A businesslike approach to charity

Dec 2007
London, United Kingdom, December, 10 2007 - The application of business principles to philanthropy is what many say defines this new generation of philanthropists.

When Stephen Dawson retired after 25 years in the venture capital industry, including more than 20 years with ECI, a UK venture capital company specialising in mid-market buy-outs, he decided to apply his business skills and experience to the world of philanthropy.

“I was very keen on doing something and giving my time and money in areas where I could have maximum impact,” he says.

In 2003 he co-founded Impetus Trust, the UK’s first general venture philanthropy fund. It brings venture capital knowhow to bear on the organisations it supports and only makes funds available after an intensive analysis of the recipient’s operations, including assessments of its strategy and the quality of its management team.

With this businesslike approach, Mr Dawson is among a growing number of donors often referred to as the “new generation” of philanthropists – people who created their own wealth and demand more accountability and professionalism of the organisations they support. While their giving is often informed by their work in the private sector, they are not the sharp-elbowed venture philanthropists of the dotcom boom.

“Whilst engagement from business people is a plus and the business skills are relevant, it is important to translate those skills into the charity environment and not shove them on the charity,” says Daniela Barone Soares, Impetus Trust’s chief executive. “It requires an understanding of how charities operate and the complexity of the social problems they are dealing with.”

Adam Waldman, founder and president of the Endeavor Group, a Washington-based philanthropic consultancy, says the hallmarks of the so-called new philanthropy are: an entrepreneurial, results-oriented framework; leverage; personal engagement; and impatience.

“New philanthropists may be mavericks in their business lives but rarely are solo in their philanthropic lives – they have an intense desire to partner with each other,” he says. “New philanthropy is also marked by the principal’s personal engagement in the work. It isn’t about hiring people and saying, ‘Let me know how it works out’, it is about getting on planes, going to meetings and reading documents. For many new philanthropists, this becomes their job.”

This level of donor engagement typifies what Melanie Schnoll-Begun, a managing director and head of Citi Family Office Philanthropic Services, calls “personal missions”. Increasingly, philanthropists “are looking for causes they can get their arms around and really measure a difference”, she says.

Something else she sees a lot is the drive for measurable outcomes. “Many of the donors who are stressing the need for immediate results and high-impact strategy don’t want to look like they invested in something that failed – they don’t want family and friends to think their success was a fluke,” she says.

This quest for results – often in a short time frame – is something beneficiary organisations need to keep in mind when seeking funds.

“The generation we are dealing with today has an unending thirst and desire for sudden impact, they want results,” she says. “They have acquired their wealth not by working at family business for 20 or 30 years and then opting to sell; they acquired their wealth overnight and so they want to see their philanthropic dollars making a difference overnight. Is it fair? No. Is it Right? No. Organisations need to take a step back and educate donors about how difficult it is to measure results.”

Source : Financial Times

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