Future trends in global giving
Change is happening quickly in some areas, notably technology and enterprise, and slowly in others, such as realising the huge impact of climate change on development.
Here are 10 key trends that are shaping global giving and impacting on South African organisations.
Trend 1: The growing role of big business in social transformation
Globally, multinational companies are slowly encroaching on the territory formerly controlled by big aid agencies. They certainly have similarities — large pockets, international mindsets, decision-makers in far-off lands and, of course, huge power.
Rolling out global social investment programmes is nothing new, but corporate development strategies are becoming more sophisticated, incorporating partnerships with local governments and global NPOs, among others, and driven by long-term agendas.
Research by Deloitte and the Committee Encouraging Corporate Philanthropy, based in the United States (US), has led to a draft framework — The Global Guide to What Counts: A defining moment for Corporate Giving — to “determine consistencies and synthesise key definitions” in regulations and tax laws across 17 countries, in order to enable benchmarking and data-driven decision-making for multinational corporate giving.
Trend 2: The rise of venture philanthropy and impact investing
A hands-on and entrepreneurial approach is a typical characteristic of venture philanthropists, who often augment funding with skills transfers and access to networks. Starting in the US in the 1990s, and spreading to Europe in the early 2000s, the venture philanthropy approach has clicked with innovative grant-makers as an effective way to give, in a way that they like and understand.
Strictly speaking, venture philanthropy looks for societal impact first and financial return second. Impact investing, on the other hand, looks to generate profits as much as secure the measurable social and environmental effects.
This concept is taking off in Africa and with African investors. In 2013, the University of Cape Town’s Graduate School of Business hosted the first Impact Investing in Africa forum, where Nigerian banker Tony Elumelu launched the Impact Economy Innovations Fund with the Rockefeller Foundation.
Trend 3: Giving without borders
Giving is becoming less parochial. An increasing number of philanthropists are less interested in where the problem is, but in the challenge itself. Such donors are generally very engaged, passionate, innovative and forgiving of mistakes.
They approach development with the aggressive, risk-taking approach that they have practised in enterprise. Bill and Melinda Gates, Warren Buffet and Richard Branson are high profile examples of this approach to giving. Locally, Patrice and Precious Motsepe responded to Gates’ and Buffet’s Giving Pledge. While their foundation is primarily focused on South Africa, the Motsepes gave R1.2-million to Rush Philanthropic Arts Foundation in New York.
Other African foundations, most notably Gift of the Givers, are doing the same. Based in Pietermaritzburg, Dr Imtiaz Sooliman’s NPO has provided more than R985-million in disaster relief to 40 countries, from Bosnia to Yemen.
Trend 4: Philanthropists are getting younger
It’s not just famous, established, older donors giving globally. Young people, the so-called Millennials, through their travels, online or real, are aware of how issues such as poverty, climate change and health are affecting people in other countries, if only somewhat superficially through online petition sites such as Avaaz.
Young philanthropists have often made their money through technology, and tend to keep investing in that space. In August 2013, for example, 29-year-old Facebook founder Mark Zuckerberg launched internet.org, a social enterprise consortium that aims to create a “dialtone for the internet”: a set of basic services such as Wikipedia that will be provided for free, levelling the broadband-enabled knowledge playing fields around the world. Zuckerberg’s co-founder, Dustin Moskovitz, also 29, is a member of the Giving Pledge.
Trend 5: The steady growth of online giving
Online giving is still a small segment of the market, but it is growing quickly, especially with the exponentially increasing use of smartphones and tablets. In the US, online giving increased by 14% in 2009 and is forecast to continue to grow.
The crowdsourcing of funds is gaining traction. Crowdfunding enables people from around the world to pool their donations, usually through an internet platform, to support a project. American-based Kickstarter.com started in 2009 and has funded more than 10 000 projects — some of them development-related — around the world, with more than $60-million collected collectively. The average pledge on Kickstarter is just $71.
Another well-known global crowdfunding platform is Kiva.org, which enables individuals to make loans to people — usually poor, small-scale entrepreneurs — in low- and middle-income countries. Since 2005, Kiva has raised more than $450-million in loans, with a 99% repayment rate. Closer to home, Cape Town-based Thundafund.com launched in 2013 exclusively for African projects.
