Will philanthrocapitalists and hyperagents really change the world?

"As philanthropy enters a second golden age, real social change is getting lost in the hype of market-based giving," writes Linsey McGoey in Fortune.

The first 'golden age' was the 19th century, the time of Andrew Carnegie and John D Rockefeller Sr., McGoey reminds us. According to her, "From Carnegie’s spending on public libraries to Rockefeller’s investment in biomedical advances, their giving helped to shift charity from the dispensing of alms in a largely unsystematic manner to a business in itself, overseen by paid philanthropic advisors".

One trend in the ‘second golden age’ that is significant, she suggests,  is 'philanthrocapitalism'. This she summarizes as "a more muscular philanthropy that seeks to combine profits with poverty alleviation".  She is not entirely accurate. Matthew Bishop and Michael Green, who coined the term, described the concept succinctly as "philanthropy led by the world's wealth creators... applying business techniques and ways of thinking to their philanthropy".

Paul Schervish, cited several times by Bishop and Green, is the scholar who has, more than any other, studied the philanthropy of US wealth creators. He described one of the characteristics wealthy philanthropists' as 'hyperagency'. Hyperagency means “… being able to construct a self in a world that transcends the established institutional limits and, in fact creates the limits for others”.

Schervish also points out that these hyperagents are the 'producers' of philanthropy in a market where the currency is not money but emotions, and the producers are not troubled by competition.

Another trend in the second golden age, according to McGoey is the effective altruism movement, championed by Peter Singer. Singer has declared Warren Buffett and Bill and Melinda Gates  “the most effective altruists in history.”

McGoey's concern is that the hype around the second golden age is ignoring questions about its effectiveness. "Its progress," she says "often seems to be measured and underpinned by self-sustaining feedback loops". Giving in the US has remained stubbornly around 2% of GDP. 

Foundations are a growth industry in the US yet extreme poverty , meanwhile, continues to rise.

"Today’s philanthrocapitalists see a world full of big problems that they, and perhaps only they, can and must put right," Bishop and  Green wrote. 

Another commentator, Michael Edwards, sets that notion to rights in 'Small Change: Why Business Won't Save the World', his rebuttal of Bishop and Green’s book. Edwards believes that “business thinking and social transformation operate on entirely different logics”.

Finally, McGoey points to an alarming paradox from the first golden age which, hopefully, is not destined to be emulated in the second. She quotes from David Nasaw, Carnegie’s biographer, “Carnegie … became, if anything, more ruthless in pursuit of profits once he had determined that those profits would be distributed during his lifetime.” Then she juxtaposes this tweet from Martin Shkreli, “I donated a total of $5,000,000 to various causes recently. Looking forward to telling you all about it.”  Shkreli is the former hedge fund trader, who was vilified for raising the price of Daraprim - a drug that fights parasitic infections in AIDS and other immune-supressed patients - by 5,000%

Indian Giving Circles: Qual vs. Quant

Schools, universities, leading cultural organisations and a handful of medical charities aside, nonprofits are rarely successful at attracting support from the very wealthy.

Small and medium-sized nonprofits generally are even less likely to engage with high net worth supporters. One of the reasons may be that, the rich support organisations with which they are connected through their own networks. One solution to this that is beginning to achieve positive results has been the formation of giving circles.

It has been my privilege to have met the founders of two such groups in Mumbai, India where I have been this month. Both are successful. What is interesting is their quite different approach. The difference is one that fascinates me and has wider significance in the discourse around evaluating nonprofits (For examples,  here or here) . The difference can be summarised in my view by that hardy perennial phrase 'qualitative vs. quantitative'.

In the quantitative corner is the better known of the two, Dasra. It was founded 15 years ago by husband-and-wife Deval and Neera. It is Deval whom I have met more than once. He is an engaging, articulate and urbane late thirty something. Both he and Neera are US educated and both former Wall Street analysts. They came to India determined to make a difference using their financial-analytic skills (though of Indian origin, neither are Indian by birth). Over the 15 years, they have developed a formidably successful organisation. It now employs some 40 plus staff, crammed into a ramshackle two-storey building in a downmarket part of West Mumbai. Nowadays, too, it boasts two small outposts (most likely working from home offices) in New York and London.

