How to Become a Progressive Philanthropist

“To truly hope, we must be able to articulate clearly and compellingly what it is that we’re hoping for. One of the most rebellious things that we can do is to articulate our own, radical vision, to organize around that vision, and to build real alternatives that embody it in our daily lives. – Farhad Ibrahimi ”

Imagine a world where progress is not only measured by the market value of all final goods and services produced in a year (GDP)  but by the quality of your human relationships, by the resilience of our communities and by the health of forests and rivers.

As Trump, Erdogan and Putin appear more frequently in the media, people start to wonder: is the world really that bad? Is there something fundamentally wrong with the world if these are our elected leaders? We seem to be living in a discouraging Zeitgeist that is fundamentally at odds with the vision of humanity described in the first sentence and indeed what capitalism had promised us – or what we believed it would bring. The enlightenment project seems to have stalled and put in reverse gear towards nationalism, xenophobia and bigotry and its scary as hell.  

My personal experience with wealth owners has been a frequent ‘head-in-the-sand syndrome’; many deny that there is a fundamental problem with the world, the economy, politics, the system. Yet the truth is that – despite our immense technological advancements – society today is following a neofeudal model, where very few people hold most of the power, and control how the game is played. It has arguably always been like that some might say, while others feel comfortable with this.

The "it's the best system available" argument is not all that great

The question is, does the majority of society really want things to continue this way? For example, why should we allow wealthy individuals and corporations to fund politicians, thereby paving the way for favours they will later collect a la Sicilian mafia? Why should the rich not be taxed at least the same as everybody else? How many Panama or Paradise Papers do we need before real reform? The uncomfortable truth of our times is that the system that has brought us to this point cannot continue with business as usual because we will face massive disruptions. It is clear that we need systems change, which has been defined as:

“fundamentally, and on a large scale, change the way a majority of relevant players solve a big social challenge, such that a critical mass of people affected by that problem substantially benefit.”

Our Czech grantee Limity Jesme My have figured it out – we need to change our system to one that focuses on social and ecological wellbeing, otherwise we’ll be ushering in the devastation that comes with climate change

As a person of wealth you can choose to sit idly by in your comfortable cocoon, while the rest of humanity is fighting those battles. You can focus on only satisfying your own immediate needs and in the worst case you will be transferred to a gated community with your loved ones when social conflict gets too intense in your country (as is already the case in South Africa). But maybe by being a bystander and not using the resources you have at your disposal to intervene, you are massively guilty of inaction? Food for moral thought..

This article is about those that want to take action and be part of the solution.

Commonly, from what I have seen, the avenues that wealthy individuals opt for traditional philanthropy and impact investing. Impact Investments are investments that combine a financial return with positive social and ecological impact. These investments often offer the same risk-return profile as conventional investments. Hence you can change the way you invest today and achieve the same, if not better, returns than conventional investments (anyone reading this who has the assets, please do so!)*.

There are fantastic communities such as The ImPact and Toniic focused on this part of the equation. I salute their work. But we have to go a step further.

Traditional philanthropy focuses on alleviating the symptoms of a problem, for example funding homeless shelters or giving out Malaria prevention-nets in Sub-Saharan Africa. These are all justifiable causes and I do not want to deride them. However, I want to make the case that the highway to human progress is becoming a progressive philanthropist.

So what does being a progressive philanthropist mean for me?

Progressive philanthropists think strategically about how they can have the maximum impact. As a person of wealth, you should strive to pull all the levers you have, which are mainly your:

A) Investment capital (via impact investments)

B) Philanthropic capital (via funding activists and social movements)

C) Career choice(s) and how you spend your time (e.g. systems-change oriented work)

D) Contacts and connections (e.g. lobbying politicians, getting more wealth owners engaged for good causes)

In the investment world, the discourse is shifting more and more towards investments that integrate social and ecological concerns. Pension funds are divesting from fossil fuel companies all over the world. This is great, and you should not waste any time in doing the same.

In the philanthropic world, we still seem obsessed over treating symptoms rather than trying to change our broken systems. What is urgently needed are more funders that are willing to support activists and social movements that are working towards changing our system towards one that is prioritising social and ecological wellbeing, the Commons Movement, the Buen Vivir Movement, the New Municipalism movement – take your pick. A framework that has come up with defining how this change should take place is called the Just Transition, which we have described more extensively in this blog post.

The concept of the Just Transition is emerging more and more in the context of progressive philanthropies such as the Chorus Foundation and Solidaire.

For your (progressive) philanthropic journey, I would encourage you to do the following:

1)Read about systems change philanthropy. A great place to start is this article by Leah Hunt-Hendrix of Solidaire and/or this article by Farhad
Ibrahimi of the Chorus Foundation. Of course feel free to follow our
Guerrilla Foundation blog as well!

2)Be aware that the only thing that will change the world we live in, profoundly and in a lasting manner, are social movements. Just think back to Martin Luther King Jr. and Gandhi when in doubt.

3)Find role models and mentors such as the Chorus Foundation, Solidaire and the Bewegungsstiftung in Germany. The EDGE Funders Alliance, a network of progressive foundations, will also be able to help you in finding the right mentors.

4)Get your “hands dirty” and connect with your local activists. Start making small donations and build trust with activist groups.

5)Enjoy the ride and bring your friends and family along. We need more people of wealth to step up their philanthropic giving in a major way.

Now if you are reading all this and vigorously nodding your head, please reach out to us (hell, even if you’re mildly rotating your skull back and forth reach out). We at the Guerrilla Foundation are passionate about finding and supporting people from wealth that want to change the world. Ideally, we would like to build a network of progressive philanthropists in Europe, something we are planning  together with a couple of other young people of wealth and the EDGE Funders Alliance (for more information see this open call). Again, if you are interested in learning more about our work and this planned network, please feel free to reach out us. Changing the world is more fun and effective done in company.

