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).

Data protection spells disaster for fundraising

I was struck by the headline of an item in Third Sector. "EU data protection plans 'potentially disastrous' for charity fundraising" it proclaims.

The article went on to quote from a report from a fundraising agency "Fundraising depends on big numbers and economies of scale; by generating enough new donors, the cost of finding and keeping each one gets small enough to make donor recruitment profitable." My question is, "Does it?" 

Without wanting to denigrate the commitment of those of you fundraisers who specialize in mass appeals, my understanding of successful fundraising leads me to quite the opposite conclusion. Could it not be that instead of disaster, perhaps restrictions on the use of lists, telephone campaigns and direct mail would be a victory for effective fundraising?

Effective fundraising, it is generally reckoned even by those who practice more mass-market approaches to fundraising, requires building a relationship. So what if suddenly we switched our effort from list-buying, mailing and calling segments, postcodes and sociodemographic profiles? Instead, what if we spent our time identifying and researching people who  really are connected and close to us? Who are part of our real social constituency not just the product of data analysis. Our existing donors, our volunteers and their families and friends? And, those that have been touched by and share in our causes? What if we actually took time to talk personally and directly to these people? What if we got to know them on a one to one basis? What if we asked them to become part of a network of personal connections? What if our contact with them was social, face-to-face and responded to their interest and passion for what we do uniquely, valuing them as a person instead of as a data point?

That, of course is the basis of major gift fundraising. It is also the way to successfully approach business partnerships and to get support from trusts and foundations.

However, if we step back in time it was also the way that philanthropy originally was born. Mass-market fundraising only really started in the early part of the last century. Street fundraising originated with the YMCA and wasn't popularised until the 1980s by Greenpeace. Direct mail fundraising is really only a post World War II phenomenen. Its precursor direct mail marketing began the 1900s. Telephone fundraising, as I'm sure many of you know came much, much later.

Prior to these, fundraising for social causes including the arts and education was achieved by personal connection between social activists, volunteers and donors. The main fundraising tools were events of various sorts including balls, concerts and lectures. Fundraising letters were written personally -think of Mrs Jellaby in Dickens' Bleak House. Other forms of  eighteenth and nineteenth century fundraising also included financial tools and instruments curiously similar to those that we describe as "new philanthropy". The significance of any of these older forms of fundraising is that they involved networks of individuals interacting viscerally, personally and socially.

So, if suddenly, governments introduced regulations that limit our ability to buy lists, to mail and telephone people whom we don't know, will that really be such a disaster?

One must travel, to learn (Mark Twain)

 "If the passenger visits better countries, he may learn to improve his own", wrote Samuel Johnson,  in 1755.

As I have spent the past two weeks in India a thing that has struck me as I read my morning news has been the number of stories about local nonprofits. 

It has led me to think afresh about the importance of nonprofits (NGOs) and social enterprise in the space between what government and the for profit sector can do. It is in this space where change can happen, a difference can be made and humanity can be found. What would the world be like without all the various organisations in that space where you live?

There are said to be around 200,000 nonprofits in India more than one for every 600 of its 1.2 billion people. In India, as in much of the developing world, the ability of governments and the for profit sector to deal with the huge demands of extreme poverty and a fast growing population has limits. Here are some examples of how Indian nonprofits are stepping up to the challenges. 

Keshav Srushti in a bid to spread awareness on solar cooking, will be recruiting students from 500 schools across Mumbai to cook solar-powered dishes. This solar cooker is a rudimentary piece of plastic foam that can reach a maximum temperature of 120ºC and can save up to 10,000 units of electricity on a daily basis and is functional for a year.

Salaam Balak  is trialing solar powered school bags for the poor. This idea came to its designer when she was talking to her domestic help, “She told me about the problems her children faced while studying at night. There are frequent power outages in her slum". The backpacks look like regular schoolbags but turn into a lamp when their front pockets are unzipped.

GOONJ  responded to the problem that 68% of rural women cannot afford sanitary napkins. When women cannot afford sanitary pads they resort to using cloth pieces or nothing. This causes infections and can lead to cervical cancer. GOONJ decided to act on this issue and started a movement of making sanitary pads out of waste cloth for rural women.