In the first two months it raised R220 000, with an average pledge of R200. One of the drawbacks of crowd-sourced fundraising for projects is that all the money goes back to the donors if the total isn’t raised. The idea is that the project will not go ahead if it doesn’t ignite people’s imaginations and raise the required support.
Some non-profits are finding that they are getting a better return by fundraising through straightforward online donation platforms and their own websites. Trend 6: Refining database management The mix of digital and traditional fundraising methods is also seen in internal systems. Email is increasingly the norm for sending applications, reports and receipts.
But there are major funders, notably the National Lottery and more traditional family trusts, that require hard copies to be posted or couriered. There is a quiet, but significant transformation happening with the uptake of sophisticated databases, previously the preserve of large organisations.
Some grant-makers, such as the DG Murray Trust, are now using Fluxx, an open-source grants management platform. Fluxx is a software application that allows everyone in the organisation to interact with real-time data on funding flows and proposals via custom dashboard views.
Trend 6: Refining database management
The mix of digital and traditional fundraising methods is also seen in internal systems. Email is increasingly the norm for sending applications, reports and receipts. But there are major funders, notably the National Lottery and more traditional family trusts, that require hard copies to be posted or couriered.
There is a quiet, but significant transformation happening with the uptake of sophisticated databases, previously the preserve of large organisations. Some grant-makers, such as the DG Murray Trust, are now using Fluxx, an open-source grants management platform.
Fluxx is a software application that allows everyone in the organisation to interact with real-time data on funding flows and proposals via custom dashboard views.
Trend 7: Products supporting philanthropy
Donating across borders is extremely complex when it comes to tax-efficient giving and compliance. To manage this, there are long-established philanthropy offices in large global organisations such as Barclays, KPMG and HSBC, as well as South African financial advisors, such as Investec and Nedbank Private Wealth (previously BoE).
Again, it is now not just the big players who are being catered for. Citadel has recently launched South Africa’s first donor-advised fund. Companies and individuals pool their charitable contributions into this collective foundation and can select from a list of beneficiaries carefully vetted by Citadel and GreaterCapital.
This saves the donor considerable expense, time and administration. In the US donor-advised funds are the fastest growing charitable giving vehicle, with 175 000 of these giving accounts holding $37-billion in assets, up 34% since 2009. This growth has defied general sluggishness in charitable giving since the financial crisis.
Trend 8: Fundraising networks
The Ikoyi Initiative was launched in December 2012 in Lagos for emerging African-funded foundations – including the Brenthurst Foundation, FATE Foundation, Wellbeing Foundation, the Nelson Mandela Children’s Fund and the Motsepe Foundation – “so that they can work together to leave a lasting impact on the African continent and beyond”.
Collaboration and knowledge sharing is happening on a smaller scale too. Operating out of Cape Town alone, there are a half-dozen active philanthropy and fundraising networks, including Inyathelo’s Private Philanthropy Circle, Women in Philanthropy, New Generation Fundraisers and the Sustainable Development Network.
Trend 9: Professionalising fundraising
The international economic downturn, shifts in wealth from well-developed philanthropic markets to developing ones, particularly Asia, and technological innovation mean that fundraisers need to be increasingly skilled and knowledgeable.
Ironically, although many universities offer marketing and PR degrees, there are few universities, if any, that offer fundraising qualifications. However, there are initiatives to improve fundraisers’ skill sets, credibility and value. In 2012 Inyathelo and Rhodes Business School offered Africa’s first university-level course in Advancement. And in 2013, the Southern Africa Fundraising Awards, organised by the Southern Africa Institute of Fundraising (SAIF), were held for the first time.
Trend 10: Funding climate change
Climate change is still way down the list in terms of philanthropic giving trends. The latest research indicates that the environment receives just 3% of charitable giving in the US and United Kingdom (UK).
However, its profile is slowly rising: leading philanthropic institutions such as the Gates, Clinton and Rockefeller foundations include climate change in their focus areas or grant calls. It is widely accepted that people living in poverty will suffer first and worst from climate change – recent extreme weather events around the world have reinforced this belief.
Southern Africa is considered especially vulnerable, and local organisations may find that they need to address climate change resilience and/or adaptation in their grant-making or proposals. For example, the UK’s department for international development runs a bilateral climate change programme with South Africa worth £13-million.
Kate Crane Briggs is a fundraising consultant. This article first appeared in The CSI Handbook 2013, published by Trialogue.
This article has been paid for by Trialogue.