What is Philanthropy For? (Speech to Yorkshire Funders 2023 Conference)

Hello. My name is Rhodri Davies.

As well as the work I do with the Pears Foundation and at the Centre for Philanthropy at the University of Kent, my main job is running a new think tank called Why Philanthropy Matters. I have also just published a book called “What is Philanthropy For?”

So it should be fairly obvious that I quite like big questions about philanthropy! And that is what I want to talk to you about today: why I think there are some big questions we need to ask about the nature and role of philanthropy, what those questions are, and what they mean – in particular – for grantmakers.

I should make a definitional point here. When I use the word “philanthropy”, I am not using it simply to refer to giving by the very rich or by foundations, or even solely to the giving of money. For me, philanthropy needs to be understood in its broadest sense – as being about people voluntarily giving private assets of some kind (money, time, expertise, connections) to further the public good.

I do, however, think giving by the very rich and by foundations are both important in their own right, since they have distinctive features and raise distinctive issues. And given the audience today, I will unsurprisingly be talking quite a bit about both.

Now, let’s return to the question posed in the title of this talk: “What is philanthropy for?” This may seem like an odd question to some of you. “Surely we don’t need to ask what philanthropy is for”, you might say, “philanthropy just is: it’s a reflection of a basic truth about human nature – that we are driven to want to help others by our fundamental ‘love of humanity’, so it is inevitable and unsurprising that we see philanthropy all around us.”

However plenty of economists and behavioural scientists would tell you that the idea of people helping others in ways that don’t bring benefit to them too (and may even come at significant cost) is a lot harder to explain than you might think. (Or, at least, it is if you’re an economist…)

We also need to recognise that philanthropy has a dual nature. Yes, at one level it is about individuals and their choices about whether and how to give; but when we zoom out to the macro level, all of those individual acts add up to something much bigger, which sits alongside the state and the market as a mechanism for redistributing resources within our society. And from that perspective, the idea that we might want to ask questions about the exact nature and role of philanthropy no longer seems at all odd.

The other thing to note is this is pretty much what we have always done. If you spend quite as much time as I do reading about the history of philanthropy (which I’m going guess is unlikely, to be honest…) then you quickly come to realise that asking fundamental questions about philanthropy’s nature and role isn’t some kind of new fad. Rather it is something baked into the very notion of philanthropy.

However, although it might well be the case that we have always asked these kinds of questions, I would argue that we stand at a moment in time when they have become even more pressing, for a number of reasons.

For one thing, times of crisis tend to bring more acute focus on the nature and role of philanthropy. Historically this was the case with times of war, famine, illness and economic crisis – when questions about what we expect philanthropy to do, as opposed to the state; or about how philanthropy relates to concerns about inequality – have often come to the fore in quite dramatic ways.

We have, of course, just lived through a crisis in the shape of a major global pandemic, and I’m sure all of you are aware of the challenges this brought – both for your own organisations and for the people and communities you work with. Unfortunately, it seems very unlikely that this is going to be the last such crisis that all of us will see during our lifetimes. In fact many experts argue that we are in the midst of an ongoing polycrisis, in which multiple factors – including climate, future pandemics, inequality and the impact of technology – are all coming together to pose major challenges for coming years.

In this context, many are already asking whether our current forms of philanthropy are up to the task of responding, or whether we need radical reform and transformation in order to make philanthropy meet the needs of the future.

The other reason that the question “what is philanthropy for?” is particularly important right now is that increasingly philanthropy sits within a wider “landscape of doing good” that seems to be expanding rapidly in multiple directions.

On the one hand we have social enterprise and social investment approaches, for instance, which offer new ways of combining profit and purpose; as well as a growing number of for-profit businesses proclaiming that they have a social purpose. On the other hand we have digital giving and crowdfunding platforms that are taking us full-circle back to very old models of person-to-person giving, in addition to new forms of technology-enabled organising that are giving rise to all kinds of protest movements and informal grassroots organisations.

Against this backdrop, the question of what philanthropy is and what (if any) unique role it plays becomes even more important.

So what are some of the biggest issues and challenges that we need to get to grips with? And what does this mean in particular for grantmakers?

Philanthropy, justice & equality

One of the biggest overarching issues when it comes to the role of philanthropy is understanding where it sits in relation to concerns about justice and equality.

