The media these days is full of articles, blogs, research papers and enthusiastic descriptions of new ways of engaging in philanthropy, most of which employ the words ‘impact’, or ‘investment’. This is in contrast to the old-fashioned words ‘charity’ or ‘goodwill’. The focus has moved from a philanthropist making donation to an initiative, to an entrepreneur making an investment in that initiative. Much of this change in perspective is driven by young, successful business visionaries entering the philanthropic space and bringing with them new language to describe what they expect their generosity to accomplish. They also bring the governing principles used in successful startups and business models and expect to apply these principles to their philanthropy.
Four pillars are often seen in this modern view. These pillars are not new, they have been part of the philanthropic landscape for decades, but they have risen more firmly to the top of expectations and conditions for giving. The first is a documented need, not just one that tugs the heart, but a condition that is clearly documented to threaten or damage a population or environment. Second is an organization’s ability to scale their efforts to address larger, greater goals around this need over time. Measurable outcomes are even more critical to today’s social impact investors, and these outcomes are identified on the front end as goals or expectations, before they are achieved. Finally, philanthropic organizations soliciting funding are increasingly expected to have earned revenue as a component of their efforts and not be entirely dependent on donor support.
Many of the best known and successful global efforts use these pillars in their reporting and as proof of their success. The philanthropic model will determine the need in a foreign country where vaccines are unavailable, then calculate the ability to scale from one village effectively, to a region or even a nation or country. Providers will measure the health outcomes of the populous to prove success, and seek ways to bring in revenue from those who are able to pay, for example governments or hospitals, to insure the initiative can reach those too poor to pay and thereby replicate their efforts.
In most cases, these expectations are value added to the sector, bringing clarity and discipline to the work being done. One caution is that philanthropy will increasingly be focused on initiatives that inherently conform to this model, while leaving behind those needs that are too desperate, small, messy or difficult to attract this kind of funding. Let’s hope this great next generation of entrepreneurs entering the sector can help all of us figure out how to solve these problems as well.