Families aligning their charitable giving with their business plans and the rise of the next generation of family leaders are among the trends explored in a new book which aims to guide families on their ventures in philanthropy.
Family Philanthropy Navigator, published this month, delves into case studies and offers advice and practical tools for experienced and aspiring families in the philanthropy sector.
Families gave on average $6.4 million via their family office to philanthropy over 12 months, according to The Global Family Office Report 2019 by Campden Wealth. Driven by next-gens, 26% of families surveyed by Campden Wealth for the Global Impact: A Power for Good 2020 study wanted to show that family wealth can be invested for positive outcomes and 24% believed that incorporating sustainability considerations will lead to better investment returns.
Family Philanthropy Navigator was written by Prof Peter Vogel (pictured), Debiopharm Chair for Family Philanthropy at the International Institute for Management Development (IMD), Etienne Eichenberger, managing partner of WISE philanthropy advisers and Malgorzata Kurak, IMD research fellow.
“The world needs all hands-on deck to address the big challenges we face—they can’t just be fixed by governments or NGOs alone,” Vogel said.
“Our mission with this book is to inspire more individuals and families to give and to ensure that their giving is effective and efficient.”
In this extract, the authors outline the nine trends of modern philanthropy.
1 Inclusiveness of giving
Driven by advances in technology, giving has become highly democratised. First, mass collaboration allows everyone to make a contribution to the greater good of society. Second, online philanthropy marketplaces allow everyone to contribute to specific causes, even with just a few dollars. Third, aggregated funds are forming, combining the resources of many donors in the most effective ways.
2 Next generation as agents of change
We are in the middle of one of the greatest transfers of wealth in human history, with the next generation (largely millennials and digital natives) taking over the reins and moving into powerful positions within their families. They come in with a fresh mindset, new ideas and they feel a great sense of responsibility to become agents of change.
3 Real-time global awareness
Improved access to the Internet has placed a greater and more detailed spotlight on many more needs and causes around the world, raising awareness and making them more visible to donors. It has also made it easier to connect donors with causes and organisations around the world so that solutions can be found.
4 Spending down
Many philanthropists are choosing to spend down their funds instead of, for example, donating the interest from perpetual funds. They prefer to give while they are alive instead of trying to create a legacy after they pass away.
5 Rise of mega-donors
In recent decades, we have observed the rise of a new breed of mega-donors—individuals who have accumulated their wealth in a matter of years rather than generations and who have decided to use (part of) that wealth to do good in the world. The likes of George Soros, Bill Gates and Mark Zuckerberg have led the charge, seeking to control how they give back in specific ways.
6 Rise of multi-stakeholder efforts
In this new “era of impact”, we can observe a convergence of the different stakeholder groups, including traditional charities and philanthropists, businesses and investors, as well as policy-makers. They are collectively striving towards impact.
7 Rise of effective and impact-driven giving
There is a clear shift towards measurable and sustainable impact of philanthropic giving. Donors are demanding clear key performance indicators (KPIs)—which is evidently easier for some projects and more difficult for others—to ensure that their money is being put to use in an effective and efficient manner.
8 Focus on issues rather than places
In the time of the United Nations Sustainable Development Goals 2030, philanthropy has become more and more focused on specific issues and causes rather than places. Philanthropists are often acting more globally than locally.
9 Rise of cohesive being
Families have embraced a more cohesive approach to philanthropy by aligning their giving closely with their business activities as part of an overarching approach inspired by a sense of higher purpose and social value creation.