Philanthropreneurship Forum Alert

Alert me before session starts

At the Philanthropreneurship Forum in Versailles in December 2015, I was honored to participate in a panel that asked whether philanthropreneurship signals the end of philanthropy as we know it. I learned much from my co-panelists and from the vibrant Philanthropreneurship Forum more generally, and I would like to take this opportunity to reflect further on the question in the title of this essay, to which my answer is unequivocally “no.”

Let me begin by asking what “philanthropreneurship” means. It is a new term, associated with the contemporary Saudi philanthropist, His Excellency Amr Al-Dabbagh. A recent Wikipedia entry[1] defines philanthropreneurship as an “emerging practice of driving social change in new and creative ways,” or “deploying entrepreneurial business practices to help drive maximum impact, sustainability and scale.” In a 2015 article in Fortune, Mr. Al-Dabbagh writes:

“Too often, donors write checks to charitable organizations and just hope for the best. But this doesn’t help deserving non-government organizations achieve real impact. An entrepreneurial philanthropist, or … “philanthropreneur,” takes a more active role in helping NGOs by bringing the same entrepreneurial skills they learned in business to the world of philanthropy. Essentially, they disrupt the status quo of giving.”

Contemporary outcome-oriented philanthropy fits into two broad categories: (1) supporting organizations to deliver social change and (2) philanthropic problem-solving that goes beyond these organizations.[2] Philanthropreneurship, as described by Mr. Al-Dabbagh, represents some valuable developments in the first category.

Supporting Organizations

The most popular approach to supporting organizations is what one might call “philanthropic buying:” funding existing nonprofit organizations to provide services for beneficiaries in areas such as health, sanitation, and education.

While this is the mainstay of the social sector, the term “philanthropreneurship” is more aptly reserved for creating and scaling the various organizations that provide such services. Philanthropreneurship includes the support of social entrepreneurs by organizations like Ashoka, Echoing Green, Skoll, and the Star Foundation (whose awardees were featured at the Philanthropreneurship Forum).  It includes providing risk and growth capital, often coupled with technical assistance, to nascent enterprises. In the nonprofit sector, this is called venture philanthropy, epitomized by The Edna McConnell Clark Foundation, which builds the capacity of promising youth services organizations and aggregates capital from multiple funders toward this end.

Multi-stakeholder collaborative efforts to solve local problems can also be characterized as philanthropreneurial—though they call for broader problem-solving skills as well. A paradigmatic example is Cincinnati’s Strive project, in which foundations, nonprofit organizations, corporations, school district leaders, and universities collaborated to address the problem of low student achievement in the city.

Philanthropreneurship is increasingly involved in a variety of hybrid practices at the intersection of the for-profit and social sectors. To date, the core practice in this area has been impact investing—investing in for-profit enterprises with social missions by funders such as Acumen Fund, Omidyar Network, and Bridges Ventures. There also is a growing interest in program-related, socially responsible, and mission-related investing; in corporate social responsibility; and in benefit corporations, including those with B Corp certification.

For all of their potential, these efforts to integrate profit-making and social interests remain largely unproven. One particular concern is that the assessment of social impact, a difficult enough proposition in the nonprofit sector, will be subordinated to the much easier measurement of financial profits, and that the social mission may be marginalized in the process.

Problem-Solving Philanthropy

But even if these philanthropreneurial practices succeed beyond their greatest ambitions, there remains a continuing need for the broader approaches of problem-solving philanthropy—philanthropy distinguished from philanthropreneurship by its focus on solving social, environmental, or other problems rather than building and scaling individual organizations. For example:

  • Problem-solving philanthropy supports research—often conducted in institutions founded by 19th century philanthropreneurs like John D. Rockefeller and Andrew Carnegie—that addresses the world’s major contemporary crises. The Gates Foundation’s support for the development of drugs and vaccines to address malaria, AIDS, and other diseases prevalent in developing countries is a good contemporary example.
  • Problem-solving philanthropy has played a significant role in building new fields including conflict resolution, end-of-life care, family planning in developing countries, and the focus on outcomes rather than inputs in global education.
  • Problem-solving philanthropy also plays a major role in supporting social movements, policy advocacy, and systems change in areas including smoking, drunk driving, and the rights of racial minorities, the disabled, women, and LBGT people. Philanthropy has induced governments to reduce carbon dioxide emissions and facilitated the global agreement to reduce emissions at the COP21 conference that took place in Paris at the same time as our Philanthropreneurship Forum in Versailles.
  • It is noteworthy that problem-solving philanthropy is helping create the infrastructure on which philanthropreneurship can flourish—for example, establishing standards and techniques for measuring the positive and negative impacts of businesses, nonprofit organizations, and social enterprises,

Whatever it takes

Every era has its challenges, and today we are facing enormous problems of global health and poverty, climate change, and nuclear- and cyber-security, just to mention some of the most obvious ones. The need for outcome-oriented philanthropy of all sorts has never been greater.

Philanthropreneurship and problem-solving philanthropy offer complementary approaches to dealing with these problems. As with their private sector counterparts, philanthropreneurs must assess organizations’ capacities, needs, and potential for growth and sustainability; understand how to replicate successful model programs; and provide capacity-building support in areas including strategic planning, management, evaluation, governance, fundraising, and communications. The efforts of problem-solving philanthropy call for somewhat different skills: understanding the dynamics of complex social and political systems, strategies that take both benefits and risks of failure into account, and linking nonprofit organizations, funders, experts, and policymakers.

These different approaches to philanthropy often can be brought to bear on the same problem. For example, the problems of climate change are being successfully addressed through a combination of research, policy advocacy and systems change, and investments in alternative energy sources. Or, to take a different example, an anti-malaria vaccine may ultimately eradicate the disease; meanwhile, the residents of developing countries must rely on medicines and bednets, distributed through nonprofit or for-profit enterprises supported by philanthropreneurs.

Savvy philanthropists want to avail themselves of the full complement of approaches. It is noteworthy that a number of new billionaires—for example, Pierre Omidyar, Laurene Powell Jobs, and Mark Zuckerberg and Priscilla Chan—are pursuing their social goals through limited liability partnerships, which give them the flexibility to do whatever it takes to achieve their goals, free from the constraints that accompany the tax benefits of nonprofit foundations and donor advised funds. The coming decades are likely to see an unprecedented amount of experimentation in both philanthropreneurship and problem-solving philanthropy. It’s not either-or, but both.

 

This article is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International Licensehttp://creativecommons.org/licenses/by-nd/4.0/

[1] https://en.wikipedia.org/wiki/Philanthropreneurship. According to the article, the term was first used in a December 2014 article in the Guardian by Rajesh Chandy, a professor at London Business School. The concept bears some resemblance to “philanthrocapitalism,” Matthew Bishop’s and Michael Green’s 2008 book, subtitled “how the rich can save the world.”

[2] http://ssir.org/articles/entry/a_decade_of_outcome_oriented_philanthropy. Some of the text that follows is borrowed from this essay.