Trends in Philanthropy from a Social Innovation Perspective

NEW TRENDS IN PHILANTHROPY FOR GRANT-SEEKERS FROM A SOCIAL INNOVATION PERSPECTIVEWebinar presented by: Tim Brodhead

EVOLUTION OF “PHILANTHROPY”1.0 CHARITY 2.0 PHILANTHROPY 3.0 “GOOD CITIZENSHIP”Purpose Alleviate Suffering Problem-Solving Effect change (responsive) (analytic) (strategic) Create Public ValueMotivation virtue generosity engagement compassion altruism contributing to one’s community

SOURCES OF FUNDINGGovernments 40%Corporate 3%Foundation 5%Individual 25%Earned revenue 20%

SOURCES OF FUNDING DIFFERACCORDING TO TYPE OF CHARITY From “Not Letting a Crisis Go to Waste” (pg.19)

NEW CONTEXT FOR VOLUNTARY SECTOR / NOT FOR PROFIT ACTIVITYo Slow growth economyo Aging population, inadequate provision for pensionso More competitive environmento New attitudes / expectations among donorso Stagnating donor baseo Changed terms for federal Gs & Cs: performance- based, leverage private funding, more ‘accountability’o Many provinces dealing with deficits

EVOLVING MOTIVATIONS / EXPECTATIONS Old New Social InnovationGovernment ‘contracting out’ / project-based pay-for performance delivery of public accountability Leverage private Funds services (core and social impact bonds for results program costs) strategic ‘shared value’ – socialCorporate PR linked to and economic returns ‘’giving back” corporate CSR ObjectivesIndividual charity cause-based direct, by-passing organizational loyalty Intermediaries EpisodicFoundations legacy, perpetuity, hands-on impact-mobilizing project funding all assets strategic responsive collaborative venture ‘funding plus’ philanthropy

TRENDS IN GRANTING FROM A SOCIAL INNOVATION PERSPECTIVEo Social Innovation: any product, process, design , program or initiative that profoundly changes the defining routines and laws, resource and authority flows, cultural beliefs and practices of a given social system. Social innovations transform intractable problem domains. - Slide referenced from Dr. Frances Westley

Social Innovation Spectrum – CanadaLocal Impact System-Wide Social innovations grouped along the spectrum - Slide referenced from Tim Draimin

NEW FUNDING MODELSFUNDING FINANCINGProblem ProblemSolution SolutionFunding (grants) Business model (for-profit, n-f-p, charity)Business model (charity) Financing (loans, equity, subsidy)

RESULTS-BASED FUNDING, e.g. SOCIAL FINANCE

social financesocial finance[soh-shuhl fi-nans, fahy-nans], n.;synonym: impact investingSocial finance is an investmentapproach to solve social orenvironmental challenges whilegenerating financial return. Thisincludes investments that rangefrom only producing a return ofprincipal capital, to offeringmarket-rate or even market-beating financial returns. Socialfinance encourages positivesocial or environmentalsolutions at a scale that neitherpurely philanthropic supportsnor traditional investment alonecan reach.- Slide referenced from Tim Draimin

“Canadians have long relied ongovernments and communityorganizations to meet evolving socialneeds, while leaving markets, privatecapital and the business sector to seekand deliver financial returns.However, this binary system is breakingdown as profound societal challengesrequire us to find new ways to fullymobilize our ingenuity and resources inthe search for effective, long-termsolutions.Mobilizing private capital togenerate, not just economic value, butalso social and environmentalvalue, represents our best strategy formoving forward.” Dr. Ilse Treurnicht Task Force Chair CEO MaRS December 2010

Social & Financial Return Continuum Social finance approaches support a spectrum of organizational business modelsNon-profit For-profit - Slide referenced from Tim Draimin

Social Impact Bond 101 Payments based Returns dependant 3 on defined 1 4 on outcomes outcomes Public Social Impact Bond Investors Sector Delivery Agency Service Providers 2 Services Funds Target population Information The Model “T”

TRENDS FOR GOVERNMENT FUNDING• Reduced capacity due to deficit cutting• Performance-based• Leveraging private resources• Focus on accountability• Need to cut transaction costs• Open to innovative approaches (social finance, social impact bonds...)

TRENDS FOR CORPORATE PHILANTHROPY• Highly competitive• Linked to corporate objectives• Moving beyond corporate social responsibility

TRENDS FOR INDIVIDUAL DONORS• Levels of giving not growing: fewer giving more• Donor base aging• Less attachment to organizations rather than causes‘• More concerned with results and solutions‘• By-passing intermediaries to be more hands-on‘• Using IT and non-traditional ways of giving

TRENDS FOR GRANT-MAKERS/FOUNDATIONS• Less capacity due to low market returns• More competitive environment for funders• Higher visibility may increase risk aversion• Having a strategic focus - fewer responsive grants• Greater emphasis on results• Continued reluctance to supply operating support• Importance of learning and knowledge development• Use of evaluation to improve practice• More willing to collaborate, including across sectors• Funding + (going beyond grants)• Growing willingness to leverage assets (eg impact investing)

CONCLUSIONS : GENERALFROM TOStatus quo Present situation not sustainable“Doing good” is worthwhile in itself Demonstrate valueThe “cause” motivates people to give Results motivate people to givePhilanthropy is purely voluntary Social change is needed; we all have a(and dependant on emotional appeals) responsibility to engage

CONCLUSIONS1. The present business model is not sustainable2. Funding strategy must be based on organizational needs, mission, capacity.3. There is a need to diversify, adapt and innovate4. This is as much a challenge for funders as for grant-seekers.

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Trends in Philanthropy from a Social Innovation Perspective

by Social Innovation Generation on Jan 12, 2012

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