Philanthropy used to be a matter of throwing cash at a cause and forgetting about it. No longer. Josh Spero on the rise of more creative, entrepreneurial and engaged forms of giving.
Profit and loss, profit and loss, profit and loss. Say this, mantra-like, enough times and it sounds like a train thundering along the tracks, single-mindedly making for its terminus — an appropriate image for the CEO, who only thinks about debits and credits in the headlong rush to the annual accounts.
It is no longer just enough, though, to engage in philanthropy as a scenic diversion on this journey; the philanthropy of the 21st century is much more engaged than the previous era of executives sitting at the head of the boardroom and throwing money at a project until it goes away. Philanthrocapitalism, or venture philanthropy, a blend of giving through time, networks and entrepreneurial methods, is on the wax.
Whereas once, high-net-worth CEOs would sign a (perhaps oversized) cheque and pose with a charity’s founder for a commemorative photograph (soon to be forgotten), with neither deriving any sustainable benefit, HNWs can steer themselves and their companies towards philanthropy in more thoughtful and more rewarding forms, not just for the beneficiary but also for the benefactor. One need only look at Bill Gates and Warren Buffett, active participants in the new business of philanthropy.
Clive Barton, marketing director of the Serco Group, outlines the problem of the old, one-dimensional approach: ‘We did the usual Corporate Social Responsibility thing and I was getting a little fed up of having some very clever people paint walls at a children’s hospital. It ticked our box, but I was looking for any opportunity where we could donate our skills instead of time, money and labour. The quality of the painting wasn’t even that good.’ The problem was that there was no intermediary organisation that could match the skills of the executives to the needs of the charities in a focused way, to substitute practical business advice for poor wall-painting.
That is where Pilotlight, a company that assembles teams of executives to work at growing charities, comes in. Fiona Halton, founder and CEO of Pilotlight, describes why it was needed: ‘We had two groups of people: one group was time-poor, skills-rich business leaders; the other was dynamic small charities. Two-thirds of charities say that they’re held back by not having the management skills they need for growth, and the executives want to make the biggest difference in the smallest time.’ These business leaders are FTSE 100 material: BP, BT, Marks & Spencer, Coutts, and Channel 4 are all corporate members, which costs £2,500 (or £1,300 for individuals).
Under Pilotlight’s guidance, executives spend two to three hours a month in a meeting with the charity, helping them to develop strategies for sustainable growth, and that is the limit of their commitment. Pilotlight takes care of any administration and ensures that there is no direct contact between the two parties outside the meetings, which is a buffer against the chief fear of the executives, who are ‘terrified of it soaking up their time’, according to Halton. The charities have demonstrably benefited: the average annual growth in turnover of Pilotlight charities is 36 per cent, against a UK average of 6 per cent. Perhaps more importantly, they say that they have increased the number of people they help by 60 per cent.
When Martha Lane Fox, the founder of lastminute.com, spoke in an interview with the magazine of New Philanthropy Capital (a charity that advises donors on effective giving) about how she gave, it sounded a lot like philanthrocapitalism. ‘Money is only one small part of my work with charities, and increasingly I hope to be able to give more of my time,’ she said.
‘When you come from an entrepreneurial background, there are things you do instinctively, like building networks or linking people up.’ In a separate interview with the same magazine, Matthew Bishop, author of Philanthrocapitalism: How the Rich Can Save the World, said that ‘because so many of the new philanthrocapitalists have made their money in entrepreneurial ways, they apply a similar mindset to their giving’.
The association of the Prince’s Trust, which provides practical help for young people, with Accenture is such philanthrocapitalism. Isabel Naidoo, UK lead in corporate citizenship for Accenture, agrees that it is more a partnership than sponsorship: ‘Accenture’s relationship with the Prince’s Trust is far more integrated than a traditional sponsorship and takes a number of forms, including volunteering, pro bono work, fundraising, leadership consultancy and financial support.’ As well as an annual gift of £50,000, Accenture contributes directly to the trust’s work by giving young people workshops on interview skills and mentors for the business programme, and it implemented a new purchasing system to streamline and economise the administration.
Any HNW who has built up their own corporation will exactly understand this appeal of developing a charity — effectively a small business — into a greater force, the opportunity almost echoing their own experience. These charities are indeed small businesses, headed in the main by people who never expected to be running such things. Now that they need to expand, the skills provided by Pilotlighters and other HNWs of the corporate world — not just financial or strategic but also technological and marketing — are key.
That is the outward-facing half of the story, and if it ended there it would seem almost altruistic. But philanthrocapitalism does not necessarily mean selfless gifts hurled down from on high: the companies that create benefits also reap benefits.
Sam Berwick, who is the CEO of Mizuho International, credits Pilotlight with helping to develop his abilities: ‘My company spent $50,000 sending me to business school for three months, but I learnt just as much and in different ways from working with Pilotlight.’ Instead of blocking out large sections of expensively billable time with academic work (as valuable as that might be), this small commitment is a provocative insight into other aspects of business.
Humility, which is perhaps not the first trait one associates with HNW chief executives, is a definite outcome of a Pilotlight project. ‘One of the things that Pilotlighters learn early on is that you can’t tell charities what to do,’ says Fiona Halton. ‘You may have a business plan in your back pocket but you’re not allowed to get it out. They have to coach, not tell.’
Given the nature of the business world, it is hardly an unpleasant side effect of this volunteering that concentrated networking can be done for the benefit of the donor. Since Pilotlight puts together teams of four from different sectors, executives get to meet others in high positions, as well as the trustees, as Clive Barton says: ‘The trustees of these charities are generally extremely well connected, so you may meet a minister they work with or a leader of industry.’ Fiona Halton adds: ‘It’s much better than networking at a cocktail party.’
What becomes clear is that these efforts are not discrete philanthropic gestures, and they are certainly not box-ticking for corporate social-responsibility programmes: both sides come to see them as a journey, which makes the partners stronger the more it endures, hopefully even in recessionary times.
While the profit-and-loss train will never wholly be derailed (as one person remarked to me, ‘They’re businesses — they exist to help their shareholders, not the public’), it can be put to good use, too. There is nothing stopping these HNWs in their City offices from giving donations to charities and forgetting about it, but there are many benefits, intangible but definite and not otherwise attainable, which should argue against this, and for 21st-century philanthrocapitalism.