Dasra says it has assisted inject some US$37 million into nonprofits and social enterprises. It also runs a very successful Indian Philanthropy Forum, which brings together some of India's most active philanthropists and successful nonprofits. A version of the Forum was recently staged in New York for the first time.

Dasra identifies and thoroughly researches both key areas for intervention and potential partner organisations working in those fields. As well as working to thoroughly understand the problem, it investigates which nonprofits and social enterprises may have the skills and capacity to solve it. More often than not it works closely with these organisations to encourage and train them to think and act more analytically. The mechanism it advocates is 'the theory of change'. Their goal is to create solutions that can be 'scaled up' and achieve as big an impact as possible for the resources invested. I once, tongue-in-cheek described this style of approach in an earlier blog as ‘philanthropy for bankers’: I  had Deval partly in mind!

Once, Dasra is satisfied that it has a grasp of the problem and suitable partners it will begin to recruit donors to a 'giving circle'. Members of a giving circle agree to provide a fixed amount over three years to achieve a significant change in the problem area.

The second organisation I have just met on my current trip. It is a semi-formal organisation called Caring Friends. I met its founder, Ramesh in the tiny two room office, up a narrow staircase, that he shares with a former business partner. His support staff comprises a team of two administrators and a driver. Ramesh was a senior manager of a well-known Indian corporation. His travels through India had brought him into contact with the notable activist, Baba Amte and his centre for leprosy patients and the disabled called Anandwan.

Moved by his initial experience he sent an article together with a letter to around 50 of his friends and acquaintances inviting them to support the work of Baba Amte. He became a regular visitor and supporter and his subsequent outlook has been much influenced by the friendship that developed between him and Baba Amte.

Ramesh then began to take an interest in other nonprofits and became aware of their challenges and limitations. These in particular he described to me as the lack of financial resources; their limited vision; and deficiencies in human resources and training. He began to apply his own skills as a business executive to assist nonprofits.

He later found an ally, Nimesh, and together they created Caring Friends. The name is taken from the quote usually attributed to anthropologist,  Margaret Mead: “Never believe that a few caring people can't change the world. For indeed that's all who ever have”.

Caring Friends is not a legal entity and does not fundraise. Its website makes the point, "In fact, Caring Friends does not have a Bank Account.  We do not accept cheques in our name. Cheques are made directly to the NGOs, hence 100% of the funds go to the NGOs." It adds that “we have zero overheads.”

The group has grown into a network of around 200 wealthy (some very wealthy) individuals who support the nonprofits that Ramesh and Nimesh identify and on which they have undertaken 'due diligence'. These supporters meet every 2-3 months and invites a nonprofit to present their work.

Ramesh describes the due diligence as based on visits to the nonprofits and the areas where they work. These visits are undertaken by Ramesh and Nimesh. Above all, they are looking for integrity. They focus on whether the nonprofit is well ordered, and maintenance aspects such as record-keeping and cleanliness of the premises. Often, he says, they will support the nonprofits out of their personal resources before recommending them to others of the Caring Friends.

Ramesh, who is now in his 70s has retired from his corporate role to become a partner in the small business whose office he still occupies.  This allowed him the flexibility to continue and fund his philanthropic work . Nimesh too, runs a  business.

The support  nonprofits receive through Caring Friends may vary from between 25 to 80% of their total financial resources. Projects featured oin Caring Friends' brochure are making a difference to hundreds of thousands of individuals spread across India.

Both Dasra and Caring Friends are exceptional organisations that - though, very different in approach- are making a major difference. Which, I wonder would be the approach you find most attractive: the very quantitative, methodical approach of Dasra; or the more subjective, qualitative approach of Caring Friends?

