The belief that applying business methods and disciplines to philanthropy and charity will make those organisations better is quite simply misguided. It speaks of distance: using your business mind-set and value system to help the poor, rather than compassion, love and a large dollop of common sense.
A very mean streak has entered the world of philanthropy and charitable giving over the last few years. It has been led by well-intentioned financial wizards – bankers, hedgies, stars of private equity and successful entrepreneurs – who have bought their money, views, business processes and methodologies to make judgements on charities.
In effect, the message has been "You aren't doing your work effectively enough, and your management needs to be improved. We have lots of money and we will give it to you if you shape up and run your charities as businesses." Impact measurement is the new holy grail.
New hoops were created for charities to jump through to satisfy this new wave of L-plate philanthropists. New terms like venture philanthropy came into being. Charities began filling in new forms and meeting new demands. "Perhaps these very clever people are right," they thought. "And anyway, they quite obviously have lots of money, and we desperately need it for our cause, so let's go with them and become their friends."
Charities were badgered grudgingly into the world business people understand. And the language business feels comfortable with: due diligence, risk analysis, ROI, KPIs, impact reports, leverage, milestones, outcomes, legal agreements, funding schedules (putting the donor in control) – the very words and phrases that make an average person lose consciousness.
The hubris was, and still is, breathtaking. The vanity, arrogance, self importance and conceit shameful. There is more than one way to get results.
In trying to be businesslike some charities found their work seriously messed up – reporting was getting in the way of the real purpose. Innovative charities quite often know the "outcomes" they'll achieve. Measuring outcomes is an inexact science when running a hospice for the terminally ill. There is only a certain amount that financial analysis can tell you about the recovery treatment of a heroin addict, or the improvement in self-esteem of a disadvantaged young person, or the fear faced by a battered woman. To say nothing of people living with rural Africa or the deserts of Rajasthan, whose most important battle each day is to gain food and water and survive.
What on earth is complicated about building a well in a village in Ethiopia for $1,700 that will supply 400 people with fresh water for the rest of their lives? The price of a cappuccino for each villager. Which bit of this do the new philanthropists not understand?
The right way
People don't want to see the money they give wasted. They want to help other people. Not aid workers; not corrupt regimes. In the words of Dr Fred Mulder, one of the most creative philanthropists I know:
"Everybody wants to make a positive difference in the world...if you are fortunate enough to have the financial wherewithal, it is a wonderful thing to be able to do.
Making someone happy, comfortable, feel loved or accepted or safe is a very powerful thing...there are certain things that you want to see done in giving terms that are about your own values and the values you would like to see embedded in the world. You can't do it because you don't have the skills or are too busy doing something else. Then you find wonderful people who ARE doing it and you think, "Oh my God" that needs to be done, but I can't do it. I'll help those people to do it – that's a much better way.'
In all my years getting funding for the children's charity Whizz – Kidz and then advising companies and individuals about giving to good causes, I have never met one individual who made a decision to give on the basis of financial information. Not one.
People give because something touches them personally, or makes them angry, or they meet someone who inspires them. And most often all three. They give because they want to effect change, do something useful and be a force for good. Or because they see such injustice they're moved to act.
Individual philanthropy is very personal. Forget "unpopular causes". Where there's a family with personal experience of heroin addiction, they will willingly support a charity challenging addiction; a woman abused as a child will fiercely support a charity helping victims of child abuse; a successful businessman with dyslexia will support a programme that teaches children with dyslexia in India. These are just three recent cases I have dealt with. It is not complicated. The important thing is to understand where the people who want to engage are coming from. Let them explain their feelings; the issues that have touched their lives, make them angry, move them. Then channel their passion by introducing them to wonderful, often small, charities which need help. Financially and personally.
That is the crux of successful philanthropy. Personal involvement, motivation and focus.
Over the years I have met many, many philanthropists and I shall share a secret with you. Successful philanthropists focus on only one thing: inspirational people who have the ability and
the will to pull off their dream.
They may not have the full gamut of skills, talents and systems.
All that can be bought in and supplied: accountants, marketing expertise, business planners, HR people can all be seconded to help and often free. These inspirational leaders march to a different drum. They may not understand cash flows or how to write a decent business plan. The fact they can't see the marketing opportunities available if they had more money does not, repeat not, make them incompetent. You wouldn't know how to give palliative care to someone dying of cancer. And they wouldn't dream of telling you how to run your office. You need to be quiet, supportive and humble. Use "the eyes of your heart".
And while we are here, funding well-run organisations that have been checked and double checked by others is not particularly adventurous behaviour – however worthwhile it may be.
Funding difficult projects; being a critical friend to a cause that can grow and change exponentially with a relatively modest bit of financing is hugely satisfying. OK it's riskier, but real change can be achieved instead of more of the same.
Having made up your mind which areas of charitable work interest, inspire or anger you, the next step is to find projects and charities in your chosen sector doing great work. A simple but vital rule in philanthropy is that you can never be a great philanthropist without having great projects to fund.
The research is interesting, fun and exciting.New philanthropists uncover an astonishing variety of wonderful causes and the people leading them. Go on the web, talk to friends about causes they support, engage the help of experts and most important of all – when you have narrowed the charities you are interested in down to a shortlist – visit them and meet the people. Ask questions about the work, the challenges, the opportunities to expand if they had more funds.
Do they have the get-on-ability factor – are they are the sort of people who you would like to work with over a period of time? And yes, you should check the accounts, with your accountant on hand if necessary, and query points that seem a bit murky.
And what of monitoring and evaluation and all that stuff? I know a grant-making trust that asks its recipients to visit their office once a year and give a one hour report on their work. Simple stuff eh? And there's David Gold, a philanthropist running a family trust that bases its investment approach on trust and risk. Taking risks on people and trusting them to deliver. The trust uses its own network of contacts to find innovative projects, led by good people who have trouble finding funding. David feels strongly that the majority of current grant-making is inherently conservative and undervalues knowledge and intuition. A large part of his analysis is: "Would I trust this person over a period of time? Have they got passion and compassion?"
So he does something original with the people and organisations he funds: he talks to them, keeps in regular contact and remains an engaged investor. He writes the cheque, stays in touch, and visits for feedback. "I can spend 45 minutes with them and find out much, much more that I would if I read a report. And, importantly, it takes up much less time than it would take the charity to write the report in the first place."
To be a successful philanthropist, engage your heart as well as your head. It is life enhancing to be part of an organisation that is engaged in helping others. And much more fun than buying a yacht. Someone once said that compassion is the opposite of competitiveness. There is wisdom in this. Trust yourself. Use common sense. Trust other people. And try to behave like a human being!