still an open one: ‘Money is a powerful influence. It can be used to promote empowerment. It can also ignore people and take a superior perspective. There are some terrific examples of how philanthropy has supported and promoted empowerment – take for example the Joseph Rowntree Charitable Trust. Philanthrocapitalism has great potential to make change happen. But if long-term sustainable change comes from changes to systems and the way people think, then philanthrocapitalism must work with people and make sure that people, not capitalism, are the drivers of change.’
Taking on others’ experience
How much regard do they have for what has already been done in the field? It depends, says Lyndall Stein: ‘the established mature funders such as Gates are engaged with debate, dialogue and expertise,’ he says, but ‘some of the new funders … are utilizing a more mechanistic business model. I would like to see them develop more strategic partnerships with leading practitioners and thinkers. I also think they could learn from the mistakes of other funders.’
Akwasi Aidoo does not make the distinction between different organizations, but in general finds philanthrocapitalists ready – and quick – to learn: ‘Their business/investment background means that they instinctively scan the “marketplace” before discovering their niche. In my experience with them, I have been impressed by how many questions they ask, how well they listen, and how fast they seek to learn.’ He adds one caveat: ‘If there is a downside, it’s possibly that some of them want to learn too quickly or have little time to learn (given how much money they must push out the door). As we know, learning about doing good in a good way is a marathon, not a sprint.’
How effective is their approach?
This was a question which raised further questions rather than eliciting answers. ‘The present state of the world and the economy is not the best advertisement’ for their business model, feels Lyndall Stein. However, she concedes, it ‘has been very effective at making money.’ Akwasi Aidoo feels that it is too ‘early to determine, but their emphasis on leveraging definitely does augur well for impact.’ Christine Edwards sees two key questions here. First, she says, ‘we need to ask “where does it do its good?” Is it in developing the community sector? Is it in changing the way people think about something? Is it in major social transformations that have long-term, multigenerational impact? Second, we need to ask “where does a model of capital investment and growth fit into a democratic process and society?” In other words, what happens to the organizations that do not get the support of philanthrocapitalism? How can access to these resources be shared more equally? How can more people and organizations participate in this potentially high-impact type of philanthropy? How can this be scaled up to profit the many and not just a few?’
A singular focus
As we have already seen, Akwasi Aidoo believes philanthrocapitalism is not as novel a phenomenon as some would have us believe. Christine Edwards agrees: ‘much giving in the history of philanthropy has looked for similar characteristics: great leadership; a strong, visionary and supportive board; a strategic vision and business plan; professional staff who can see what’s needed for accountability and good governance; a focus on outcomes and indicators of progress; and a commitment to development. From this perspective philanthrocapitalism is not necessarily new. What is new is its intensity, its singular focus, and the great wealth that it brings to bear.’
Can they save the world?
Well, can they? Not on their own, says Akwasi Aidoo, ‘but,’ he says, ‘their emergence has an important existential import for all of us trying to turn the world around through philanthropy.’
Akwasi Aidoo is Chief Executive of TrustAfrica. Email firstname.lastname@example.org
Christine Edwards is CEO of The Myer Foundation and the Sidney Myer Fund. Email email@example.com
Lyndall Stein is Interim CEO of Resource Alliance. Email Lyndall@resource-alliance.org
For more information
To find out more about the 9th IWRM, visit http://www.resource-alliance.org/iwrm