Sewa Trust  provides free meals to city slum and street dwellers admitted to hospitals who are unable to afford their own. Many of the beneficiaries are migrant workers drawn to the cities from rural India by the opportunity of work and separated from family support during their time of need. Says one beneficiary, “I regularly come to this organisation and am offered free food by the members. I live on a footpath and do not have enough money to buy food for myself". 

Sangama, an NGO for sexual minorities, sex workers and people living HIV has been asked by the Kerala Government  to conduct a socio-economic and situational survey of transgenders in the state through an NGO with a view of formulating welfare measures for them.

To celebrate Indian National Day on 15 August, the Times of India ran a feature that highlighted several more NGOs and social enterprises:

Basic school skills

The focus of in-school programs has always been on children achieving basic skills. The depressing fact is that of children enrolled in class 1, about 40% drop out before class 8 and a total of 70% drop out before class 10, makes basic literacy and numeracy an urgent social goal. Akshara’s effort began in Bangalore when remedial programs were implemented with volunteers, trained to identify children with learning deficits and give them specialized inputs. 

Microcredit and crowdfunding

Rang De combines microcredit and crowd funding to help people achieve freedom from poverty. It acts as a bridge between people who want to help the under privileged and those who need money to invest in small businesses. People living in cities can choose from a huge database of borrowers on rang these websites invest as little as Rs.100 into their business.

Out on the streets

Started in 2010 by an anonymous group of volunteers Ugly Indians are out on the streets fixing pavements, fearing a garbage, removing unauthorised posters, painting walls and planting saplings all over India. The regional initiative in Mumbai has been to document all the filthy and rundown parks and playgrounds and lobby the city council to remedy these.

Femininity and Fearlessness

The Fearless Collective are artists, activists, photographers and filmmakers who use art to speak out against gender violence. It was formed in response to the Nirbhaya rape and murder. The collective aims to redefine fear, femininity and what it means to be fearless.

Pay from your heart

Seva Cafe is a pop-up restaurant run entirely by volunteers. At the end of the meal  diners don't get a bill, just a little note which says "Pay from your heart!".  A hundred percent of the restaurant profits is used to support social service projects.

See also https://www.youtube.com/watch?v=b0V1XVzD7ik

Is the Death of Corporate Philanthropy Exaggerated?

The end of corporate philanthropy was predicted in a post on the Forbes Leadership Forum. I reckon not and  the answer lies in stirring the alphabet soup.


Paul Klein, who heads business and civil sector consulting group Impakt, encourages any corporations who are giving away their hard-earned dollars to charity to stop.

Klein, admittedly, doesn’t go as far as Milton Friedman famously did, saying that the only responsibility of a business was to make a profit, or as Jamie Whyte implied even more stingingly in the Wall Street Journal, “Corporate philanthropy is theft.” However, Klein spares no punches when it comes to charities. He recommends they “can address the loss of 5% of their revenue by reducing costs, improving efficiency.” (Those who argue that charities should spend more on overheads will wince at that uppercut.) The five-percent figure quoted is the corporate contribution to nonprofit income.

The Giving USA statistics from which the number is drawn also show that corporations’ giving to charities declined during 2013. Yet there has been a steady flow of reports and articles pointing out that companies who do good in the world do well. A 2013 Cone Communications/Echo Global CSR Study says companies are “expected to be an active participant—if not a driving force—in solving the most pressing social and environmental issues.” Cause marketing—such as Toms’ “One for One,” (Product) Red, and Patagonia’s “Common Threads”—has been highly successful. Millennials, we are told, choose to join and stay with companies on the basis of their volunteer programs and social commitment.


However, it might just be a matter of semantics. Aren’t all the above types of doing good by companies forms of corporate philanthropy? Or are they corporate citizenship? Or corporate social responsibility? Impakt on their website extends this lexicon with yet another label: corporate shared value.

