A mirror to our field: my five-point plan for the future of philanthropy
This article was originally shared by Alliance Magazine within the scope of the Next Philanthropy project.
At the end of last year, I had the privilege to speak on a panel alongside colleagues in philanthropy around the world at the Gife conference – the leading association for philanthropic foundations in Brazil. I joined Candid President Brad Smith, East Africa Philanthropy Network CEO, Evans Okinyi, as well as AVPN founder Naina Batra who recorded answers to a selection of questions to manage time zone differences.
The panel was exploring the future of philanthropy and towards the end, our moderator, the Arab Foundations Forum’s Naila Farouky, asked us to share our own personal vision for philanthropy – what we would like to see happen in our field.
During the panel discussion, I shared five ideas I think our sector should consider as it looks to what the future holds for philanthropy, and I’ve now written up these ideas to share as part of a pan European series looking at what’s next in philanthropy.
So here it goes – my vision for the future of philanthropy:
1. Root and branch reform to the way foundations consider and conduct their investments and their investment policies
This is arguably the most pressing question for philanthropy and the one where reform is most needed and could make the biggest difference. The majority of philanthropic capital – $1.5 trillion – is in endowments and funds which are managed and invested in global capital markets sometimes in ways that are inconsistent with the very missions of the foundations.
The most obvious case is around climate where a foundation might be funding efforts to tackle climate change and global heating but might also be investing in fossil fuels. Now a foundation might have good reasons and arguments for why they might do that. But at the least I would want to see foundations explaining the rationale for their investment policies as well as being far more transparent about the investment houses which manage their assets, where they invest, how much they pay their investment managers and advisors, and how they come to adopt the approaches they do. It’s worth noting that the UK’s highest paid charity sector workers are, to the best of my knowledge two investment managers at the Wellcome Trust, Peter Gray and Nick Moakes. They were paid approximately £4.5 million each according to Third Sector for successfully increasing the foundation’s endowment. They did this, in part, by investing Wellcome’s assets in fossil fuels, while the foundation was developing plans to spend millions tackling global heating. These choices justifiably deserve scrutiny.
2. We need an agenda for philanthropy rooted in justice and social justice in terms of race, class, climate and gender.
This agenda is not just an external one in terms of where funders direct their money but also an internal one in terms of a foundation’s own practices and composition.
That means examining the representation of Black people, people of colour, and women in the most senior professional roles in foundations and on foundation boards. While progress is being made, why is it that as recently as 2018 only one out of the largest 35 foundations in Germany had a female CEO?
And to give another example of the concentration of power cutting across justice, take the most powerful foundation in the world, the Bill & Melina Gates Foundation. It spends in excess of $4 billion per year but its trustees comprise just Bill Gates, Melinda Gates, and Warren Buffett. Anyone who cares about justice in the philanthropy sector should feel obliged to ask them about the composition of this board and whether three people should control so much resources. You could argue that it’s their wealth or it’s wealth that has been given to them or that far larger amounts are controlled privately by them and other billionaires. But speaking in terms of justice, which most philanthropists say is an important aim of their philanthropy, there are legitimate questions which extend well beyond the Gates Foundation and its anything but super-sized board of trustees.
3. Liberal Foundations need to fund and get behind social movements
It’s often said that philanthropy is at its best when taking risks. So why don’t more of the liberal ones get behind social movements – they comprise less than 0.5 per cent of total foundation spending according to data shared by Candid for a recent Alliance issue on the interplay between philanthropy and social movements.
The social movements of the kind we’ve seen emerge in recent years are – almost by definition – at the cutting edge of where social and political change is going. Why isn’t more philanthropy going there too?
Of course, social movements reflect different political orientations. You might like one social movement and I might like another and they might be doing or calling for opposing things. But if philanthropy is to be relevant to society, to building the future, then they cannot do it without more effective engagement with the social movements of our time.
Of course, we should acknowledge some obvious tensions here. The independence of foundations gives them the luxury to inject money into causes without much downside. In short, they’re not particularly accountable for their choices – certainly in comparison to democratically elected politicians. There are also risks to social movements who might find themselves becoming more like NGO’s in order to secure funding. But that’s another reason why major reforms to funding practice are needed.
4. Core funding must become the default – a new philanthropic orthodoxy
Here, the current reality should be inverted. Funders should provide core, unrestricted and multiyear funding as the default – something most nonprofits have long called for. When core funding is not provided, then the norm should be for funders to explain why another type of funding was justified in the circumstances.
A shift to core funding should be accompanied by a democratisation of funding practice. Participatory grantmaking – including people who are affected into the funding decision-making process – is a promising development but not sufficient.
I would go further and place a requirement on funders to include beneficiaries not just on expert panels but on the boards of foundations themselves. This would meaningfully shift the power in philanthropy by breaking down the boundaries between funder and beneficiary and bringing the latter into the heart of decision-making.
I would extend the revolution in funding practice by creating a requirement that formal grant agreements and related correspondence (not just grant amounts) should be publicly available – an FOI mandate for philanthropy to illuminate the true nature of funding agreements and relationships.
Publishing grant agreements and correspondence between philanthropists and arts and higher education in particular would help open up the elite and rarefied world of major donor giving. Having to rely on leaked correspondence from egregious cases risks undermining trust in philanthropy by making such examples appear the norm rather than the exception.
5. Create more spaces to speak truth to power
While philanthropy remains a private and sometimes opaque pursuit, albeit one undertaken for public benefit, we need to invest more in the capacity of our media to understand and provide coverage of philanthropic power – in a way which is nuanced, constructive and well-evidenced.
And that’s where the communications infrastructure for philanthropy comes in. Not just for us at Alliance but in philanthropy publications, journals and journalism around the world, we need to invest in editorial capacity to keep asking questions. The feedback mechanisms one needs for the good health of the sector need to be built not assumed they will just happen.
My worry is that the current distribution of philanthropy infrastructure is highly imbalanced – 80 per cent of infrastructure funding is concentrated in the US according to a WINGS estimate. Of course, that’s a very good reason for funders outside the US to build up the global philanthropic infrastructure. But it’s also incumbent on internationally oriented US funders to pay attention to the gaps. The development of philanthropy focused media is a case in point. It’s a good thing that US funders have turbo-charged the space by funding the US Chronicle of Philanthropy at a level and kind that outlets in the rest of the world could only wish for. But imbalances between the US and elsewhere make it harder for a more geographically balanced field of philanthropy to emerge.
Ultimately, all of us have the opportunity, and some might say responsibility to ask questions of ourselves and our commitment to fulfilling the promise of philanthropy. We can all be our sector’s critical friend holding up a mirror to our field whilst avoiding the dual traps of undue cynicism or uncritical celebration.
As Brad Smith noted on that Gife panel, ‘very few foundations have met the standards outlined in these five points’. But he also noted that governments and markets are imperfect too. It follows that these imperfections are incentives to improve not reasons to abandon hope. Imperfections can be overcome and I hope these radical measures will not appear quite so radical in the years to come.
Charles Keidan is Executive Editor of Alliance magazine and former director of the Pears Foundation.
You can watch the full Gife panel here.