Hands-on givers want results
Tuesday, 25 September 2007
Sarah Murray
THESE days, among the growing number of westerners flying to places such as India or China are travellers who are not on a holiday or business trip, but on a site visit to a philanthropic project to which they have donated funds. The tours are a way of seeing exactly where their money has been spent.
But as philanthropists become more interested in measuring the impact of their donations, the one-off trip to an orphanage or healthcare project may not be sufficient. Moreover, before buying the plane ticket, the first step donors must take is to establish what exactly it is they want to bring about with their money.
"A lot of clients don't know what they're trying to achieve and then they try to measure it after the gift has been made," says Melanie Schnoll Begun, managing director of Citi Philanthropic Services.
"That's like trying to cook a roast chicken, picking anything out of the fridge, throwing it into a pot and then being disappointed that it doesn't taste like roast chicken." Even once a donor has settled upon a cause, a region and a beneficiary organisation, measures of success vary, and often simply counting the individuals fed or cured is not necessarily the most accurate measure of success.
Maximilian Martin, global head of UBS Philanthropy Services, cites the example of a children's foundation in South America whose impact, when considering the number of children it assisted, looked small given its financial resources. However, it was using its funds to provide seed money to other non-profit organisations. "So if you look at the fact that they've kickstarted the funding for other organisations, it's a very impressive story," he says.
At the same time, donors often want to give their money directly to the projects on the ground.
"People want to be able to wrap their hands around it and see what they've accomplished with their money," says Sal LaSpada, chief executive of the UK's Institute for Philanthropy. "That's a first level way of measuring your social impact, but in fact often it is about building strong institutions and investing in leaders - and that's less tangible and less easily measurable."
However, with the emergence of a new hands-on generation of philanthropists - many of them entrepreneurs with experience of what it takes to run an organisation - this approach is starting to change. And supporting organisations are emerging to help donors that want to do more than simply write a cheque.
The Institute for Philanthropy, for example, offers a number of programmes designed to build knowledge, skills and networks among philanthropists.
Its Philanthropy Workshop caters to an international group of donors, bringing them together for three week-long sessions in London, New York and a location in the developing world.
At UBS, the Philanthropy Forum is a regular event held several times a year in different locations around the world and bringing together high net worth individuals, philanthropy specialists and non-governmental organisations. "Pure learning especially in the first stage is very important," says Mr Martin.
Banks can also help their clients once a decision has been made on where to focus funds. UBS offers clients an audit process that looks at how well a foundation or trust is performing, as benchmarked against best practices in areas such as governance, human resources policies and operational management.
Citi facilitates meetings between donors and the leaders at the non-profit organisations at the outset of a new funding arrangement. "It helps both sides become aware of what each is expecting at the end of the relationship," says Ms Schnoll Begun. "And they can even set parameters on what reporting should look like - is it the end of the year or quarterly, for example?"
At the same time, a new generation of intermediaries can help donors monitor and maximise the impact of their funds. Impetus Trust, a UK venture philanthropy organisation, does this by becoming involved in the charities and bringing venture capital know-how to bear on how those organisations improve their performance.
"We assess the whole organisation, and our funding isn't tied to particular projects - it's tied to the performance of the whole organisation. Funding is drawn down on a quarterly basis, so we have a strong tool there," says Stephen Dawson, a venture capitalist who founded Impetus Trust to enhance the impact his own charitable donations.
Mr LaSpada also argues that when it comes to maximising the impact of philanthropy dollars, donors need to start looking at "upstream" solutions, preventative ways of addressing social issues.
"But you can also think about it in a less literal way," he says. "So if you care about delinquency, you can set up a centre for young people to stay at where they have job training opportunities."
For Mr LaSpada, the challenge is how to bring about a greater social return. "Part of that is moving away from a transactional, cheque-writing model with a limited number of beneficiaries," he says. "The question is how to get beyond that and add value to your financial contribution in a way that will create greater change."