And which, are likely to work best to attract wealthy donors where you are? I would be fascinated to hear your answer.

The very, very rich got even richer

Wealth-X and UBS have just released their 2014 research into the world's billionaires. 

The numbers have increased, which will surprise nobody who subscribes to Thomas Picketty's argument that you and I will never catch up to the wealth of people who are already rich.

There are now 2,325 people with a net worth of at least $1 billion this year – 155 more, or a 7% increase, from 2013. They collectively control $7.3 trillion dollars in total wealth. Jacob Davidson, in Money put is, "that means a group of people about the size of a typical suburban high school student population could fund the entire United States defense budget for 14 years." 

The report provides some interesting tidbits for those who are interested in the lives of the rich and famous. For example it offers a month by month billionaires' social calendar, noting the events they are most likely to attend. The US Masters and PGA Championship feature prominently . But also, at least 23% of the world’s billionaires are likely to attend at least one, if not more, of the many elite art shows held annually around the world.

However, more comforting is the discovery that more than 70% are active in the philanthropic sphere. Excluding future pledges, the report says "billionaires, on average, donate just over US$100  million cumulatively over their lifetimes. This is equivalent to 3% of their net worth – more than the average  billionaire’s real estate holdings".

Topping the list are Chicago's billionaires. 100% of these billionaires are active philanthropists. New York and Los Angeles follow at 96%. Riyadh, Saudi Arabia at 95% beats Singapore's 94% of philanthropically inclined billionaires. Only 85% in London show interest in philanthropy.

Education, and Higher Education are top two on their list of preferred causes. The Arts come fourth after Health. Religion, unlike for the population more generally (most studies show) falls bottom with only about 4.5% supporting church, temple or mosque.

Chicago's billionaires give especially towards improving living conditions and the developmentof their city. Those from Tokyo, in contrast, show interest in disaster relief and the environment.

Also just published is a new book by Brookings Institute academic Darrell M West 'Billionaires: Reflections on the Uppercrust.' One of this book's cautions is that we need to be aware of new models of billionaire gift giving. Cultivating wealthy individuals requires considerable tact, persistence, personal contacts, and know-how, he rightly notes. Being results oriented, many billionaires focus on concrete objectives, and they want demonstrable impact for their money.

West cites Matthew Bishop Michael Green, the authors of Philanthrocapitalism . They describe how the very wealthy bring skills and tools from the business world to their philanthropy. They push nonprofits to focus "in some cases for the very first time" on specific outcomes for their work and performance metrics.

He could also have cited Paul G Schervish, who coined the term hyperagency for the behaviour of the very wealthy. As he describes it:

"Hyperagency  is the ability to exercise effective control over the conditions and circumstances of life rather than merely living within them. Hyperagency, in contrast to agency, means that the wealthy are able to construct a world that suits their interests". Schervish, PG & Herman, A 1988, 'Empowerment and Beneficence'.

In a later work, Schervish - who has studied the philanthropy of the very wealthy in United States in greater depth that anyone - has also identified 13 strategies followed by philanthropists in what he likes to call the New Golden Age of Philanthropy. (Schervish, PG 2000, 'The modern Medici')

Theresa Lloyd and Beth Breeze have recently published a study of why rich people in the UK give to charitable causes.Lloyd, T & Breeze, B 2013, 'Richer Lives: Why Rich People Give' 

For Australians, a work worth reading on what motivates major donors (though not billionaires per se) has been written by  Wendy Scaife, Katie McDonald and Sue Smyllie (2011 'A Transformational Role).

"You mean, there is philanthropy in India?"

I am just back from a trip interviewing philanthropists in India.  You may wonder what I am interested in Indian philanthropy for. 

