Whereas traditional philanthropy is typically driven by a sense of gratitude (to your alma mater for example), duty (supporting the charity our family has been supporting for a generation), or responsibility (towards our community), high-impact philanthropy is driven by the desire to achieve the greatest (and measurable) positive impact in people’s lives and community well-being. However high-impact giving requires effort and expertise.
Philanthropy should be treated like a business
The causes and sectors more capable of leading to impact may be far away from the family members, both in terms of location as well as expertise. In addition, a scattered approach is unlikely to work due to the need to develop expertise in selecting and supporting the investments. A targeted portfolio approach is likely to lead to greater impact return.
There are several ways of engaging in high-impact philanthropy. One is for the family to create its own vehicle (foundation or fund) and spend time managing it, or put in place professional management. This is the example, provided in the Campden article, of the Stone Family Foundation which chose to invest in water and sanitation projects in developing countries:
“Although I am no expert in sanitation or water, during my time in Cambodia recently, I was able
to give advice to the NGOs, acting almost like a non-executive director of the project. I’m not involved in the day-to-day management, but I am used by the managers of the projects as a bit of a sounding board and I try to give them some helpful advice as a businessman.” – John Stone in
A targeted approach
Charitable giving at the heart of high-impact philanthropy
A second approach is to provide funds for others to manage in order to avoid fixed costs and the time it takes to building relevant impact expertise. Maybe the most high-profile philanthropist who adopted this approach is Warren Buffet, who chose the Bill and Melinda Gates Foundation to manage his philanthropic endeavors.
A sensible middle approach would be to become an investor in an existing venture philanthropy fund. The membership base of the European Venture Philanthropy Association is a good place to start looking for investment vehicles.
Alternatively, several families with related interests can pool their funds and expertise and found a new vehicle for impact giving. The key point is that the process of high-impact giving looks much more like a business investment than traditional philanthropy.
Applying business practices to philanthropic activity
“If you are going to give some of your wealth away, surely you want to give it away wisely and well. After all, you have almost certainly worked very hard and taken lots of risks to build the
business to create the wealth – for that wealth not to be spent wisely seems crazy.” – John
Stone in A targeted approach
There needs to be an identified market/societal gap that creates the opportunity for impact, a strategy to tap into that opportunity, careful selection of projects, and a systematic reporting and measurement of the results. The upside of all this effort is that your family’s hard-earned resources are put to the best societal use possible in terms of the positive impact that they can generate.
And, there is always the chance that, in the process of engaging in high-impact philanthropy, the family members will discover a renewed sense of purpose and focus.
To read more about the process of high-impact philanthropy, read further: A targeted approach.