"I’ve always found it delightful to push people’s conventional thinking, to be a little contrarian," says philanthropist and eBay founder Pierre Omidyar. "I really like to challenge people’s assumptions about what is the best way to make the world better."Omidyar is not the only philanthropist with nontraditional ideas about how best to create social change. And with new ideas comes new influences into the philanthropic arena. Here are just three.
Young donors and Silicon Valley-style work processes are changing the philanthropic status quo.
Emmett Carson, CEO of the Silicon Valley Community Foundation (SVCF), is on the forefront of philanthropy and says that younger donors are one reason the philanthropic landscape is changing. Silicon Valley is replete with young entrepreneurs who make big bets, aren't afraid of risk, and operate with expectations of 24/7 connectivity, quick turnarounds, and direct involvement. When those entrepreneurs become philanthropists, Carson says that they approach giving with a similar mindset. It's a mindset Carson embraces. “They want partnerships; they want people who can go on the journey with them,” he says. Of the old philanthropic model, wherein donors were expected to simply entrust funds to philanthropic experts, Carson says simply, "that model is broken." Another difference Carson points to is the agile, iterative approach to philanthropy—you might call it adaptive strategy—modeled on software and project development so evident in Silicon Valley. To this point, Carson is a true believer in evaluating grantee performance using cheap, low-cost tools at frequent intervals rather than expensive studies at the beginning and end of a grant term. "As we learn something, we disseminate it," says Carson. "The idea of just doing the same thing for three to five years and then you’re going to tell me if it’s successful? No business runs like that, other than foundations."Emmett Carson on keeping up with young philanthropists
Game-changing funding models like impact investing are expanding how philanthropic investments are made.
What constitutes appropriate philanthropic investments is another area that is seeing burgeoning—and polarizing—change. Impact investing is a prime example of this, which broadly defined, means investing capital to generate social impact in a way that also provides monetary returns. Perhaps not surprisingly, some of impact investing's most vocal proponents come from the tech world, whose very existence rests on innovation and transforming the status quo. eBay's Omidyar is among those who believe impact investing can be a powerful force for creating social change. Through his “philanthropic investment firm,” the Omidyar Network, Omidyar invests in a wide range of nonprofits—such as Refugees United, a web-based platform that enables displaced people to register to find missing family members—and for-profit companies that have the potential for profound social impact, such as d.light, which sells affordable solar lights to the world's poorest, many of whom lack access to electric light.Pierre Omidyar on making the unconventional conventional
The Case Foundation's Steve and Jean Case, both of whom got millions of Americans online with AOL, also think impact investing has the potential to be a powerful tool for philanthropists. Jean points out that impact investing could be considered as one of the ways even traditional philanthropic organizations can strategically leverage some of their dollars toward social issues. "Impact investing will create a terrific opportunity for foundations and large organizations with large endowments," she says.
"I think we're kind of in the early days," says Steve, "but [impact investing] really is a place where things are trying to come together in a more integrated way and take some of the principles of business but also some of the principles of the social sector." He believes that this "blended model" will have a lot of appeal, "particularly for the up-and-coming philanthropists who don't want to just do it in a completely traditional way."
Jean and Steve Case on impact investing
Despite impact investing's potential, many in the philanthropic arena urge a cautionary approach. For example, echoing Steve's words about the "early days," a survey from JP Morgan Chase and the Global Impact Investing Network characterized the field of impact investing as “in its infancy and growing.” The survey also highlighted the lack of a track record of successful investments, a shortage of quality investment opportunities, and inadequate impact measurement practice. These potential challenges are significant, and may take decades to overcome. Due to the nature of these challenges, a report by the Monitor Institute and the Acumen Fund argues that impact investing is not a replacement for philanthropic contributions, but rather a complement, helping organizations to grow once they have proven the success of their model using, frequently, philanthropic contributions. In addition, despite the potential of impact investing, some who have studied the nascent field are worried that the approach could undermine support for philanthropy. Potential investors should realize that impact investing will require significant due diligence and attention to measuring results, and that however the field emerges, traditional philanthropic contributions will continue to be necessary.
For some, the lines between business and philanthropy are blurring.
One definition of philanthropy is an "active effort to promote human welfare," and many people today believe that the division between businesses and nonprofits is fading as new generations become more experimental about how to create social change. For example, Steve and Jean Case say they aim for the same vision from different sectors. While Steve invests in socially conscious businesses such as Revolution, Jean manages the family foundation—but both target investing in people and ideas that can change the world. And when they can bridge the for-profit and nonprofit sectors, they do. "The Startup America Partnership is a good example of where we're bringing some of the entrepreneurial capabilities together with what we're doing on the foundation; marrying that up with what's happening with the government side of things," says Steve.Jean and Steve Case on bridging business and nonprofit ventures
Josh Mailman, son of the late Joseph Mailman, founder of a knife and razor company that grew into the conglomerate Mailman Corporation, is another philanthropist-businessman who subscribes to the "business can be a force for good" mindset. "I want to change the world, not just make money out of the businesses," he says. To his point: He was among the first investors in environmental household products and distributor Seventh Generation; yogurt-maker and leader in the corporate social responsibility space Stonyfield Farm; and the Utne Reader, a magazine devoted to alternative coverage. "When there's for-profit structures, I'll make investments; when there's nonprofit structures, I'll do grants," he says.
Mailman has also had a hand launching organizations that promote collaboration among private companies, social entrepreneurs, private investors, early stage ventures, Fortune 1000 businesses, and business school students to promote socially responsible business. To name just a few: He has gathered other wealthy individuals to promote social good through the Threshold Foundation and is co-founder of Social Venture Network, a community of social entrepreneurs; and played a key role in launching the global network devoted to sustainable business, BSR (Business for Social Responsibility).
As with impact investing, the concept of businesses doing good can be incredibly complex. For example, in 2011 the Center for Effective Philanthropy President Phil Buchanan, speaking largely to the issue of big corporations creating shared philanthropic and business value, writes, "Our most pressing social problems are, almost by definition, the ones that markets haven’t solved over the decades—either because they defy market solutions or result from market failures." And in an earlier piece, he writes that some "seem not to understand—or perhaps choose not to acknowledge—that the ability to operate outside of traditional market dynamics is at the root of why the nonprofit sector matters!"
Josh Mailman on putting impact investing to work
New kinds of donors, who bring new ways of thinking about how to create change are affecting traditional views of philanthropy. To what extent these forces will affect the field of giving and whether they will create positive transformative change—or inhibit it—remains to be seen.
