Increasing professionalism: the role of trustee companies in philanthropy

It has been expressed to me on more than one occasion that philanthropy is becoming too professional. I work in the sector, so I try not to take it personally but I think it is time to pick apart the debate a little. We’ve previously tackled on this blog the delicate balance that good philanthropic grantmaking must attempt to strike: a warm heart and a cold eye. There have been a number of good posts and speeches about the nature of philanthropy and the belief that altruism is unique and embedded within human nature. There are also the economists of this world and other theorists who believe altruism, like all other human behaviours, is incentivised and can be moulded into form.

It appears the nonprofit sector, with the exception of a couple of amateur sporting codes (Gaelic football comes to mind), is the final domain of debate around whether increased professionalism diminishes rather than increases the value of a sector. Does increased professionalism, and the development and employment costs it carries, remove much needed funding from the service coal face, or ultimately help to deliver more while building efficiencies?

With relation to professionalism within philanthropy I hear two main complaints:

  1. There are a lot of people making a lot of money out of spruiking the value of professional organised philanthropy and/or;
  2. Philanthropy has lost its benevolent heart and is no longer organic or enjoyable.  In short, it’s become work rather than play.

The question of philanthropy profiteering is more often than not pointed in one direction – trustee companies. With the enormous growth in private ancillary funds and the governance arrangements they carry there is suddenly money to be made in giving away money. Of the 5,000 or so estimated trusts and foundations in Australia more than half are thought to be held within trustee companies.  These pots of funding are held outside of the public view and are managed and coupled with investment and other financial services. To the cynical, trustee company philanthropy is perceived as tax-break grantmaking and the philanthropic services they offer is viewed as being muddled up with, and merely ancillary to, the bigger bucks of the financial services game.

Equally, those who lament the loss of the benevolent heart of philanthropy are genuinely fearful that philanthropy is the latest victim of fads and bureaucracies that add little value and ultimately deter people from giving. In the world of strategic grantmaking, venture philanthropy, philanhrocapitalism and engaged philanthropy, the concern is that the joy of giving has been lost and with it, potential philanthropists.

It would surprise some detractors perhaps to learn that despite concerns around profiteering and the loss of the joy of philanthropy, it appears that financial advisers and trustee companies might actually be playing an important role in both attracting people to and educating people about philanthropy.  A report from the Queensland University of Technology, Foundations for Giving: why and how Australians structure their philanthropy, documents responses from 40 people involved in structured, formalised philanthropy.  Virtually all respondents indicated that advisers and other intermediaries played some role in their philanthropy and the views expressed were generally positive.  In fact, the negative views expressed by respondents around advisers seems to suggest a greater level of expertise in philanthropy and skills in grantmaking would be preferable.

Philanthropy is and always will be a ‘people’s’ game.  Its about people being inspired by other people.  Its about people trusting and believing in other people.  Most of all it is about people wanting to create better lives and communities for others. It is hard to imagine that the heart of philanthropy will be lost simply through increased professionalism. In fact there is mounting evidence to suggest that the opposite may actually be true. Some of Australia’s trustee companies are driving not only increased professionalism within philanthropy, but also a greater diversity in practices and approaches to grantmaking. Some of our most vocal proponents for greater levels of giving among Australia’s wealthy, increased investment in organizational capacity support and improved engagement and evaluation of grantmaking approaches, are coming from within the trustee company sector. The gags many individual philanthropists are compelled to wear when talking about their philanthropy are less evident within adviser circles.

Good trustee companies will be passionate about their philanthropy and the approaches available to their clients.  Poor trustee companies will see philanthropic services as ancillary, and more than likely will charge a hefty price for the pleasure. As is the case with all services, donors should shop around, the cream of the crop will quickly become evident.

The professionalism that trustee companies bring to client services is beginning to have an impact on philanthropy as it is delivered in Australia.  It’s a diversity that the sector absolutely needs.  More choice for donors and potential philanthropists is important as is greater debate on grantmaking approaches and philosophies.

You can follow the musings of Caitriona Fay via @cat_fay on twitter and the eggs via @3eggphil


Prevention at the expense of the cure

Let’s face it, these days it’s simply not in vogue to be considered a philanthropist (or philanthrocrat) driven by a spirit of benevolence.  We have entered the era of the venture philanthropists, the philanthrocapitalists, the tactical philanthropists.  In philanthropy, strategy is now the name of the game. Philanthropists and their foundations are finding smarter ways to give and more innovative ways of funding for impact. If this group of strategy driven philanthropists had a mantra it would likely be prevention, prevention, prevention. But when everyone wants to be the funder helping to build the fence at the top of the cliff,  what does that mean for those people who need the ambulance at the bottom of it?

The philanthropic sector in Australia is racing towards a new level of maturity.  It’s vastly more professional than it was as little as five years ago. But professionalism has led to a recognition that supporting prevention and mitigation programs offers greater bang for the funder’s buck.  There is no disputing the fact that prevention is less costly than the cure. However, if we as a sector are encouraging a greater focus on prevention, perhaps it’s important to stop for a moment and consider at what cost?

Photographer : Cybele

I’m fortunate enough to work for a foundation that has the capacity and the inclination to fund across the grantmaking spectrum. Funding programs that seek to mitigate against homelessness are great, but there is still a desire at Board level to make sure issues of food security and the need for refuge are also addressed. For some, funding the ambulance at the expense of the fence might appear counter-productive but we’ll always need the balance.

I wrote recently about the growing recognition that great philanthropists can balance the head and the heart. Perhaps the reality is that the benevolent urge to help those in need is the heart of funding. Trying to make progress on the problems and difficulties (a great post here on the difference) that affect our communities is more a challenge for the head.

I remember reading once that Bill Gates sat his young daughter down and tried to explain to her the work the Gates Foundation was doing to find a vaccine for malaria. As they flicked through pictures of the devastation caused to those individuals already struck down she asked ‘who is helping them?’.  It was a reminder to Gates, and should be to all of us, not to forget those with immediate and real need for support. It’s important that we don’t leave behind those organisations working at the bottom of the cliff for the sake of increased bang for the buck.

For some funders, prevention is the best way to give within their limited resources.  For others, their philanthropy will be driven by a desire to address the need they see every day. I don’t ever think we’ll get to a stage where all funders are focusing prevention at the expense of the  ‘cure’. We do however, need to be careful not to dismiss programs and organisations working to provide immediate support,as having no place in strategy driven philanthropy.

As a sector, philanthropy needs to be more introspective.  Perhaps it’s time to shift our focus from funding where government can’t or won’t and start looking more closely at where the philanthropic gaps are. That requires new levels of collaboration and a transparency around our foundation missions and objectives.  If we can get the balance right and find a way to solve problems and service our society’s greatest difficulties, then as a sector we will be more impactful.

You can connect with Caitriona Fay on Twitter via @cat_fay or any of the eggs via @3eggphil.