One reason is the depressingly frequent and blunt question I often get asked: "You mean, there is philanthropy in India?".*
I have commented before, (Is US Philanthropy exceptional?)that I think it is a mistake always to think of United States as the model of philanthropy. Philanthropy is a comparative infant United States compared with the rest of the world (India's philanthropy long preceded America).  To counter these misapprehensions here are some examples of Indian philanthropists I have met.

Example one, is a husband-and-wife team who started their own foundation after building a successful investment advisory service. Through the foundation, they apply their investment skills to advising,  investing, and fundraising for a range of social activities. Three of the social initiatives that they were actively involved in when we spoke were, firstly, an orphanage for children of sex workers in Mumbai. Second, an organisation managing rural ashrams for treatment and rehabilitation of leprosy patients, and other disabled or marginalised people. And, third, an initiative that ran education programs for children Mumbai’s slums. All of these three were initially started and run by local social entrepreneurs.

My second example, is the second generation family owner of a mining company.  His family foundation has focused on implementing  a social model enabling the families of the company’s workers themselves to manage all aspects -  health, education, sanitation and sustainability -  of  their own  village communities. This, self-sufficient management model is being extended to 300 or more similar industrial villages across India. From, this initial focus on village management has grown a larger commitment to the management of wider regional ecosystems. As part of this wider initiative, the foundation is now also building a university, which will provide research and training specific to the region’s challenges. The region is the poorest in India.

A third philanthropist whom I interviewed is the founder of one of India's most successful IT companies.  We spoke initially about the philanthropic foundation arm of the international business he founded, which supports health, education, culture, and the destitute. As well, it invests in rural development of some of India’s poorest and hardest to reach areas.  Later, more reluctantly, he was encouraged to talk about the substantial gifts he and his wife personally make to universities in India and abroad. And, also their quiet giving to India wide projects in education and sanitation.

Of others I have spoken to, one was the representative of a third-generation philanthropic family. Noteworthy, was her commitment to her personal philanthropic giving to arts and education quite separate from the family's traditional corporate philanthropic support of health, education and the environment.

Two other individuals I met had made fortunes from international careers in finance.  Both, with their wives, had made their personal  commitment to give away at least 50% of their wealth.

It's way too early to draw any specific conclusions from this small sample. I intend to interview 20 or more others. However, they and other conversations that I continue to have confirm my view that philanthropy is vibrant and strong in India.  The fact is that philanthropists in India have for centuries founded universities, schools and education programs, hospitals and healthcare and provided housing and facilities, not just for workers but entire communities.

It is, I suggest, in societies closer to home, with isolated and commendable exceptions, that a culture of philanthropy has yet to take deeper root.



*The research will also contribute to a PhD in philanthropy at the Asia Pacific Centre for Social Investment & Philanthropy at Swinburne University)

Charity vs philanthropy

This month you will have been in a world where people in the Phillipines are crying out for basic necessities while million dollar gifts are on the rise to universities. Is this a dilemma for you as a fundraiser?

I believe not. But the dichotomy is illustrative of a wider principal – the distinction between charity and philanthropy.  The distinction is practical not semantic.  The roots of both words (one Greek one Latin) are comparable.  “Love” is in the etymology of both.  Both have been used interchangeably in the English and other languages for centuries.  Yet in practice there is I believe a distinction.

I have friends in the Philippines who are volunteering to help provide the essentials of life to their fellow citizens in some of the more remote regions of Cebu.  They point out that 150 pesos (about $3.50) = 3 packets of noodles, 2 canned goods, 1.25liter of drinking water , 2kilos of rice.  A modest contribution can make a big difference to one or more person’s individual condition.

Contrast this with gifts to Australia universities by Andrew and Nicola Forrest  or Graeme and Louise Tuckwell.  These multi million dollar gifts will fund research and scholarship.  What will be done through enhanced research and scholarship?  Or rather, a better question is what has been achieved throughout history by researchers and scholars?  We may not live in a perfect world but the achievements and progress we enjoy has to a large degree been the fruit of  education and inquiry.

