The Promise of Philanthropy

In 1889, Andrew Carnegie penned his gospel on Wealth, acknowledging:  “It is well to remember that it requires the exercise of not less ability than that which acquired the wealth to use it so as to be really beneficial to the community.” Nearly 120 years later, Bill Gates echoes these sentiments in his commencement speech to the graduating class of Harvard in 2007: “To turn caring into action, we need to see a problem, see a solution and see the impact.” In short, it takes a thoughtful plan to make a real difference.

Over the past few decades, billions of dollars from newly-created wealth and from the transfer of multi-generational wealth have become available for philanthropic investment in a wide range of efforts targeted at addressing local as well as global, social and environmental issues. However, many affluent individuals who care, but do not know how to help, not surprisingly tend to give to causes and organizations simply because they are asked—they react without much thought or intention as to whether some real benefit to the community will be achieved.

They also tend to give to “safe” organizations and causes within their comfort zone, typically low risk, requiring little due diligence and ultimately of marginal impact. As a result, emerging social challenges, organizations with innovative solutions, international causes where the needs are great and capital goes far, and other efforts with breakthrough potential often go unaddressed or underfunded.

The opportunity to realize philanthropy’s promise is greater then ever. While some, maybe even many, affluent individuals are uninterested in giving or giving better, there are significant numbers of philanthropists who are interested but limited in knowledge, skills and networks. They are unaware or uneducated about the opportunity to leverage philanthropic resources to generate the highest possible social return for communities in need across the globe.

In the past decade, there has been tremendous wealth creation in the United States, Europe, China, Brazil, India, Russia, and other states. Up-to-date trends can be found in the Capgemini and RBC Wealth Management 2014 World Wealth Report, which offers a detailed analysis of high net worth individuals (HNWIs) around the world. The 2014 survey received responses from more than 4,500 HNWIs in 23 countries across five regions of North America, Latin America, Europe, Asia-Pacific, the Middle East and Africa, making it the most comprehensive study of its kind.

According to the Capgemini and RBC Wealth Management 2014 World Wealth Report, which offers a detailed analysis of high net worth individuals (HNWIs) around the world, not only is the population and wealth of HNWIs growing, but importantly for us, having a positive impact on society is important to the vast majority of HNWIs. We cite heavily from the report:

• HNWI ranks expanded by nearly 2 million individuals in 2013, marking a 15% growth rate and the second largest increase since 2000. North America and Asia-Pacific continued to lead the way.
• In managing their wealth, many HNWIs seek to achieve more than monetary returns. Making a positive impact on society through thoughtful investments of time, money, or expertise also ranks highly, and the numbers are telling: while 92% ascribe some level of importance to driving social impact, it is either extremely or very important to over 60% of HNWIs. The wealthy in India and China rank #1 and #2 in terms of desiring to give back to their communities.
• Age plays a strong role in the desire of HNWIs to strive for social good. While 75% of those under 40 cite driving social impact as either extremely important or very important, the tendency declines about 10% with each age segment, reaching a low of 45.4% for those 60 and older.

For over two decades, The Philanthropy Workshop has educated and inspired over 350 individuals to transform their behavior and embrace the promise of philanthropy. We believe that as the number of effective philanthropists increases—those with the knowledge, skills and network for practicing philanthropy’s promise—the giving culture will tip from one of limited results, conventional interventions and modest investments, into a social force for advancing new models, innovations and improvements to existing social institutions.

Tracy Mack Parker