We Need Longer-term, Flexible Funders–Here’s How to Nurture Them
Research published this month by Oxfam shows that the wealth of the ten richest men has doubled during the COVID-19 pandemic, while 99 percent of the world’s population is worse off. This stark contrast in wealth is a symptom of wider societal issues that can only be changed by addressing the root causes of inequity.
Some might argue that philanthropy is actually part of the problem. But whether it’s tackling gender inequalities, finding sustainable solutions to the climate crisis, or more just education systems, creating change in these areas requires long-term and flexible commitments from all sectors, including philanthropy. So what is the role of philanthropy? We need philanthropists who are willing to give more, more quickly and more collaboratively, to those initiatives closest to the communities they seek to serve.
The way in which philanthropy currently operates globally sits in contrast to the approach needed to make significant transformations to our systems, with current philanthropy remaining highly focused on short-term, project-based interventions to achieve the full impact it could have.
However, at Co-Impact, we are seeing encouraging signs that more philanthropists are willing to address these challenges. Since November 2017, we’ve raised over $500 million across our two different funds from over 45 different philanthropists and foundations from 16 countries showing that there is an appetite for collaborative funding focused on just and inclusive systems change and it is growing.
So, how can we use our learnings to encourage more collaborative and effective philanthropy that tackles the deep seated challenges we face across the world?
What is a systems-change philanthropist?
Late last year, Co-Impact released a report detailing the opportunities and challenges with ”higher-impact” systems-change funding, specifically looking at what makes a “systems-change” philanthropist. Creating transformative change requires shifting systems – the structures, laws, policies, and processes of government, how markets function, and how social norms are shaped and enforced. In order to do so, we need a model of philanthropy that is larger, longer-term, and flexible in order to meet the demands of this transformation work. Our research, therefore, began looking at the trends in how individual, private philanthropists give and the process through which a philanthropist becomes a ”systems” funder.
The results gave a fascinating insight into philanthropic giving, painting a picture of a fragmented and hyper-local sector, where tackling systemic solutions often through funding collaboratives is forgone in favor of directing their own efforts through foundations or trusts. Maybe unsurprisingly, philanthropists tend to start where they can see the immediate impact or where they have social ties, meaning that local projects take priority over that of global ventures. There also remains a lack of trust in nonprofits or giving-collaboratives meaning many feel pressure to keep the operations and programs close to home, rather than giving the reigns over to someone else.
These trends translate into stark statistics. Over 50 percent of U.S. philanthropists focus locally and/or nationally and of the more than 70 percent of ultra-high net worth donors who have created their own foundations, 58 percent state they do not collaborate with other foundations.
These insights may not be groundbreaking, but what they do clarify is that these attitudes and approaches to giving sit in contrast to the approach needed to tackle and shift the biggest problems in society. The often intangible or non-linear outcomes of a program, working to transform the rights as well as economic outcomes for female farmers across India, for example, are not as popular with private philanthropists who prefer to see short-term improvements in a particular group for the money they are investing. There are also cultural norms and practices, particularly with Global South philanthropists, where staying closer to home is seen as the right approach to giving. Among philanthropists from the Global South, 92 percent give to their own country or locality and, in many cases, philanthropy is not practiced via a giving vehicle but given directly to extended families and communities. Given the needs are so great in their own countries, it is difficult to justify funding elsewhere.
For those working in international development, this is hugely challenging as systems change initiatives need funders willing to invest long-term and to trust in the effectiveness of the team and organization, even when it does not yield results straight away.
Understanding the journey of a systems-change funder
What our research helped us to understand better is the evolution of a “systems change” philanthropist. We mapped their journey which showed how experience, attitudes towards giving, and different values and approaches shape how philanthropists give. It is also worth noting that increasingly we are seeing younger philanthropists and self-made entrepreneurs taking risks with their giving, meaning some subvert the journey and dive into systems-change work earlier in their philanthropy career.
Now we know this gap exists, what can grantmakers and collaboratives do to support philanthropists as they evolve their giving over time? Co-Impact is on its own journey to strengthening work in this area and below are some key learnings we have to share with the field:
Collective intelligence is a motivator: Understanding where an individual is in their philanthropic journey is an important starting point as pooled funding necessitates that a donor relinquishes some degree of control and many may not be ready for this. However, the opportunity to learn together with others, as well as the impact and leverage collaborative philanthropy can have, is a strong motivation for many. For those of us who create environments for philanthropic change to happen, it’s about opening up opportunities for collaboration to happen and supporting those who wish to learn more in their philanthropic journey.
Transparency on roles and responsibilities is key: We also acknowledge that giving at a significant level means many philanthropists need to feel a degree of ownership over the initiative. To do so in a way that also addresses the historical power disparity between donor and recipient can be challenging. We’ve approached this by ensuring there is transparency on the roles and responsibilities of the different partners in the collaborative, and a willingness to engage as thought partners.
Issues matter for engagement: And finally, the language used with funders is also vital to its success. The term “systems-change funding” in itself is not the most enticing or exciting term so it’s necessary that systems-change work is tied back to key issues in order to engage funders, both old and new alike. Education, economic empowerment, women’s rights – these are all issues a vast majority of funders are passionate about and by tying it back to these, we move beyond the slightly jargony-feel of ”systems change” to how it can make an impact in the world.
Learning to transform the funding system
As the wealth of those at the top continues to grow and those at the bottom continues to sink, there is a growing moral imperative to give in longer-term and flexible ways in order to see bigger and more sustainable impact at a transformative level. We are hopeful that sharing our learnings will contribute to transforming the funding system itself and help us collectively rethink and redesign the way social change efforts are supported.