The analogy, it seems to me is with curing symptoms and finding causes.  Both are essential. Charity and philanthropy are both essential.  We need to develop expertise at both.

Another paradox was in the philanthropy news this month.  Bill Gates - channelling Peter Singer - asked “why anyone would donate money to build a new wing for a museum rather than spend it on preventing illnesses that can lead to blindness?”

The essence of that dilemma was encapsulated by this remark in the Wall  Street Journal.  “Somerset Maugham said in his novel Cakes and Ale: ‘Beauty is an ecstasy; it is as simple as hunger’." Philanthropy has a role in contributing to both.

What do you think?

 

 

 

Is US Philanthropy exceptional?

Is US philanthropy exceptional and is it unfair to judge Australia against US standards for wealth and philanthropy? Those were two questions posed in media I read last week.

"We overdo this thing about philanthropy because we don't compare with the Americans. There is no one with money in Australia if you compare us to the wealth in the US," said Harvey Norman chief, Gerry Harvey in TheAustralian. 

My friend, Sabith Khan posed the question, "Is US philanthropy exceptional?" in his blog The Clockwork Muse.   My response? US philanthropy is not exceptional and we do ourselves a disservice by thinking so.  Yes, it involves institutions which are native to the USA - such as the US tax treatment of donations.  But the US concept of philanthropy was inherited and remains consistent with other, much older cultures including the Islamic culture of giving which in turn spread to Europe around the 13th century.  Many of the institutions of philanthropy in the US were adopted from Britain. Among the institutions inherited from Britain was the legal concept of 'charity' which is based on the Elizabethan statute of 1601. 

British philanthropy was well developed in the nineteenth century at the time that it was only beginning to take root in the US. Its development from Tudor times to the early nineteenth century is described by the two great histories of British charity written by WK Jordan and D Owen. Reduced to its essence it is a tale of the emerging haves recognising a responsibility for - even a self-interest in - alleviating poverty and providing better education and health.  Many of the ways in which 18th and 19th century British philanthropists met these challenges were equal in their innovation to today's so called, "new philanthropy".

The newly wealthy US industrialists, moved by similar concerns about the welfare of the communities from which their fortunes had been created, looked across the Atlantic for ideas.  Some such as Andrew Carnegie and George Peabody were active in both Britain and the USA.

Some of the significant differences, especially the significantly higher levels of donations by US taxpayers stem from the era of World War I and its aftermath. By that time the British state had begun to take more responsibility for welfare and the relief of poverty.  For example, the old age pension was created for Britons in 1908.  After the War, under the influence of the Fabian movement, the British government took further responsibility for education, culture, health, welfare and religion. The influence of the Fabians was significant in the development of these social institutions in Australia and New Zealand too.

Conversely, in the USA much of this responsibility for welfare and poverty was taken up by philanthropy - supported, nonetheless, indirectly by the state through the generous tax treatment of philanthropy.  Tax rebates on philanthropy were created in 1913 when income tax was first introduced in the US. Olivier Zunz describes US philanthropy as "self-taxing for the common good" and cites Tocqueville who talked of it in his descriptions of Jeffersonian (early 19th century) America, as "self interest properly understood". (Zunz O, 2012, Philanthropy in America: a History, Princeton University Press, Princeton).

Britain has no such direct tax relief on charitable donations though relief is available to a donor who "covenants" a regular payment to a charity. Instead through Gift Aid, the charity receiving a donation also can claim an additional amount equivalent to the tax payable by the donor on her donations.

In contrast, however, Australia actually preceded the US by introducing tax deductibility for gifts to charity as early as 1907 in Victoria.  Tax deductibility was enacted federally in 1915. So in that regard, Australia cannot claim to be different from the USA.*

What about wealth, as suggested by Gerry Harvey?  The following data from Wealth-X Ultra High Net Worth Report ought to give pause for reflection. The USA has 60,280 UHNWIs (i.e. with over $30 million financial assets) with an average worth of $133 million.  Australia has 3,350 worth on average $122 million.**   As percentages of their respective populations, UNHWIs represent 0.019% of the USA total population, 0.015% of Australia.*** Oceania saw the greatest growth in UHNW population, with an increase of 5.9%, largely driven by the continued growth of Australia. That excuse is disappearing as fast as the wealth gap is narrowing!