There are two big, related, questions here:

• Does philanthropy further justice, or get in the way of achieving it?
• Is philanthropy a potential part of the solution to inequality, or a symptom of it, and therefore part of the problem?

To understand why we might question the relationship between philanthropy and justice, it helps to think about those times when you might have found yourself thinking “I’m glad philanthropy was there to do that, but I still think the need for philanthropy to do it was a problem”. A good example of this was the response to the story about the fundraising of Captain Tom Moore, where many applauded his efforts in fundraising to support NHS charities but felt uncomfortable that it was necessary to do this, when they felt that it was something the state should be providing.

This tension between charity or philanthropy on the one hand, and justice on the other, is by no means a new thing. Pioneering women’s rights campaigner Mary Wollstonecraft declared back in the 18^th century, for instance, that “It is justice, not charity that is wanting in the world”. And Martin Luther King famously said in the mid-20^th century that “philanthropy is commendable, but it must not cause the philanthropist to overlook the circumstances of economic injustice that make philanthropy necessary”. Clearly, then, this is something we have grappled with for hundreds of years.

Similar concerns apply when it comes to inequality. In order to have philanthropy (especially elite or institutional philanthropy), the argument goes, there need to be “haves” and “have nots”; hence philanthropy reflects underlying inequality and is therefore not a good tool for addressing it.

These are clearly profound challenges. For some it is tempting to see them as a reason to abandon philanthropy altogether, or to claim that we would be better off in a world where it didn’t exist.

But I don’t personally think that is helpful, for at least two reasons. Firstly there is the pragmatic reason that philanthropy does exist in the world as it is right now, so the reality is that even if your end goal is to vastly reduce the need for philanthropy (or even do away with it altogether), you are probably better off engaging with it and trying to make it the best version of itself rather than just shouting from the sidelines.

Secondly, I think that there will actually always be a need for philanthropy (understood in the broad sense I outlined at the start), even in a much more equal and just society; and furthermore that this is a good thing, because philanthropy brings unique value to the table that cannot be replaced by the state or by the market.

So what does this mean for how we go about doing philanthropy and grantmaking?

Power & participation

The first thing is that we need to think about power, because more often than not the inequality we find in philanthropy is not just an inequality of resources, but an inequality of power. If we are to address this, then we need to find models of philanthropy that enable us to redistribute power as well as money.

However, the concern is that our current models of philanthropy are not good at doing this. Models of grantmaking, it is argued, have become too top down and technocratic. Models of giving, meanwhile, have become too transactional. So people feel disempowered; both as givers and recipients.

What can grantmakers do about this?

When it comes to their own grantmaking, they can look at ways of shifting power. One way of doing that might be through supporting grassroots organisations and social movements, which are able to engage people and give them means to participate, and to draw on a large base of support.

In practical terms a vital part of doing that is to embrace multi-year, core-cost or trust-based funding, as that is what these kinds of organisations need. But of course, longer term and unrestricted funding isn’t just important for social movements and grassroots groups – it is crucial for all kind civil society organisations, as it empowers them to do their work and gives them the flexibility they need to adapt and evolve.

Grantmakers also can go even further by experimenting with participatory approaches; where people and communities that would traditionally have been seen as the passive recipients of philanthropic support are instead given a role in decision making about how assets are distributed.

Putting wealth in context

The next thing we need to do if we are to address concerns about inequality and injustice is to recognise the need to put philanthropic wealth in context.

At one time it was felt that it was possible (and maybe even desirable) to make money with the left hand and to give it away with the right, and to keep the two entirely separate. Increasingly, however, that just doesn’t wash. These days there is a growing consensus that how wealth is created, how it is invested and how it is given away form an unavoidably interconnected whole, so you can’t address any one without thinking about the others.

Pressure to contextualise philanthropic wealth is coming from grantees and from the public, but intriguingly it is also starting to come from donors themselves: especially the younger generation of “next gen” philanthropists, who often see little or no dividing line between their work, their investments and their philanthropy when it comes to wanting them to reflect their values. And given that we are in the early stages of a vast intergenerational wealth transfer, where this next gen will come to be the wealth holders of tomorrow, it is certainly worth paying attention to what they think about philanthropy!

So, what does it mean in practice to contextualise philanthropic wealth?

