I just attended FSG’s webinar “Where Strategic Philanthropy Went Wrong”, based on the eponymous article published in the Stanford Social Innovation Review. The webinar and article are mostly focused on the resolving the problem of multiracial democracy in the US.
It covered - with a different approach - the scalability problem that I have been observing in the market and that I had mentioned in my 2019 LinkedIn article about the need for partnerships between philanthropy and impact investors to scale impact. (see link in comments).
Their thesis is that:
- philanthropy has been focused on funding individual (non-scalable) programs through non-profits.
- these programs have had limited impact because they did not achieve SCALE.
- philanthropy should act as a facilitator to achieve system-level change through policy intervention and through work with governments.
- philanthropy has to start influencing corporations and the impact investing movement.
- philanthropy need to continue to explore how to ensure that beneficiaries keep a sense of agency
The authors vouch for the concept of “empowering philanthropy”.
📈From my standpoint, I agree that philanthropy should try to achieve scale and facilitate scaling of net positive impact.
I also agree that a dynamic and intentional collaboration should exist between philanthropy, the private sector and the government whose intervention is key to create an enabling environment.
🤔My approach is a little bit different, partly because I focus on other types of problems (circular economy, climate change, etc.). I believe that foundations should explore the concept of providing CATALYTIC CAPITAL beyond grantmaking. It is about providing more flexible and patient capital that is risk tolerant and can help mobilize more traditional investors, in frontiers markets or in challenging sectors. In a way, it’s about expanding the concept of blended finance beyond the world of Development Finance Institutions, especially relevant to scale up impact-driven companies. In fact, some foundations in Europe and in Australia have already created fund vehicles to channel investments towards impact investments…
🇺🇸In the US, the concept of PRI Program-Related Investments and MRI Mission Related Investments have existed since the 70s in the IRS tax code to allow foundations to make investments aligned with their charitable mission, in a way that may (or may not) generate market returns. MRI are expected to generate market returns… MRI and PRI paved the way for foundations to go beyond grantmaking (giving money at a loss) into what is known today as impact investing. Yet, these instruments have not been widely used according to a 2016 article from Wharton’s Center for High Impact Philanthropy (I know, it dates…).
What did the article and/or webinar inspire you?
#philanthropy #catalyticCAPITAL #systemicCHANGE
📣 HAPPENING TOMORROW: How can top-down models of philanthropy be transformed so that individuals and communities can create their own solutions?
📅 Join us on Tuesday, June 25th from 2-3PM ET where we will invite attendees to reimagine and co-create what's next for the sector of philanthropy.
Panelists:
⭐ Steve Phillips, Author and Founder, Democracy in Color
⭐ Mark Kramer, Co-Founder and Board Chair, FSG
⭐ John Harper, CEO, FSG
Register here ➡️ https://lnkd.in/e3SBbcDs