Philanthropy: looking forward
The Association of German Foundations and Dr. Annette Kleinbrod the Advisor for International Cooperation interviewed Benjamin Bellegy, Executive Director of the Worldwide Initiatives for Grantmakers Support (WINGS). This interview is part of the #NextPhilanthropy initiative.
Benjamin, what do you consider will be the main driver of philanthropy globally over the next 10 years?
There are quite a few. One of them is the growing influence of technology and data on philanthropic actions, decisions and strategies. In the individual giving sector, for instance, online giving platforms are quickly developing in different regions of the world, building new bridges between individual donors and local organisations. In China, online giving is growing very fast and 90% of it is done through the private companies’ platforms Alibaba and Tencent. That’s one of the evolutions we have seen over the last few years. But I think it will go much beyond that.
You also mentioned decision-making – how will this be changing?
Decision-making might focus more and more on research regarding what will have the highest possible impact: choosing what appears as the most effective and efficient approaches, but also causes. With increasing pressure to achieve impact, donors are trying to find ways to make the most of their investments. Some actors are also starting to look at big data and artificial intelligence in those processes, which of course raises interesting and deep questions – philosophical questions, but also questions about the effectiveness of this type of approach as there are diverging views on what being effective means. This is a major trend that will certainly transform the sector in the future.
What impact will artificial intelligence have in the area of impact investing?
I think we will see the emergence of ultra-rational approaches to giving, like we see already in the effective altruism movement, which is based on a utilitarian philosophy. This can appear as a quite cold-hearted approach as it hierarchises priority causes and organisations based on “objective” criteria and often very quantitative approaches to impact. Big data and artificial intelligence are perfect allies for donors willing to follow this type of approach and they will develop in the future. Charities Aid Foundation is talking about “philgorithm” – a combination of philanthropy and algorithms. Although some experiments have been carried out – e.g. letting a computer process data and define what cause you should address – for now this is more of an idea than a reality. But talking about the future, this is definitely something to be considered.
What do you see being the role of foundations and support organisations in terms of using artificial intelligence in a helpful way, and reducing the dangers and risks?
Although I am not an expert I think the philanthropic sector should become more proactive in anticipating the ethics and politics behind technological developments which will affect humanity deeply. It has a role to play there, where the government and the private sector are slow to step in because of the huge financial prospects behind this industry.
Can you be more explicit – what are the biggest risks of artificial intelligence for the philanthropy sector?
Philanthropy is an art and a science. There is a bit of tension between the two aspects. We run the risk of turning philanthropy into an illusory science and forgetting about the art of relationships. There is a human dimension to philanthropy, which is absolutely essential. Otherwise, we are no longer in the field of philanthropy. There needs to be a human intention and vision behind philanthropic activities.
What is the risk of focusing too much on the science part?
If we focus too much on science, decisions will be more and more disconnected from the reality on the ground or decisions will be made artificially with a bias towards those areas which are considered most impactful. Whoever builds the algorithms has a lot of power to impact them with his or her bias, even if everything is being done with the very best intentions. In addition, there is a possibility that nobody will understand how the algorithm works in the end. Once you start to build it, it gets more and more complex and, eventually, even those who build it do not understand why it works the way it works, and why it is producing the responses it does. Engineers who work in other fields than philanthropy are already stating how easy it is to lose sight of how a decision is actually made. This is critical when we want to save lives, or support social justice or human rights, for instance.
Even without talking about a still hypothetical development of “philgorithm”, an excessive focus on quantitative, short-term results may lead to missing the full picture of the social issue we are trying to address, and could even sometimes cause harm. Don’t get me wrong, it is very necessary to increase the effectiveness of private resources for the common good. I also think that big data will open up tremendous opportunities to increase impact. But a too narrow and short-term approach can’t bring about systems-change and long-term transformation. This is not just about effective technical solutions to objectively important social problems, this is about the vision of society you are trying to achieve. And this won’t come out of algorithms or equations.
And what do foundations need to do?
Foundations, and the social sector in general, are late in including technology in their work. They have a lot to do in terms of modernising their own infrastructure and taking advantage of what is available – to assess their impact, inform their decisions, increase their grantees’ effectiveness, and in many other aspects. Importantly, they also need to look into their decision-making processes and how they can, carefully, use data and technology in them.
You mentioned that there are a few drivers shaping philanthropy. Apart from technology, what else do you consider to be a prime driver?
There is the democratisation of philanthropy. This is not a new topic, it is more about the evolution of how we understand philanthropy. Everywhere there are traditions of giving and solidarity. We need to understand philanthropy as being a part of the same broad field, and we need to build bridges.
Philanthropy is not only about the wealthy, it is about everyone. Individual giving is much bigger than institutional philanthropy, it is the actual “big philanthropy”. It is very important that we coordinate and connect individual giving practices with institutional philanthropy.
What are the challenges in developing individual giving?
There is a huge potential for the development of individual giving, particularly among the middle class in emerging economies. For different reasons individual giving is not yet at the level it could be. One reason is a lack of trust between donors and civil society organisations. They need bridges, channels and standards that foster transparency and build trust. Although these are developing, we see little proactive efforts from foundations and donors to invest in the infrastructure that will allow giving flows to grow and be more effective. That is clearly one of the areas to be developed and it will take visionary funders.
How would you describe such a visionary funder?
I believe the visionary funders of tomorrow are those who will be looking for impact beyond their own resources and will try to find ways to influence other funders’ investments, leverage more and better resources for their cause or region, and consider that they are part of an ecosystem because they can achieve much more collectively than alone. Visionary funders are also those who will tap into non-financial resources, aligning investments and mission, and will try to address roots causes and engage in transformation with a broad set of partners.
