Major donors need to take risks if charities are to tackle social problems
The news that giving by the UK’s top 300 charitable foundations has increased year-on-year to £2.5bn is a welcome chink of light amid the gloom of public sector spending cuts. But a new study into what foundations fund says more should support innovative or risky projects if they want to tackle the root causes of social problems and not just plug funding gaps.
The report by Cass Business School’s Centre for Charitable Giving and Philanthropy (CGAP) examined how much philanthropic foundations are contributing to support research and innovation. While research is widely funded, only just over a third of respondents fund innovation.
The report concludes: “In an era of social, economic and political turbulence, there is an opportunity to increase the contribution of foundations to new approaches and solutions.”
The UK report is part of a Europe-wide study, funded by the European Commission, into research and innovation spending by foundations. Professor Cathy Pharoah, report co-author and CGAP co-director, suggests foundations should share knowledge more systematically and work more closely with partners to deliver their programmes. “It’s getting harder to take risks because money is so tight and there is an increasing demand for evidence,” she says. “Collaborative funding – where the risks are shared – is one way out of that.”
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In the UK, LankellyChase Foundation is one of the most visible proponents of tackling social problems in partnership with statutory and non-profit partners. By targeting people who face severe and multiple disadvantages, the foundation aims to support “systems change” – which is defined in a 2015 publication from New Philanthropy Capital as “altering underlying structures and supporting mechanisms which make the system operate in a particular way”. In other words, tackling root causes.
Alice Evans, director of systems change at LankellyChase, says the problem with traditional interventions is that they only paper over the cracks. “We are funding people to look far more at the root causes and systems,” she explains.
Launched in 2013, Love Barrow Families is a partnership between Cumbria Partnership NHS Foundation Trust and Cumbria County Council to improve the way adult and child health and social care services work together to meet the complex needs of families in Barrow. Backed by a £90,000 annual grant from LankellyChase, the project has improved school attendance, reduced anti-social behaviour and involved families as volunteers in their communities.
“We are funding this because we think it should be the blueprint for how Barrow and Cumbria can redesign services,” says Evans.
LankellyChase is also funding System Changers, a six-month pilot to gather insight from frontline workers in homelessness and drug services in the north of England, to improve the way clients are supported. Evans says these voices are often unheard but can help shape what needs to change. The results will be shared locally and nationally next year.
The Lipman Family Prize is an annual global award that celebrates innovation with an emphasis on impact and transferable practices. First awarded in 2012, it is administered by the US University of Pennsylvania through Wharton School, the school of award founder Barry Lipman.
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The recently-doubled prize offers $250,000 of unrestricted funding to one main winner, and $25,000 each to two runners up. The 2015 winner, Riders for Health, manages motorcycles, ambulances and other vehicles to ensure smooth delivery of health care in seven countries across Africa.
Breakthrough, winner of the 2014 award, is a global human rights organisation working to make violence against women and girls unacceptable. Much of its work involves quick-response, multimedia campaigns to mobilise communities.
Umi Howard, director of the Lipman Family Prize, admits Breakthrough could be seen by traditional philanthropists as a “risky pick” because of its “huge mission” to prevent violence against women by transforming the norms and cultures that enable it.
Howard says: “We won’t know if they achieve their culture change goals for a decade or more. Relying on hard numbers in terms of outcomes, the prize committee could have easily gone another way, but instead selected Breakthrough as a group doing something daring and truly different.”
Young people trying to decide what to do with their lives are often told to follow their passion. Wrong, says William MacAskill, the co-founder of career-advice website 80,000 Hours and author of Doing Good Better: How Effective Altruism Can Help You Make a Difference.
In the book, MacAskill writes: “Taken literally, the idea of following your passion is terrible advice.” Partly he’s being practical. People tend to be passionate about sports, music and the arts, and there aren’t a lot of jobs there.
More than that, though, MacAskill and his colleagues at 80,000 Hours – named for the number of hours people will spend at work during their lives – argue that passion does not lead to job satisfaction. That tends to depend on other elements, including the degree to which your job provides autonomy, variety and the opportunity to complete tasks, as well as how you get on with colleagues and the extent to which you’re good at what you do.
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Most important, at least for effective altruists – those who define themselves as using reason to do the most good they can – is that passion won’t lead to impact. Nor, necessarily, will the most obvious career choices open to a socially-concerned college student or young graduate, like working for a nonprofit.
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Young people “should really be thinking about learning skills, building networks, building up credentials, learning about what the most important problems in the world are and how to fix them,” says MacAskill. Those opportunities are more likely to present themselves in the business world, which has more resources to devote to training.
Then there’s the option of “earning to give”, which has attracted lots of attention, favourable and unfavourable. The idea is that some people – not all or most, by any means – should pursue work to make as much money as they can and then commit to giving a significant portion of their earnings away.
Consider Ben West, a software engineer and self-identified effective altruist in Madison, Wisconsin. Seeking career guidance, West read about earning to give on the 80,000 Hours website and left his job at a software firm to launch Health eFilings, a startup whose software helps healthcare providers report data required by Medicare.
West has committed nearly all of his equity in the startup, which recently raised nearly $1m (£645,000) in venture capital, to charity. He lives on a minimum-wage salary, about $15,000 (£9,600) a year, and donates the rest of his stake in the company to charities. In the four years since graduating from college, he has already given away $100,000 (£64,700).
West may be an extreme example but he’s not alone. 80,000 Hours states that “people we’ve advised intend to [collectively] donate over $10m to high-impact charities within the next three years.” Giving What We Can, an affiliated nonprofit that encourages people to give away at least 10% of their income to charities identified as effective, has more than 1,200 members who have given away over $9m so far and pledged about $460m.
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The idea of earning to give has helped persuade people like West and traders Sam Bankman-Fried and Matt Wage to donate significant amounts of money to charity.
Bill Gates probably did not have earning to give in mind when he started Microsoft but his wealth will do an enormous amount of good through the Bill and Melinda Gates Foundation, the world’s biggest charity.
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However, earning to give is controversial. New York Times columnist David Brooks, for example, has argued that it turns people “into a means rather than an end” and that taking a job just to make money is “probably going to be corrosive”. Like the effective altruism movement as a whole, some say, the idea of earning to give is driven by logic, not love.
Of course, no one who gives career advice advocates a one-size-fits-all approach and MacAskill has expressed regret that earning to give has received a disproportionate amount of attention relative to the wider effective altruism movement.
In a blog on the subject, he writes: “It seems unlikely to me that earning to give would ever be the best choice for the majority of people, just for the boring mathematical reason that there are many more non-earning-to-give paths than there are earning-to-give paths. Moreover, one successful person earning to give can support several people doing direct work, and there are lots of potential donations from people who aren’t earning to give that we can bring in by doing a good job of direct work.”
MacAskill, who teaches philosophy at Oxford, argues that his current career choice is at present the most effective thing he could do: “I considered working in law or finance and earning to give, and I considered entering politics. But I realised that by being an advocate I could convince hundreds of other people to pursue those paths; so I could have hundreds of times the impact than if I were to enter one of those fields directly.”
image from world economic forum