Might it be possible to take a contrary view that has corporate philanthropy is alive, well, and kicking—and adopting many different guises? I have always argued that the best thing for corporate fundraisers to do is to decode then rearrange the letters in the corporate alphabet soup. As well as CSR other acronyms in the soup are  CP (Corporate Philanthropy or Partnership), CSI (Corporate Social Investment), CSV (Corporate Shared Value) and more. The solution is to rearrange it as a spectrum. At one end of the spectrum is the hard edged advertising and marketing related type of corporate partnership at the other softer gentler fuzzier community, social and political objectives.

Your job as a fundraiser is to understand what opportunities your organisation can offer and where it fits in the spectrum. Once you know that, you are a better position to identify whom or what department to target. If you have opportunities that are going to drive sales, or enhance corporations product brands then you're at the hard edged and and you need to be talking to sales and marketing executives. If your organisation offers opportunities for corporate volunteering, then you probably want to be investigating the company's human resources Department.  If your organisation has good government connections then you might offer opportunities for companies government or public affairs relationship building. If you are doing good in a particular community, especially one that is linked geographically to companies activities then you will probably be wanting to talk to corporate affairs.

Of course, one of the advantages your nonprofit may have is that you may have benefits at several different places on the spectrum to offer  a company. Take for example a health charity that stages a public event, such as a marathon, that offers branding and product placement opportunities for a business partner.  As well your nonprofit may have strong links  with government health or welfare departments. Such links offer opportunities for business partners to be seen supporting a government backed initiative and may offer networking opportunities to develop  relationships with officials. A major arts festival by which I was once employed offered both these opportunities.  We worked alongside brand and product managers to achieve outcomes at the hard end of the spectrum and with corporate affairs directors and the CEO's office to facilitate networks and contacts at the other more subtle end.

The secrets to developing successful corporate partnerships is to understand your corporate partner. If you can get inside the company's skin, that is see and hear through the corporate executive's eyes and ears then you have a good chance of pitching an opportunity.

Note: Some paragraphs of this blog were first published as a NonProfit Quarterly Newswire on 21 July 2014

Has digital killed the donor pyramid?

A fascinating debate has erupted between two important names in fundraising.  Claire Axelrad is the proposer. Andrea Kihlstedt the opposer.  The proposition? That social media has killed the donor pyramid.
You know the pyramid?  Legacies (or "ultimate gifts") at the top and one-off, first time donors at the base. 

Claire milked the pyramid metaphor for all it was worth in her opening salvo. "They’re where people go to die".  Though, perhaps her more balanced comment was: “The pyramids were built in Egypt. On the backs of slaves. Nobody’s got 100,000 workers (aka direct-mail donors) building a solid pyramid anymore."

Andrea's riposte referenced Mark Twain that "reports of its [the pyramid's] death have been greatly exaggerated"  Andrea continued, "When organizations use the donor pyramid to focus their attention on raising large gifts, that’s just what happens — they raise large gifts."

It emerged in the debate, that both Claire and Andrea agree on two things.  A relief to me because they are things that I firmly believe as well: 

1. Major gift fundraising is extraordinarily important.
2. The Pareto Rule (80/20) is alive and well.

So why the furore? In my view, Claire and Andrea start from different places. Claire references research done by Adrian Sargeant and Penelope Burke on the attrition rates of first time donors (they're the ones at the bottom of the pyramid).  She then, correctly, proposes that social media provides great ways for nonprofits to engage with people.  And, in part, she is saying that attrition is avoided through engagement (aka stewarding) donors.  Social media is effective at engaging first time donors. But, actually, she expands this by saying that social media is effective at engaging many more than first time donors.  It can engage all donors, at any of the traditional levels and non-donors alike. Who would argue with that? (Claire proposes a vortex model for all this high energy, swirling engagement.)

Andrea, though, suggests the pyramid has a quite different role. In my interpretation, her view of the pyramid is really as a planning model. She says the pyramid "makes sense of complexity by reminding us to focus a disproportionate amount of attention to the precious few donors who can breathe life into our mission in the way that small donors, even collectively, can not".  And, frankly, I agree with her.