..........................................
— FT Syndication Service
THESE days, among the growing number of westerners flying to places such as India or China are travellers who are not on a holiday or business trip, but on a site visit to a philanthropic project to which they have donated funds. The tours are a way of seeing exactly where their money has been spent.
But as philanthropists become more interested in measuring the impact of their donations, the one-off trip to an orphanage or healthcare project may not be sufficient. Moreover, before buying the plane ticket, the first step donors must take is to establish what exactly it is they want to bring about with their money.
"A lot of clients don't know what they're trying to achieve and then they try to measure it after the gift has been made," says Melanie Schnoll Begun, managing director of Citi Philanthropic Services.
"That's like trying to cook a roast chicken, picking anything out of the fridge, throwing it into a pot and then being disappointed that it doesn't taste like roast chicken." Even once a donor has settled upon a cause, a region and a beneficiary organisation, measures of success vary, and often simply counting the individuals fed or cured is not necessarily the most accurate measure of success.
Maximilian Martin, global head of UBS Philanthropy Services, cites the example of a children's foundation in South America whose impact, when considering the number of children it assisted, looked small given its financial resources. However, it was using its funds to provide seed money to other non-profit organisations. "So if you look at the fact that they've kickstarted the funding for other organisations, it's a very impressive story," he says.
At the same time, donors often want to give their money directly to the projects on the ground.
"People want to be able to wrap their hands around it and see what they've accomplished with their money," says Sal LaSpada, chief executive of the UK's Institute for Philanthropy. "That's a first level way of measuring your social impact, but in fact often it is about building strong institutions and investing in leaders - and that's less tangible and less easily measurable."
However, with the emergence of a new hands-on generation of philanthropists - many of them entrepreneurs with experience of what it takes to run an organisation - this approach is starting to change. And supporting organisations are emerging to help donors that want to do more than simply write a cheque.
The Institute for Philanthropy, for example, offers a number of programmes designed to build knowledge, skills and networks among philanthropists.
Its Philanthropy Workshop caters to an international group of donors, bringing them together for three week-long sessions in London, New York and a location in the developing world.
At UBS, the Philanthropy Forum is a regular event held several times a year in different locations around the world and bringing together high net worth individuals, philanthropy specialists and non-governmental organisations. "Pure learning especially in the first stage is very important," says Mr Martin.
Banks can also help their clients once a decision has been made on where to focus funds. UBS offers clients an audit process that looks at how well a foundation or trust is performing, as benchmarked against best practices in areas such as governance, human resources policies and operational management.
Citi facilitates meetings between donors and the leaders at the non-profit organisations at the outset of a new funding arrangement. "It helps both sides become aware of what each is expecting at the end of the relationship," says Ms Schnoll Begun. "And they can even set parameters on what reporting should look like - is it the end of the year or quarterly, for example?"
At the same time, a new generation of intermediaries can help donors monitor and maximise the impact of their funds. Impetus Trust, a UK venture philanthropy organisation, does this by becoming involved in the charities and bringing venture capital know-how to bear on how those organisations improve their performance.
"We assess the whole organisation, and our funding isn't tied to particular projects - it's tied to the performance of the whole organisation. Funding is drawn down on a quarterly basis, so we have a strong tool there," says Stephen Dawson, a venture capitalist who founded Impetus Trust to enhance the impact his own charitable donations.
Mr LaSpada also argues that when it comes to maximising the impact of philanthropy dollars, donors need to start looking at "upstream" solutions, preventative ways of addressing social issues.
"But you can also think about it in a less literal way," he says. "So if you care about delinquency, you can set up a centre for young people to stay at where they have job training opportunities."
For Mr LaSpada, the challenge is how to bring about a greater social return. "Part of that is moving away from a transactional, cheque-writing model with a limited number of beneficiaries," he says. "The question is how to get beyond that and add value to your financial contribution in a way that will create greater change."
..........................................
— FT Syndication Service