Well firstly we need to look at sources of wealth. There is a long history of ethical debate over whether some donations are “tainted” by virtue of how money has been made. We can find the Venerable Bede all the way back in the 8^th century worrying about whether too much almsgiving came from wealth that had been “unjustly plundered or otherwise extracted through force and cruelty”; and in recent years we have seen a huge ethical debate about what should be done with the donations of the Sackler Family, in light of the role we now know that they played in creating the opioid epidemic in the US.

Organisation that fundraise face many difficult questions about the ethics of accepting tainted donations. The most fundamental one being: can you put bad money to good uses, or should you keep your hands clean?

For grantmaking organisations meanwhile, it might be more about interrogating where their own money has come from – both now and in the past.

Putting philanthropic wealth in context is also about investments, because we need to understand how money is used once it has been made. For foundations this is about adopting ethical investment approaches, or even going beyond that and choosing to make social investments that are directly in line with their mission.

The other important aspect of contextualising philanthropic wealth is being clear about the relationship between philanthropy and taxation.

Sometimes philanthropy is presented as if it is an alternative to taxation, but to my mind this is totally misguided. Philanthropy is never a replacement for an appropriate level of taxation and state spending, as the two fulfil different functions.

For one thing, taxation is a matter of duty: we pay our taxes because we are obliged to, and for the purpose (at least in part) of ensuring that resources are redistributed within society in the interests of justice and fairness. Philanthropy, on the other hand is a matter of choice. We give because we want to, and whilst justice may happen to be one of our driving motivations, it isn’t a necessary requirement in the same way.

And apart from such theoretical concerns, there is also the practical point that there is a mismatch of scale and distribution between philanthropy and taxation.

On the scale side, the total amount of individual giving in the UK per year is roughly on the order of £11-12bn, but the total manged expenditure of the UK govt is over £1 trillion. So there is a clear order of magnitude difference. On the distribution side, meanwhile, if you look at the profile of public spending and the profile of charitable donations, you will quickly see that the two are noticeably different.

For all those reasons – both principled and practical – philanthropy should never be seen as a replacement for taxation. You need to pay your taxes first, and then do your philanthropy.

But perhaps even that may not be enough. A growing number of donors are going beyond that baseline and dedicating some of their efforts to calling for higher taxes on wealth, in the recognition that no amount of philanthropy they do will ever be enough. The Patriotic Millionaires movement and Millionaires For Humanity are two good examples of this – they are movements largely made up of wealthy people who are noteworthy philanthropic donors in their own right, but who also believe that their donations are not a substitute for the introduction of wealth taxes, which they believe are necessary in order to make society more equitable and just.

The timescales for philanthropy

The other criticism of philanthropy that we need to consider in relation to this question of justice is that it has been responsible for creating intergenerational injustice, because the norms of perpetuity we have for endowments and foundations have allowed the “dead hand of the donor” to exert undue influence over those living now and in the future.

For foundations and grantmakers, then, part of making philanthropy more oriented towards justice is to challenge our assumptions about the timescales we use.

This is not to say that there are easy “right” or “wrong” answers here, and there is certainly a case to be made that one of the main strengths of philanthropy is its ability to work over longer time horizons – particularly when political and economic cycles have become ever more short term.

However, it does mean that we should be willing to challenge our norms – particularly when it comes the idea of perpetuity as a default. And, indeed, some foundations and donors are exploring what it means to adopt a time-limited approach: that might be new foundations setting themselves finite lifespans from the outset, or it might be established ones choosing to switch from perpetuity to “spending down”.

Some would argue that there is a particular compunction to engage with this question of timescales at this moment, because the “fierce urgency of now” and the polycrisis we face means that the case for spending more and quicker is stronger than ever.

Is philanthropy good or bad for democracy?

One of the other big overarching questions we need to address is whether philanthropy is good or bad for democracy.

Is philanthropy, as some would have it, a profoundly anti-democratic menace which enables those with wealth to bypass the electoral system and exert undue influence on public debate and public policy?

Or, is it a vital component of a healthy democracy: because it can allow new ideas to develop, it can support marginalised communities to get their voices heard, and it can provide the resource that enable civil society organisations to “speak truth to power”?

And, if we want it to be more the latter than the former, what do we need to do?

