The ‘tech effect’ on philanthropy. The dotcom boom injected a huge dose of entrepreneurship into the world of philanthropy, and gave rise to the term ‘venture philanthropy’ based on the idea that Silicon Valley’s entrepreneurs would transfer their creative skills to the foundations they were setting up. An increasingly business like vocabulary has grown around the sector, reflecting the goal to maximise the impact of wealth. Today, the best foundations are increasingly businesslike. They are “strategic” and “market conscious”, “impact oriented”, “knowledge based”, “high engagement” and always looking to maximise “leverage” of donor money explain Bishop and Green.
Their task as they see it is not about handing out money, but of forging alliances and building networks: with government and industry, or among groups of charities. The Gates Foundation’s partnership with ‘Big Pharma’ is one example of the strategising behind today’s philanthropic ventures. Since 2000 The Gates Foundation has worked with GlaxoSmithKline (GSK) on preventing the spread of HIV and AIDS and Malaria – a partnership, which has produced a promising malaria drug for infants by switching the focus of GSK’s top scientists from research objectives with short-term commercial gain to global health issues. The birth of social entrepreneurship and giving the Ebay way.
Bishop and Green describe the philanthropic statement that Pierre Omidyar founder of Ebay and his first employee Jeff Skoll made in 1998. It was on trend mirroring the risky business of tech, and it was edgy. They strolled into Silicon Valley Community Foundation and made an offer of a $1 million block of shares. Their one condition was that the foundation keep the shares for a year, a term that many others rejected. A year later the foundation sold its shares and banked $40 million. They were either very sure of themselves, or habitual risk-takers.
Bishop and Green call giving the Ebay way a feat of generosity as they had not yet banked anything themselves. Soon after, Skoll was drawn swiftly and sharply into the world of social entrepreneurship, where people were building businesses to tackle social problems. The blend of ambition to create change powered by entrepreneurial skills held Skoll’s attention and mobilised his resources. He created the Skoll Foundation, endowed the Oxford Said Business school to set up the Skoll Centre for Entrepreneurship and began hosting the annual Skoll World Forum. Each year the Skoll Foundation awards $1.25 million over three years to social enterprises on the verge of growth significant enough to create better futures for millions.
Social enterprise also emerged as the perfect match for the money of the business-minded philanthropist, Pierre Omidyar who went on to found the Omidyar Network, and began investing in micro-finance and for profit social businesses including IGNIA a Mexican venture capital firm and Meetup.com, a platform bringing together communities based on shared interests. Today social enterprise is increasingly gaining support from venture philanthropists like Skoll and Omidyar, and engaging with investors with both social and financial goals.
Social investment and tax reliefs.
Social investment is investment with a philanthropic twist. It is a phenomenum gradually funnelling capital towards social causes as social investors look for opportunities to use their investments for the broader benefits of society. Simply put the social investor looks for both social and financial returns on their investments. Most often this comes from investing in social ventures. There are increasing numbers of firms with this mandate, including Bridges Ventures, the Social Investment Business and Big Issue Invest who all back social ventures.
There are also organisations like ClearlySo, which connects social businesses and enterprises with investors. And, with a new social investment tax relief in the UK social investment is increasingly visible to mainstream investors. For Sir Ronald Cohen this is the tech effect continued, a natural progression from venture capitalism. Sir Ronald made his own private fortune investing in tech enterprises, and is widely credited as the father of social investment.
After co-founding social finance firms Bridges Ventures, and Social Finance UK he recently became chair of the G8 Social Investment Taskforce, which is looking to integrate social investment into the mainstream economy. Cohen is a strong advocate for linking social and financial return, and sees social enterprise as the wave that will follow the tech explosion. The age of the ‘social good network’. A century on from Carnegie’s essay, and hot on the heels of the tech effect and the birth of social investment a growing number of social good networks and conferences have emerged. There is already a lengthy conference circuit where individuals can connect their finance and business skills to social causes.
There’s the Global Philanthropy Forum in the US, a network of high-net-worth individuals committed to advancing international causes through their giving, investing, and policy voice. And, just a few of the popular conferences on the global circuit include the Skoll World Forum, the UK’s annual social investment conference Good Deals, the GIIN investor forum and Social Capital Markets (SOCAP) a gathering of individuals and organisations dedicated to directing market systems to social impact.
And now for the first time in the UK a six month leadership programme is being launched inviting international wealth holders and inheritors, entrepreneurs, investors and pioneering individuals to learn, connect and act with like-minded others. The Pioneers for Change Leadership Programme is designed to inspire, equip, connect and support leaders who want to explore and elevate their potential for positive impact. Continuing the Carnegie legacy and in keeping with the Sillicon Valley brand of philanthropy, the programme aims to ignite a revolution, and foster international leadership in philanthropy, social investment and entrepreneurship.
These different influences are shaping today’s approaches to philanthropy in the midst of a wealth transfer of gargantuan proportions. Years of accumulated wealth—in Europe and America—are about to change hands, as the post-war generation dies off. One estimate from a study in America, by Paul Schervish and John Havens of Boston College puts the size of the transfer likely to occur in the US between 1998 and 2052 as somewhere between $41 trillion and $136 trillion. There is an enormous amount of money available, and as an entrepreneurial culture takes root in the world of philanthropy, these may well be the boom years of philanthrocapitalism.
The original article appeared on Pioneerspost.com. Pioneers Post is the media partner for the Pioneers for Change Leadership Programme delivered by Adessy Associates. This article is from a series of monthly articles exploring the changing world of philanthropy.