The Art of Giving: David Carrington

On 9 November The Gift Trust hosted a talk with international speaker and philanthropy expert David Carrington, in a conversation navigated by NZ journalist Rod Oram, to explore the topic “Money for Good: the Art of Giving.”

Below are some of the discussion areas and David’s insights:
 

On the word philanthropy:

Philanthropy means the voluntary giving of money or time for the public good. It’s a simple term, but provokes a wide range of attitudes.  A conference of development and community professionals in Bogota last month posed the question “What do we mean by philanthropy?” and one of the responses that came back was:

Philanthropy means helping other people, but it also means corruption. The rich hiding their ill-gotten wealth in foundations and using them to exert political influence.”

Commenting on the response, the questioner wrote [1]: “And there you have it: philanthropy is a word that inspires deeply contradictory reactions and emotions. On the one hand, there is philanthropy as a positive force: private resources directed for public good, a voluntary expression of empathy and support for those less fortunate, a unique tool that can be applied in pursuit of social change. On the other, philanthropy is seen as part of the problem: the product of systemic failures of current political and economic structures, which have resulted in large concentrations of wealth in the hands of an elite and unaccountable minority.”  In the 1850s this was Rockefeller and Carnegie, today it’s the Trump and Clinton private foundations.

I want to see philanthropy as providing genuine public good. This puts pressure on those who are active in philanthropy to tell their stories, to be very open and transparent about what they are doing and what they hope to achieve.

Philanthropy can mean different things to different groups depending on their geographical placement, and more crucially where they are on the economic food chain.

I want to see philanthropy as providing genuine public good. This puts pressure on those who are active in philanthropy to tell their stories, to be very open and transparent about what they are doing and what they hope to achieve, because there are people out there who will see it in less positive terms.

There is also a tension within philanthropy generated by the fact that philanthropy in many countries is ‘rewarded’ through tax relief.  This raises interesting questions around whether the state is giving away tax money that would otherwise be spent on universal services, and instead enabling philanthropists to direct funds into the hands of people of their choosing.

 

On what drives philanthropy:

The drivers of individual philanthropy are so diverse. One factor may be to support a cause derived from a personal experience, or the experience of family and friends that drives you to say I am going to spend significant amounts of my time or money engaged in trying to sort out this condition or problem.

Research shows often the most powerful driving force is your relationship to the person who asks. It may be someone you trust, you honour, you admire. Sometimes, however, and I see this more often than I would like, the motive behind a donation may be that it’s someone you are trying to ingratiate yourself with or achieve a particular status with.

It may be your faith that drives you. It may be a wish to leave a legacy that supports where you came from. Ironically, in the creation of some family foundations is a determined approach by the settlors (the person in the family who has made the money) to limit the amount of assets they leave to their offspring.

 

On the younger generation’s role in philanthropy:

Some millennials are looking for an alternative term for philanthropy because they associate it with some of the issues I talked about before. They don’t feel comfortable with this term.

The discussions I have when working with wealth managers indicate that many of the younger generation also want to talk about different ways of doing things. They are very interested in impact, they are very clear about wanting to support social change, and they want human rights and similar issues to inform their philanthropy, which may not have been true of their parents or grandparents.

They are also often much more interested in how they can use philanthropy to impact the economic system, and so issues of social impact investing, where you use money to achieve social good, is something they are enthusiastic about exploring. Some of the most interesting social focus organisations and some of the most interesting social entrepreneurs are actually pretty rich people who have decided to focus on achieving social benefit. I think it’s a fascinating area.

 

On best practice in philanthropy:

The practice of philanthropy has become quite transactional. In contrast, a growing number of individual donors and family foundations are keen to develop a more relational way of engaging with organisations. This recognises that the act of philanthropy isn’t just about trying to make change through a donation, but is also about joining in the dreams of the organisation they are trying to assist or support, without trying to interfere with it.  It's a very different relationship from the more traditional way of writing a cheque and walking away.

Some philanthropists go charging in like a “bull in a china shop" and assume that, since they did well in business, they should be able to do the same with charity - on the whole, it’s not a good idea. There are other philanthropists who almost go too far the other way, and say “I don’t want to know any more detail about the work you do”.

The ones who I think enjoy their philanthropy the most are the ones who find a relationship with the organisations they support which enables them to feel they are on top of what is happening and feel better informed as a result. They have also chosen that organisation because they respect the talent and passion of the people running it – if you don’t have confidence in the leadership of an organisation, then you probably shouldn’t support them.

The other thing happening in the institutional philanthropic world, where significant endowments are being managed, is that there is a small, but growing, view about the use of endowments and the divorce from the traditional investment management world. People have woken up to the fact that there were things in their portfolio that they didn’t really like the look of. They couldn’t reconcile between what they were trying to do as a foundation and owning this particular stock.

