Raising the bar: rethinking giving

Around the world, billions of people live at risk of poverty and disease. Financing ambitious global development goals means looking beyond aid to unlock the potential of private capital, writes Mona Hammami

The world today is volatile, uncertain complex and ambiguous. On the one hand, we have come a long way in improving the lives of the poor and the marginalised. Billions of people are on the move from villages to cities and megacities, spurring the transition from agrarian, to industrial, to technological societies, and on to developed economies. Yet on the other hand, colossal challenges remain. Poverty, hunger, water scarcity, climate change, disease and illiteracy – these are just some of the daily threats for many around the globe. While these problems are daunting, they are not insoluble. But they do require funding – and much more  money than governments alone can supply. 

Income transfers and, in particular, remittances and philanthropy can make a vast contribution towards achieving global development goals. Alternative sources of funding can relieve the financial stress that is a byproduct of population growth and increased urbanisation, and help bear the weight of humanitarian crises. Used wisely, they have the power to transform development outcomes.

Yet philanthropy remains underutilised, falling far short of its potential impact. In part, this is because the motivations behind giving – whether for altruistic, religious or tax purposes – are not sufficiently focused on outcomes. This is evolving. But it will progress much faster if we harness four key trends to make philanthropy more reachable, innovative, strategic and engaging.

"Mobilising capital in new and more efficient ways will be key to plugging the shortfall in development funding"Let’s begin with reachable. Philanthropy is no longer the preserve of the wealthy. Technology has changed this dynamic. Anyone can donate to, or raise money for, a cause with crowdfunding and other online platforms transforming the way fundraising is done. Technology has also allowed charitable enterprises to scale up more easily, and enables greater monitoring of how funds are used.

Technology has also given birth to a new generation of funders. In the past, the archetypal philanthropist was someone who had spent the best part of a lifetime creating a business empire, which in turn created the wealth that allowed them to embark on charitable endeavours later in life. Today, rising numbers of individuals are making their millions early in their careers – a trend typified by the tech boom, which birthed a stream of dotcom millionaires and billionaires. Many made their fortunes by the time they reached their mid-thirties before turning to philanthropy. Increasingly, these young entrepreneurs are applying skills acquired in their careers to disrupt traditional models of giving.

Then comes innovative. Mobilising capital in new and more efficient ways will be key to plugging the shortfall in development funding. Consider social impact bonds, a hybrid of philanthropy and investment, where funding is tied to the outcomes of social initiatives. Governments use a proportion of the savings that result from improved social outcomes to reward the private players that financed the programme. As a model, this leverages private capital for outsized social impact.

Remittances and philanthropy can also be combined innovatively. Diaspora bonds are an inexpensive form of raising capital, where governments issue bonds to be bought by overseas citizens and philanthropists. This model – used to great success by India and other states – can be used to offset the cost of infrastructure and other key projects, and to accelerate economic growth.

Philanthropy can, and needs to be, strategic. With the rise of the new philanthropist comes a desire to track the impact of giving, and to hold the beneficiaries of such generosity to account. Greater transparency is sought. There is an emphasis on measuring impact with new metrics. These include tools such as the social return on investment (SROI) method, which gauges social or environmental returns not reflected on balance sheets, and is gaining traction among governments, including that of the UK. With many of these tools, the aim is to focus on impact. It is about the effectiveness of the deployed funds.

Lastly, giving must be engaging – this means cooperative philanthropy, which encourages and supports partnerships between different types of donors. With structured financing, for example, philanthropists, governments and investors can join forces to pay for projects that would not otherwise see the light of day. Matching programmes allow governments, companies, or individuals to equal donations to charitable causes they see as important, scaling up their impact and widening the beneficiary pool.

Philanthropic giving has the potential to improve lives and plug the resources gap, at a time when the global aid industry is stretched to its limit. I am optimistic about the future and the power of the giving community. It is time to fulfil that potential. 

About the writer

Mona Hammami is author of the book The Giving World, and a director at the office of strategic affairs, Abu Dhabi Crown Prince Court, in the UAE. She previously worked in management consultancy including at the International Monetary Fund. She is the founding curator of the World Economic Forum (WEF) Abu Dhabi Global Shapers Hub and was recently named a WEF Young Global Leader.