  

*New Zealand also offers tax relief on donations though until recently it was capped at a very low level.

**New Zealand 485 worth $126 million. UK, 10,515 worth $126 million.

***0.011% of New Zealand and 0.017% of UK population.

Philanthropy gets a Buffetting

“It’s time for a new operating system. Not a 2.0 or a 3.0, but something built from the ground up. New code”.  With these words Peter Buffett started a controversy worth taking notice of.  

In an opinion piece in the New York Times he questioned the effectiveness of philanthropy, including some examples of mistakes of his own that led to his change of view.

Quick to respond were Matt Bishop and Michael Green the authors of Philanthrocapitalism.  The solution to Buffet's issues is already here, they say.  Its name is surprise, surprise, “Philanthrocapitalism”. My own reading of what Buffett says is different from Bishop and Green.  I do, however, agree with them (and Buffett) on the importance of philanthropic money being used as risk capital, and of achieving systemic change.

Two contributors from Forbes were next off the rank. Howard Husock drew historical parallels between Buffett and two of his American predecessors – John D. Rockefeller Jr. and Henry Ford II. All three argues Husock were wrong to doubt the system that gave them each their untold wealth. 

Tom Watson, on the other hand applauds Buffet  - agreeing with one of his main points and disagreeing with another. The disagreement is on the data on which Buffet’s argument appears to be based.  His agreement too is that philanthropy ought to provide risk capital.

Phil Buchanan from the Center for Effective Philanthropy also takes Buffett to task but he doesn’t spare any of Bishop and Green, Husock or Watson either. Not surprisingly for the President of an organization dedicated to researching how to make philanthropy more effective his conclusion Buchanan approves the overall debate. “We need to ask the big questions,” he says.

Some of the big questions Buffett has asked are

• Aren't the figures who are leading philanthropy also  leaders (or former leaders) of the very system that contributed the inequity now being redressed?
• Are business principles and capitalism really the solutions?
• Do  existing models of philanthropy take sufficient regard of different cultures, geography or societal norms?

What you might wonder does Buffett’s  famous father have to say about the debate? Well he is all in favour (or 'favor' maybe) says Peter on Huff Live.  Adding, "I grew up in a family with both parents being very much around equality, humanism, how can we make this world a better place for all ... I kind of grew up in this environment of social change and saying things out loud.”

By the way, if you're looking forsome music to round this discussion off you can listen to Peter Buffett’s latest song “Already Flown”

My Asian Venture Philanthropy Adventure

My background lies squarely in so-called, traditional philanthropy – especially major gifts – and in corporate partnerships, including sponsorship. Venture philanthropy was something that I was aware of but in which I claimed no expertise. When drawn into conversations with people who worked in the venture philanthropy field I found myself mystified by the jargon. Last week, however,  I attended the very first Asian Venture Philanthropy Network Conference in Singapore.  I now pronounce myself much more enthusiastic.

One thing that won my heart was the admission by one of the key note speakers that venture philanthropy has been around for aeons.  In fact it has. Depending on your own definition, original philanthropy was exactly that - venture philanthropy. Islamic philanthropists established schools, hospitals, hostels and soup kitchens as ventures to serve humanity. In the mid-13th century most of Egypt's agriculture and Cairo's buildings were funded by philanthropic endowments. Mediaeval Italy saw the first successful micro-finance schemes the Montes Pietatis. The first social housing was funded by the 15th century Fugger family. Fast forward to 18th-century Britain where successful Victorian industrialists and financiers funded urban housing projects and industrial villages.  London's University and Queen's colleges were funded by shares. Many British provincial universities grew out of a mixture of philanthropic subscriptions and capital endowments.