Yes, it is vitally important to attract and engage with first time donors. (Actually, that would better read, "attract and engage with non-donors") . And social media offers great ways of doing that.  Via Twitter, LinkedIn, Facebook, Google+ and even texts, as Claire says. However, for most organisations I know, the truly transformative, target-reaching mouth-watering gifts and bequests have come through carefully planned relationships with a few carefully identified and researched individuals and organisations.  Those represented by the top of the pyramid.

And yes, the swirling vortex impacts and involves those at the top - and those that influence them too. So for heaven's sake let’s have both the pyramid and the vortex. But please make sure they both work together.  Or else, Claire prediction will come true.  The vortex will "crumble" the Pyramid " … slowly, surely … until there [is] nothing left but an empty frame."  And then where will fundraising be?

What is a culture of philanthropy?

What is a culture of philanthropy?  It’s a phrase that has gained a great deal of popularity over the last few years. 

Google the phrase.  I did, as I wrote this blog and what did I find?

An article by Simone Joyeaux, one of the best known US major gift fundraising pundits.  An article from NonProfit Quarterly Newswire, a leading US nonprofit sector journal. A webinar, by Compass Point (sponsored by NonProfit Quarterly).  Compass Point is a leading US consulting and training  organisation.  Two whitepapers from two more consultants showed up on my lap top screen, and, finally,on that first page of hits, an article in Fundraising Success Magazine by another leading fundraising pundit, Pamela Grow.

By the way, check out all these links and sign up to their newsletters because collectively they will provide a rich flow of knowledge and expertise for you as a fundraiser. I read all of them regularly. (Or, you can take the easy route by checking out Artful Training’s Facebook Page, where such articles are regularly posted)

But, what do I think a culture of philanthropy is. And, what would one look, feel and sound like?  Here’s my version of a fictitious organisation with an embedded culture of philanthropy.

Let's imagine it is an Art Gallery. And imagine that you are donor. Suppose you go in, perhaps to have a coffee and enjoy the latest exhibition. Of course, as you walk in the main entrance, prominent is an attractive 'roll of honour' displaying the names of all those individuals, foundations and companies whose philanthropy has contributed to the success of the gallery. You get a thrill of recognition, as you see your name amongst them.

As you walk past the welcome desk you exchange warm greetings with the staff member who sits behind it. You know each other by name. Likewise, the volunteer who is sitting at the information desk greets you by name. And you too, a volunteer yourself,  have spent some time sitting in this chair. In the café, the barista gives you a special smile. You know that he is a young artist and you ask how he is going?

While you're having your coffee, a young lady from the fundraising office pops down. She says, that the office had heard that you were in the building .She brings the Head of Philanthropy’s apology, that she can't come down and say hello - she’s in a meeting. However, they thought to take this opportunity of sharing with you their latest donor newsletter which is just about to be mailed out. When she is gone, and as you sip your coffee and enjoy your carrot cake , you browse through the newsletter. You are pleased to see notice of a special preview for friends and donors before the next exhibition and you check your PDA and discover that you are free to attend.

Fortified by coffee and cake, you decide it is time to enjoy some art. As a donor and the volunteer you have free access to all the galleries. Nonetheless, you think it is appropriate to put a $10 note into the donations box as you pass into the main gallery. Walking into the gallery feels like walking into a room of friends. There are pictures and objects there that you have long enjoyed and it is always refreshing to see them. In the next room, you are delighted to see a group of children engaged in learning. The galleries Education Officer smiles and waves at you. The education activities at the gallery, you know are sponsored by a local bank.

The main exhibition, too, has a sponsor acknowledgement displayed at the entrance way and discreetly on each of the exclamatory labels that accompany the artworks. Of course, you know that the quality of the exhibitions and the education program and the gallery generally is reliant on sponsorship and donations.

After an enjoyable hour or so soaking in the arts and the ambience you’re heading out again, much uplifted. As you walk out, the gallery director and one of the members of the board are coming in. They, too, greet you warmly. In fact, the board member is an old friend and it was she who first cultivated your interest in the gallery. And, it was the gallery director and she who visited you a couple of years ago and offered you the opportunity of becoming a donor. You remember her explaining how much she had enjoyed making a gift and how it had continued to reward her in many ways. After thinking it over you too made a significant gift. The investment you made has repaid you many, many times.

"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)