Risk & innovation

One thing is that we need to question whether philanthropy is too risk averse.

It is often argued that a key part of philanthropy’s legitimacy within a democracy is that it is able to take risks that the state and the market are not, and thereby drive innovation and a process of “discovery”.

I should be clear that I don’t think this means that philanthropy needs to be constantly chasing new things. Too often “innovation” is equated with “stuff that hasn’t been done before”, but in reality it is often just as innovative to keep funding things that are already happening.

The key point is that we should be asking whether philanthropy and grantmaking need to lean into the fact that it they aren’t subject to the same demands of accountability and scrutiny that the public sector faces, or to the sort of shareholder pressure that private sector organisations face, and that they are therefore freer to take certain kinds of risks. As the Director of the Carnegie UK Trust memorably put it when giving evidence to a parliamentary committee back in 1952, “it is the business of trusts to live dangerously”.

The question is to whether philanthropy actually lives up to this ideal; or whether we have allowed our understanding of what counts as “success” and “failure” in philanthropy to undermine our appetite for taking necessary risks.

Openness & transparency

Of course, although a certain lack of accountability might be a strength when it comes to enabling risk taking and innovation, the paradox is that this might also makes philanthropy more anti-democratic .

Perhaps, however, it is not about being less accountable, but about being accountable in different ways. Whilst the mechanisms we have for accountability in the public and private sectors may not be the right ones for philanthropy, if we do want to address its legitimacy within a democracy then we need to find other – more appropriate- means of making it more accountable.

A key part of this is ensuring greater openness and transparency, so that we know where money has come from and where it is going, and then we – as grantees, as stakeholders, and as citizens – can scrutinise and challenge where necessary.

Facing the future

The final challenge for philanthropy (or at least, the final challenge that I want to talk about today!) is how it looks ahead to the future. In  particular, how it stays relevant in the face of rapid technological development, which is starting to have an impact across all of our lives.

I’ll be talking more about philanthropy and technology in one of the sessions this afternoon if you’re interested, but for now it is just worth saying that technology will bring both new opportunities and new challenges for philanthropy in coming years.

There will be new opportunities to harness technology to address social and environmental problems in innovative and perhaps transformative ways.

There will be opportunities to make grantmaking and the work of charities more efficient and effective, by harnessing automation to free up human time to focus on what humans are actually good at- like relationship building and thinking creatively.

But there will also be challenges. There will be the challenge for grantmakers and charities of keeping pace with technology, so that it is something they are able to harness effectively, rather than something that happens to them. And even more importantly, there will be the challenge of ensuring they understand how technology is affecting the lives of the people and communities they serve, so that as funders or charities they remain relevant and are able to deliver on their missions.

In order to meet these challenges, the philanthropy and grantmaking world needs to do far more to get to grips with technology.

We need to ensure that we give grantees the support to develop digital capacity and infrastructure (perhaps by making this an element of all grants).

We need to ensure that organisations have a clearly developed technology strategy, which looks at how they are going to adapt to the challenges and opportunities tech brings, rather than just seeing it as an IT issue.

We need to ensure that grantmakers and charities have the support they need to look up from their day-to-day work and find the time to think collaboratively and collectively about the future.

And we need to think far more about the role that funders and civil society organisations can play in highlighting the negative impacts of technology, and ensure that they have a voice in discussions about how we want tech to develop. The problem is that, at the moment, this voice is sorely missing.

Conclusion

So where does that leave us?

Hopefully it should be clear from what I have said that I think philanthropy does have purpose and value.

But it should also be clear that I think we need to be far more explicit about what that purpose and value is. And also that there are legitimate critiques of philanthropy that we need to take on board.

The challenge for any of us who continue to believe that philanthropy, at its best, has huge potential to act as a force for good in our society, is to work out how we forge a path between two poles that pull us in different directions: increasingly polemic criticism of philanthropy on one side, and increasingly stubborn defence of philanthropy on the other.

Because neither of these is particularly helpful, and it is only in the middle that most of the worthwhile movement forward is going to happen.

We absolutely need to embrace the need for change within philanthropy, but at the same time we need to stand up for what is good about it and making a far stronger positive case for its unique value and role within our society.

Only in that way can we ensure that philanthropy becomes the best version of itself; and is able to play the part that we are all going to need it to play in coming years.

Thank you.