I was also gladdened by the admission of many attending that they were equally uncertain of the true definition of venture philanthropy. It is a slippery beast. In fact many speakers were comfortable with the concept of a continuum of philanthropy embracing traditional philanthropy at one end and the newer philanthropic financial instruments at the other. Several people talked of the importance of blended solutions. There was a refreshing lack of dogmatism.

Equally encouraging was a spectrum of views about the role of metrics in impact analysis.  Many made the important point that how and what you measure depends on what your intended outcomes are. Some agreed that, sometimes, stories of impact were as effective, if not more so, than statistics. There was agreement that both stories and stats have their role to play.

What was most exciting though was the palpable commitment of the 300 or so attending, drawn from all over Asia, to using wealth in creative and flexible ways to meet the many challenges of the region and of humanity in general. Those attending were a mixture of individual philanthropists, philanthropy intermediaries and nonprofits. All were comfortable in each other's company sharing ideas, successes and failures. All recognising that we are living extraordinary times that require extraordinary measures and imaginative and daring philanthropy. In Asia we are surrounded by great wealth and great poverty. To create a more equitable sustainable world requires commitment and risk taking by those that are fortunate by birth, education and success in business.

An encouraging aspect of the gathering was the number of young educated people of all nationalities committed to using their financial and /or intellectual capital to serve their fellow men.

One of the more persuasive cases of the effectiveness of philanthropic financial and intellectual capital being applied to achieve socially beneficial outcomes was the story of how social ventures Australia assembled a consortium of nonprofits to rescue the collapsed ABC childcare. (If you are not familiar with this you can read about it in NonProfit Quarterly)

In all there were only perhaps a dozen Australians amongst the 300 or so from the rest of Asia.  None of these were philanthropists per se. I would love to think by the time the next conference comes around that this number will have quadrupled and that there will be an Australian billionaire or two sharing the platform with the Indians, Chinese and Singaporeans that were there on this inaugural occasion.

India vs Australia (Who's winning this test?)

I have just come back from India where I had the opportunity to attend the Indian Philanthropy Forum in Mumbai. I was able to listen and talk to a number of nonprofit leaders. To say I am impressed is an understatement.  In fact, I would say inspired.  And would even say that I saw and heard lessons to be learned and models to be copied that would benefit practice in other countries including ours.

I listened and watched some extraordinary presentations.  They came from small and medium sized, indigenous NGOs pitching their cases for support to social investors and philanthropists. The clarity and structure of the information, usually pitched with considerable passion and conviction by the group’s CEO was exemplary. In part this was due to their coaching and training by Dasra the hosts of the Forum about whom more later.

There is famously one nonprofit for every 400 people in India!  This statistic, however, is massively inflated by the fact that it represents gross registrations.  Unfortunately, there is no de-registration of those that are defunct.

Generosity in India is pervasive.  Around 80% of the population, according to a 2012 Charities Aid Foundation survey, give to help others. The big challenge is that only around 27% is given to nonprofits.  The larger portion is given directly to individuals in need – family, servants, neighbours, beggars.  Giving to charities represents about 0.3-0.4 per cent of gross domestic product – behind the US at 2.2 per cent, yet ahead of fellow Brics - Brazil at 0.3 per cent and China on 0.2 per cent of GDP.   High net worth individuals in 2012 donated ten times the national average - 3.1 per cent of their income.  (Australia currently does not produce comparable up-to-date statistics).

Much of my visit was spent with nonprofit organisations whose work is to change this imbalance.  They are run on shoestring budgets.  They are lead and staffed by university educated Gen X or Y, women mostly. Members of the fast growing middle class.  All these people could be earning several times their salaries in the private sector. Their offices are spartan, often in rented residential accommodation adapted to provide workspace.  Every single person I met was incredibly welcoming.