We are seeing more examples where foundations are challenging the orthodox view that the money they were investing must maximise financial return. A report[2] by the Association of Charitable Foundations and Cazenove Capital Management summed up the present position in the UK “that charity trustees are obliged to use their resources in ways that best meet their charitable objectives”; crucially it doesn’t say that charity trustees are obliged to make as much money as possible out of their assets. They go on to assert that “charity trustees are not obliged to pursue investment returns at the expense of their charitable mission, their organisation’s reputation, or in ways that could alienate donors or beneficiaries”.

Philanthropy is a good thing, but it isn’t a simple thing.

We are seeing, particularly in the newer foundations, more who are wanting to adopt investments that are longer-term, take into account people and planet and, crucially, are better aligned with why the foundation was set up in the first place.  We’ve not really seen this before.

Philanthropy is a good thing, but it isn’t a simple thing. There is a very real danger in philanthropy of people deciding “this is the best way to do it” and imposing their view on the charities they decide to support. One of the most important aspects is there is no single “best” way; effective philanthropists will find ways of doing it that are comfortable for them, that they enjoy and that they can see is useful.

 

On collective action:

Philanthropy can often be a very lonely thing – it needn’t be as there are often several other people seeking to tackle the same thing and they could be doing it together.  One encouraging current development that you didn’t see much even a couple of decades ago is foundations deciding they should do something jointly. One of the powers of philanthropy is that if you do it thoughtfully and adventurously you can actually create leverage. The money, or time, you put in can also make 2+2 = 5. 

Philanthropy can often be a very lonely thing – it needn’t be as there are often several other people seeking to tackle the same thing and they could be doing it together.

Likewise the notion of Giving Circles, where people can share the giving experience rather than doing it solo, is generating interest.  One bank I worked with had clients who were interested in microfinance. This group of clients collectively decided to pool £25,000 each and use the funds to support microfinance schemes in different parts of the world.  They then collectively decided which projects to finance. It was a delight to see. A group of individuals that started off being very wary about talking with each other about their personal philanthropy became hugely engaged together in the issue. They ended up giving five projects unrestricted funds. Three of the donors also spent time visiting individual organisations and became champions for them. This grew out of a bank seminar, and led to a transformation in the philanthropy of those individuals and their families.

 

Role of technology in philanthropy:

The impact on philanthropy of technology can be incredible. There are two particular things about technology that are having an impact on Philanthropy.

The first is data. People can now find causes, organisations and foundations online that they might want to support. They can see where funds are needed way beyond what was possible even 10 years ago. This was stuff that was hard to get at before, now it’s almost instant.  It is improving the quality of the data and information that philanthropists have access to.

The second part is around crowdfunding philanthropy. These systems mean you don’t have to have a great machine to enable people to support projects. You can support a project a long way away from you that you wouldn’t have otherwise known about. I suspect that over the next 10 years use of this sort of technology will enable more donors and recipients to both establish a connection and become ambassadors for causes.

We are also seeing some philanthropists in the UK who are very deliberately using funds to target the use of technology to enhance charities operationally and to transform the way these organisations communicate, collect data and tell people about it.  This is also helping these organisations secure additional funds.

 

On impact:

The biggest problem in measuring impact is often due to funders asking the wrong questions!  “What is the impact of my money?” is an impossible question to ask. Money is only one ingredient of a successful outcome and there are so many other variables at work. To try to get a causal link between the money and outcome produces a nightmare of a technical challenge, usually badly done, with the wrong answer.

If the trustees, staff and beneficiaries are not engaged in thinking about whether or not what is going on is working, there may be something fundamentally wrong with the organisation. If a funder finds an organisation they love and it can’t answer these questions, then maybe the first grant you give should be to help them learn how.

The questions I think philanthropist should ask when they are first discussing the possibilities of supporting an organisation, is “how do you know if what you are doing is successful, and is working. What is your system for evaluating yourselves, your own work and how do you use that information to improve?”.

Would you support a company which didn’t know what direction of travel it was going to go in? If you were running a company would you not have some indicators to judge whether you were being successful? If the trustees, staff and beneficiaries are not engaged in thinking about whether or not what is going on is working, there may be something fundamentally wrong with the organisation. If a funder finds an organisation they love and it can’t answer these questions, then maybe the first grant you give should be to help them learn how. With this in place, you will probably have a much more resilient, better organisation to invest your philanthropy in.

One of my biggest worries about the interactions between institutional foundations and the organisations they are helping is that there is often a ‘dance of deceit’ going on. Charities can end up almost reinventing their project to suit the funding. If you can engage with people in a way that actually gets them to talk the truth, I would encourage you to explore ways of doing this, rather than looking for something that seems to reinforce the very transactional form of philanthropy.

I am also keen on simplifying the process for foundation’s grant applications by being very clear on what you will and will not fund, keeping initial applications simple (no more than 2 pages) and only asking for more detail if the initial assessment is positive. It is also important, I think, to be transparent and to create dialogue with unsuccessful grant applicants, letting them know why you haven’t funded their projects.

 

REFERENCES

[1] Jenny Hodgson, executive director of Global Fund for Community Foundations, writing in Alliance October 2016.
[2] Intentional Investing: The principles, practicalities and pitfalls – Richard Jenkins and Kate Rogers 2015

 

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