Philanthropists across the globe are realising that simply disbursing one time funds on ad hoc initiatives, without a particular focus on their long-term impact, financial viability and sustainability equates to squandering scarce resources. It may allow you to tick the boxes in terms of how many grants you issued and how many projects you managed but often gives little or no tangible developmental impact. Even where developmental impact is delivered often it is short-lived because the long-term sustainability of the programme is not taken into consideration. As philanthropy grows into a trillion dollar business, assessing its efficiency and effectiveness are critical.
New models of philanthropy are increasingly applying a business mindset to delivering social programmes efficiently and at scale. The process of transition from a grant-distributing model to a business-based model takes time and is an inward-looking process, where foundations and their leadership chart the desired direction and evaluate what their success would look like and how to measure it.
With the aim of identifying opportunities for change and new models for achieving impact at scale, a collective endeavor, led by the OECD netFWD, a global network of foundations, initiated a case study examining the journey, enabling environment, incentives and drivers that led a number of philanthropic organisations to redefine their operating model in line with venture philanthropy. Case study foundations include Emirates Foundation Lundin Foundation, Rockefeller Foundation and Shell Foundation. Others also contributed to the study: Edmond de Rothschild Foundation, JP Morgan Foundation and the Novartis Foundation for Sustainable Development. Entitled Venture Philanthropy: Dynamics, Challenges, and Lessons in Search of Greater Impact, the study looked at how foundations maximised the impact of their financial and non-financial resources to create real measureable social value.
Those foundations who had undertaken historical analysis of their model, often expressed a dissatisfaction with their impact. By undergoing a transformation, in terms of strategy and business model, they were able to become much more impactful and efficient. The study captures the transition of the core four foundations, why they decided to change, how their impact had improved and the lessons they learned.
The study assessed three main dimensions; foundations that had transformed themselves from a more traditional one to a venture philanthropy model; the implications of this transformation and; the lessons learned from their experience. Chris West, the director if Shell Foundation said "We realised that what we were doing wasn't working… it wasn't just around a particular challenge or a particular geography but it was not working for everything we did. It was our way of working that was wrong".
The case study foundations were plotted against the European Venture Philanthropy Association's "continuum of social investment" which describes the various stages of evolution of a venture philanthropy initiative. It notes that more mature organisations will be broadening their interventions to not just be direct beneficiaries but also look at the market as a whole. They may also then contemplate financial tools that go beyond grants including mission related investments and loan guarantees. While the transformations described in the study varied in depth and scope, there were commonalities in terms of the challenges they faced and the end result.
All the foundations expressed the importance of improving impact and believe that the methods they use today are achieving far more in terms of sustainable outcomes than their more traditional models. However, most also admitted that the more complex engagement models they now use, working systemically with and through multiple actors, means that making comparisons between old and new models is complex.
Content on this page is produced and controlled by Emirates Foundation