CAFIndia encourages both individual and corporate giving.  It has established payroll giving in India.  Indian Parliament is about to pass a law making it compulsory for corporate India to spend 2% of its profit on CSR initiatives.  (However, as I heard one speaker at the Forum note, “There’s many a slip between cup and lip”. India’s Parliament moves slowly).  CSR in India has traditionally been understood to mean corporate philanthropy.  This, for now, until other elements of CSR are adopted, is likely to create a huge opportunity for substantial growth in giving. (Australian equivalent is CAF Australia).

Centre for the Advancement of Philanthropy for 25 years has provided the nonprofit sector with training and advice on governance and legal issues.  This is no mean feat in a federation where there is a plethora of Acts and regulations of Central and State governments for nonprofits and fundraisers.  The founder and driving force of CAP left what he described as a “cushy job” as a lawyer.  Ever since, he has helped nonprofits through the legal labyrinth. He also writes extensively and champions the sector to both business and government. (As far as I know there is no equivalent in Australia).

Dasra was founded by two people who left the security of careers on Wall Street and brought their skills to the Indian nonprofit sector. Dasra puts philanthropists and social investors together with nonprofits.  It intensively coaches and mentors these nonprofits.  The proof of the Dasra pudding was the nonprofits I saw and heard make cases so persuasively. (Possible the nearest comparison would be Social Ventures Australia).

Guidestar India was started to provide robust information about the performance of nonprofits to would be donors.  Its founder was driven by her training and experience in the Indian finance sector and her strong desire to help others.  The searchable online database now has information on 3,500 nonprofits.
Indian Foundation for the Arts meets a difficult challenge close to my heart. Even in the face of poverty and other social issues, artists and creative people will do a great deal to change India’s society for the better. (Australia has no equivalent to Guidestar).

Indian Foundation for the Arts makes grants, runs training programs and advocates for the arts, all without any government support.  As described to me: “IFA does everything that a government funded arts council (like the Australia Council) does but with no government funding!” (Nearest equivalent would be the government funded Australia Council).

Resource Alliance South Asia is part of the global organisation of the same name. It runs a certificated training program, workshops and an annual resource mobilisation conference in Asia.  It conducts an awards program for nonprofits. It also offers consulting services – “tailored capacity building” – drawing on its international network of experts. ( Resource Alliance has a presence in various regions but not Australia)

Saampradan Indian Centre for Philanthropy was founded in 1996 to promote philanthropy through research and exchange of information.  Nowadays, it focuses on creating regional community foundations outside the major metropolitan hubs. (No real equivalent down under).

South Asian Fundraising Group (SAFRG) is the veteran, founded in 1987.  Its most valuable contribution has been its annual Workshop.  This brings fundraisers from all of South Asia together to learn from fundraising experts from around the world.  In addition it runs one day masterclasses led by local experts.  These programs have recently been joined by a certificate course in fundraising and marketing.
All of these organisations have first to raise their own funds. Governments provide no financial support for the sector.  They do not charge memberships. And usually they charge only minimal fees for their activities and advice.  (An organisation with similar intentions would be the Fundraising Institute of Australia).

There is one lesson I took back with me from this trip.  It is that there is a key difference between the developing and the developed world. The first is described by a verb (well a gerund, to be precise), the second by an adjective.  One is active, doing. The other, well, static….

Fair point?  What do you think?

Facts and Figures

India is the second most populated country in the world with approximately 1.2 billion. Its GDP per head is USD$3,900.  Thirty percent of the population live under the poverty line, which the Indian Government defines as about $0.50 a day. On a more generally accepted measure of $1.25 a day the percentage would be the more commonly stated 40% living in poverty. India ranks 134th of 187 in the United Nation’s Human Development Index.

Now some good news.  India’s economy is ranked 50th for growth at about 7% p.a. (Australia is 103rd, New Zealand 139th). India’s rapidly rising middle class should grow from more than 160 million people in 2011 to 267 million people in 2016.  HNWI numbers are around 120,000.