The new age of giving

Farahnaz Karim has spent her career connecting philanthropists with impactful social enterprises. She tells us how philanthropy is not something one does, but something one is

In May 2005 the celebrated writer and philosopher David Foster Wallace gave a seminal commencement speech to the graduating class of Kenyon College in Ohio, US. His address carried a simple message: “The really important kind of freedom involves... being able truly to care about other people and to sacrifice for them over and over in myriad petty, unsexy ways every day”.

Wallace’s words call for philanthropy as an answer to the existential challenges of human life. They speak to philanthropy or the love of humanity in the broadest sense, not of charity or investment or some legal variant of the above. Wallace argues that being aware of and caring for another human being gives us purpose, fulfilment and may in fact be one of the few things that elevates us beyond the worshipping of the self. Wallace was speaking to the youth, what many call the next generation of philanthropists.

So who are these next-generation philanthropists, and what matters to them? In my view, Baby Boomers, Gen-Xers and Millenials are distinct from previous generations of givers. Their worldview sets them apart and in turn influences their approach to philanthropy. The first difference is that philanthropy is no longer something you engage in when you have amassed significant wealth, but is something you engage in early on, no matter what your income level.

The second shift is that philanthropy is not something one does, but something one is. In other words, next-generation philanthropists do not live their lives (or at least the majority of them) in dichotomous ways. Sharing wealth and caring for others is not an activity or a hobby or an event they attend. For them, philanthropy is a way of life, a conscious choice.

Finally, whereas in the past philanthropists may have come from specific wealth-creating industries, mainly industrial conglomerates, next-generation philanthropists work across the hi-tech and financial industries, arts and media, combining a plurality of skills and knowledge bases, both rational and creative. Together, they are transforming the landscape of philanthropy in several notable ways.

In a report published in July 2010, the Monitor Institute highlighted that “acting bigger” is of importance to next-generation philanthropists. Rather than creating their own foundations or their own programmes, next-generation philanthropists are happy to pool resources together, leveraging each other’s resources and understanding that making a bigger impact makes more sense than supporting fragmented, smaller, short-term initiatives. And by resources they mean more than just money, but the three Ts; treasure, talent and time.

The next-generation philanthropists are also wise to the challenge of allocating capital effectively. Over the years many have argued that doing good cannot be reconciled with making money; others contend that making money may be the best way to ensure social change, driving entrepreneurial ventures in both developed and developing markets. Next-generation philanthropists tend to think differently, beyond these ideological lines. They know that engaging in charity or donating to relief organisations is needed, but in parallel they back innovative social enterprises. Diversification and value creation are achieved through the use of different tools: support for charity, microfinance, social enterprises and impact investing.

Herein lies the challenge: what is a social return? Measuring success in business is fairly straightforward, but in philanthropy the metrics are harder to ascertain. There is an ongoing debate between those calling for more uniformity in metrics, and those who insist that human change is too idiosyncratic to the culture in which it occurs, to be measured across countries.

According to Forbes’ Next Generation Philanthropy report, 46 per cent of donors use IRIS indices to assess philanthropic impact, and another 37 per cent use the Global Impact Investing Ratings System. These systems, however uniform, are heavily weighted towards outputs and outcomes rather than impact on people’s lives. In education, for instance, they emphasise enrolment over test scores, and test scores over changes in life goals and meaningful employment. While useful, they do not capture the whole picture.

The field is also divided, to some extent, between the economists and social scientists that would prefer statistical evidence, and the students of mixed methods and humanities, who insist that such a narrow definition of progress will inevitably limit our ability to innovate.

Ultimately, the key is the ability to measure human change and that is not something that can be easily accounted for using a single method or index. Human change is cumulative and incremental and occurs over generations. Systems thinking, which considers individuals in terms of their relationship to the whole, and considers iterative rather than linear learning, perhaps offers a better framework. This means listening to people, asking them what change means to them in the context of their culture, their ambitions and values, and using that to develop and interpret the statistics we generate. It means talking to people and not about them, working with them and not for them. It means using stories and statistics, but always making sure to be people-centred.

In May of this year, a nine-minute video featuring excerpts from Wallace’s commencement speech went viral, attracting more than 4 million views on YouTube in just two weeks. I hope, and believe, that this overwhelming response to Wallace’s message is indicative of a growing consciousness that we can indeed choose to decide what we value, how we act and react, and demonstrate a greater level of empathy and care for others, every day.

About the writer

Farahnaz Karim is the founder and CEO of Insaan Group. She has worked for the UN and the World Bank, as well as a wide range of non-profit organisations.