Why is individual giving such an important component of philanthropy?
It is quantitatively the most important source of funding for civil society almost everywhere in the world. Beyond volumes, funding coming from a vast number of citizens provides a solid legitimacy to civil society organisations and contributes to a better financial resilience. This puts these organisations, especially those working on edgy issues, in a safer position to confront restrictions from governments and shrinking space. It is more difficult for a government to crack down on an organisation supported by many donors than one that is operating thanks to the support of a few bigger funders. This is even truer if we are talking about local individual donors versus foreign funders.
So the philanthropic sector needs to wake up?
Yes, indeed, the philanthropic sector needs to wake up in terms of understanding how much they could do in boosting philanthropic development in their own setting and in countries where they have operations. They can activate the philanthropic potential at different levels: helping communities they support to tap into local funding opportunities, helping improve the legal environment, supporting the professionalisation of the sector, etc. And this requires a thoughtful strategy and investment in philanthropy developers: networks, advocacy bodies, teaching and research centres, campaigners for giving, etc.
The development of philanthropy is not miraculous and takes time and effort. Those support organisations also have to increase their own impact, and their ability to collaborate and act as a proper ecosystem of support to philanthropy that truly responds to the needs of the field. But this can only happen if funders act with intent and take this infrastructure question seriously, shifting from a transactional lens looking at benefiting directly from services, to a more strategic lens looking at leverage effect and collective impact.
What do you consider to be the impact of big philanthropy?
The growth of big philanthropy, including in emerging economies, brings opportunities and increases the availability of funding for civil society. Some of them, leveraging their size and influence, are trying to address change at a more systemic level. This is very interesting and welcome, although there are diverging ways to understand what systems-change means. Those big philanthropists also raise the profile of the philanthropic sector, for better and for worse. A number of actors, such as development actors, have started to identify the importance of the philanthropic sector and to consider how they can partner with actors that have a similar size to them.
Having very high net worth individuals committing large parts of their assets to social causes and promoting philanthropy among their peers has also encouraged new philanthropists to come to the field. On the down side it has contributed to distorting the understanding of philanthropy as a practice that is reserved for billionaires, as opposed to a way for citizens, rich or poor, to engage in society. Criticisms that are currently arising regarding those actors reverberate across the whole sector, which is very diverse.
That being said, increased pressure for the transparency of donors and for more consistency between the way wealth is distributed to social causes and the way this wealth is generated are constructive challenges for the field that can help it achieve more impact. This pressure of society will probably increase and it is better for the sector to anticipate it and to turn it into an opportunity.
Big philanthropy also kicked off the blurring of the line between the profit and non-profit sectors. What is your view on that?
The trend towards more business-oriented practices and the blurring of the line between the profit and non-profit sectors are promising developments that need to be encouraged. At the same time, it is important that new actors, next generation, emerging philanthropies, remain in dialogue with “traditional” grantmakers, on the one hand, and more grassroots and collective approaches to philanthropy, on the other hand.
Why is exchange and dialogue so important in this respect?
It seems like there are different bubbles or sectors that are at risk of developing in silos. Focusing on social business approaches, impact investing, etc., is good news for the impact of our field, but we need a variety of approaches and tools so that no area is left behind and so that works that will never become economically profitable, such as human rights defence, are still well supported. We face the risk of there being two sectors that do not talk to each other, that try to achieve similar things but have a different language, with separate networks, and a trust gap between them.
How can this be solved?
We need approaches that reconcile different social investment practices, from grantmaking to impact investing and core business. The continuum of capital developed by the Asian Venture Philanthropy Network (AVPN) is an interesting attempt in this area. There is also a critical need for the two sectors to continue communicating and learning from each other. In order to do this, you need bridge builders, networks and different sorts of infrastructure organisations, and possibly also new forms of infrastructure organisations.
In this regard, what is your call to philanthropic infrastructure organisations?
One of the important trends is the shift from a service model to a thought leader model. There is a need to be looking forward, to help the field to navigate changes and to challenge our constituencies and members. Services are essential to support the field but infrastructure organisations can also play a proactive role and exert influence, to act as change-makers.
Another important aspect is that philanthropic infrastructure organisations need to start considering that they are part of a broader support ecosystem for giving, philanthropy and private social investment. In general, this ecosystem needs to be more collaborative because we can create more jointly than individually. We see interesting developments in that regard in Europe, with the joint work of the Donors and Donations Network in Europe (DAFNE), the European Foundation Centre (EFC) and the European Venture Philanthropy Alliance (EVPA) on enabling environment issues, the platform role AVPN plays for infrastructure in the Asia region, or in the US with the work of United Philanthropy Forum, and very recently with the merger of the Foundation Center and Guidestar.
Another point would be that we need to improve our own impact as philanthropy developers and get better at communicating it. It is sometimes challenging for funders to understand philanthropy support organisations’ added value: most of the work is long-term, collective and intangible. There is a need for better impact assessment. We now have a common language with WINGS and DAFNE’s 4Cs (capacity, capability, connections, credibility) framework; both the infrastructure organisations and their supporters should look more closely at impact.
This piece was originally published at the Association of German Foundations’ blog: https://www.stiftungen.org/en/home/news-en/a-call-for-a-braver-philanthropy.html
Dr. Annette Kleinbrod
Advisor for International Cooperation
The Association of German Foundations