He’s witnessed first-hand the rise in philanthropy. The increase in people – wealthy individuals, families, and corporations – who want to give more, give better and expand the reach and impact of their charitable giving. The 2018 Report on Global Philanthropy from Harvard University and UBS notes that: “While many countries and cultures have long traditions of philanthropic giving, the current global foundation sector is growing. Nearly three-quarters (72%) of identified foundations were established in the last 25 years.”
Here, Cafferkey talks about the trends in philanthropy, how to start giving and the pitfalls to avoid.
The way people view philanthropy has changed.
Six years ago, I started to think about setting up a consultancy – driven by a number of things. First, I found that philanthropists were not satisfied just trying to manage problems; they wanted to try to fix them. Second, they were looking for different ways to problem-solve, by bringing methods from the private sector into the not-for-profit sector. Finally, consumers were increasingly looking for companies to have a clear social purpose.
But it’s not just the next generation and do-gooders like myself saying: ‘Yes, it’s growing’. For example, two years ago Blackrock CEO Larry Fink wrote in his annual letter to CEOs that social purpose is important. At first, people said: ‘Who are you to tell us this?’ Because Blackrock was not known as a socially minded company. He doubled down this year and said the whole purpose of companies is what they bring to society.
You won’t know what you want to get out of giving, or how you want to engage in philanthropy, by sitting at home. You learn by doing.
What he is reflecting is that wider trend. For the past 30 years, there has been a separation between business, government, and society. Now people are saying: ‘No, business is part of society.’
There are three types of new philanthropists.
You get one group who genuinely don’t know where to start. But very quickly, you can find what they don’t want to do. So, you could say: ‘Do you want to give it all to an animal charity?’ and they might say: ‘No, I want to focus on children.’ Sometimes people won’t realise they’ve already got some clear ideas – it’s just a case of asking the right questions.
Others will come knowing one part of the criteria. There might be something in their family history or where they grew up that will be connected to the type of charity they want to support.
The third group will have been giving for a while, but they’re not getting results. They’re not seeing the change they thought they’d see. Or it’s been tougher than they imagined.
Our role is to ask: ‘What are you trying to achieve?’ Or: ‘What is the family or individual story you want to tell?’ And we make it less scary. There is pressure on philanthropists to have a vision, a mission, a dream from day one. But it’s normal to not know everything. Bill Gates didn’t set out knowing that he wanted to combat malaria.
What links all of these individuals is their desire to want to do good. Yes, they might benefit from tax reliefs, and it might be good for their brand or business or family name. But the primary driver is that they want to do good.
For a would-be philanthropist, the first step is to simply do something.
It could even be giving away a small amount of money to a local charity. You won’t know what you want to get out of giving, or how you want to engage in philanthropy, by sitting at home. Or even by doing all the research in the world, or paying someone to do the research. You learn by doing.
You have to work out how much time you want to give, what role philanthropy will play in your future, and how hands-on you want to be. Sometimes we meet clients who feel a bit paralysed because there’s this pressure. This feeling of: ‘I haven’t worked it all out yet; I don’t know what I’m doing’.
Some of the most thoughtful and committed philanthropists I’ve met spend a lot of time talking to people about it. So don’t be afraid to reach out to an established philanthropist – they can provide great insight.
New donors will make mistakes.
The vast majority of people we deal with at Boncerto are entrepreneurs, and the rules in the private sector are of course different to those in the not-for-profit sector. In the private sector, you can be investing, failing, innovating and changing all the time. Not-for-profits are not allowed to fail. Sometimes there can be a disconnect.
We also help to manage the expectations of the donor. There can be a perception that if you turn up and donate some money, you will get your positive result. However, this isn’t the case – if you want to end child poverty, you’re probably not going to do it on your own.
And we often have to help both sides – the donors and the charity – understand each other. For example, in some charities, there is a built-in complacency. In other words, there’s an assumption that: ‘People have money, so they should give it to us’.
The old method of philanthropy lacked accountability.
In the past, it seemed that you could be a robber baron, pillage resources, do harm to the planet, and treat your staff as badly. But as you got closer to god, you could make up for it by buying everyone a library. That model of philanthropy no longer works. People are seeing through it.
You need to look at your whole legacy. Social media has pluses and minuses, but it absolutely means you can’t hide your past or past actions in the way you used to. We saw that with the Sackler Trust, which has donated millions to causes in the UK, but whose members are involved in a pharma company that has now been linked to the opioid crisis in America.
As Generation Y gets older, they are putting more value on purpose. They are more socially-minded, and will hopefully mark the baseline of what is acceptable. In turn, what is expected will change. How you make your money is important. These changes take a generation to kick in, and we’re just seeing the start of that.