*For more information, please see this meta-study of more than 2,000 empirical studies of the relation between environmental, social, and governance (ESG) criteria and corporate financial performance (CFP). For examples of impact investing portfolios, you can visit the website of the Bewegungsstiftung, KL Felicitas Foundation, Blue Haven initiative and RS Group to see how money can be invested for sustainable development.

What’s more? Thinking beyond impact investing

Note: This article was first published on the blog of the Guerrilla Foundation.

Impact Investing, an investment “into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return”1 is being hyped right now. Go to any conference related to investing and it will be mentioned at some point. Banks, wealth managers, advisors – everybody is trying to jump on the train  to fulfil the growing demand for impact-oriented products and services. The landscape is growing with new funds emerging, impact investor networks such as The ImPact and Toniic attracting new members and of course new social entrepreneurs raising investment with their groundbreaking ideas.

In the last couple of years I have led three parallel lives. As an activist, trying to increase transparency in the Greek parliament. As a philanthropist, funding organizations in the area of political activism, social entrepreneurship and refugee aid. And finally, as an impact investor through our family office in Munich. Impact investing is a fascinating field and a great way to support commercial activities that tackle the social and environmental challenges of our time. Yet, my experience with political activism and philanthropy taught me that impact investing alone cannot achieve the breakthrough change we need. The big issues facing humanity, most importantly climate change and the growing divide between rich and poor, cannot be solved by impact investing alone. These issues call for cultural change regarding our values, frames and belief systems as well as changes to our political, economic and social institutions.

For many social entrepreneurs the highest achievement actually is achieving systems and policy change.2 For example, social entrepreneurs might advocate for closing the gaps in the welfare system that made their own emergence necessary. Ashoka, one of the leading organizations supporting social entrepreneurs worldwide, also supports the idea that actual service provision is only one side of the social impact coin. Their four level impact model 3 lists Influencing systems and frameworks as the other – often neglected – side. I am therefore convinced that impact investing strategies need to be coupled with efforts at achieving change at the level of root causes and systems. Policy change is an important aspect of this. It can have the same, if not greater impact than impact investing.

Last year for example, I made a donation to a UK NGO called Share Action to support one of their campaigns for pension fund reform in the UK and Europe. As members of a broad alliance of European NGOs, Share Action lobbied the European Parliament to allow pension funds to become more responsible investors. The suggested changes in the EU legislation include an adaptation of the Shareholder Rights Directive which would give investors more power to hold companies to account with respect to their environmental performance and the use of pension fund assets. The European Council and the European Commission will hopefully reach a final agreement on this matter by the end of this year, which could have a tremendous impact. European pension funds with combined assets of around 3 trillion € would then have to actively consider environmental, social and governance factors in their investment decisions. The project was supported chiefly by the Mava Foundation Pour La Nature and KR Foundations with an overall budget of just over € 208,000. Although my own donation was below 15,000 € the effect it could contribute to is arguably massive, helping shift billions of Euros into more sustainable investing and changing the behavior of an entire sector!

Another great example for the effects of advocacy funding are the $27 Million donation that Atlantic Philanthropies, the foundation created by Duty Free Shoppers Group co-founder Chuck Feeney, made to the Health Care for America Now coalition in 2007. The coalition eventually succeeded in lobbying congress to pass the Affordable Care Act also known as “Obamacare” that provided millions of people access to critical health services. According to the Huffington Post and other media, the legislation would most likely not have passed without this critical support by Atlantic Philanthropies.4

Advocacy impact strategies are surely accompanied by high levels of risk. Outcomes are by no means guaranteed and your donation will be gone indefinitely irrespective of whether a change was achieved on the actual issue. However, if you are a risk-taker and care about achieving the maximum impact with your money, investing into political advocacy is very much worth looking into. Moreover, even failed campaigns can have their upside if alliances were built, knowledge was shared and organizational capacity was increased. These effects will outlast an individual campaign effort and can fuel future advocacy. In the case of the Share Action donation, the result was the formation of ERIN (European Responsible Investment Network), which  brings together a wide-range of civil society organizations interested in improving public accountability and investment practices of Europe’s investment sector.

Another angle on advocacy funding is how ESG (ecological, social and governance) issues can have a financial impact for investors given a certain policy framework. For example, in a policy framework where the ‘polluter pays’ for damaging the environment, sustainable companies represent better investment choices. Creating such a framework, the state (and entities like the EU) could help create markets for responsible and sustainable products. Public policies can mobilize more resources than anyone else; they can create an environment where new solutions are allowed to scale; they can discipline offenders and encourage early adopters in ways that the market alone cannot do. One example in this context is how the European Investment Fund is helping to build the social investing space in Europe by investing more than 250 mio. € into private equity impact investing funds through its Social Impact Accelerator program. These funds allow social businesses around Europe to become investment-ready for larger follow-up investments.

The bottom line is that Impact Investment and policy work really should support and complement each other. Undoubtedly, there is no one solution to solving the world’s problems, as the world’s struggles are interconnected from democracy to climate change, from rising inequality to consumer protection. In the end achieving policy change and impact investing are part of the same coin, different strategies for achieving the same goal that is a peaceful and prosperous society.

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1. https://thegiin.org/impact-investing

2. An interesting example in this context: the social entrepreneurship organization Ashoka keeps a close eye on the policy impact of its fellows – 83% of Ashoka Fellows have contributed to changed national policy. See: https://www.ashoka.org/press/6825 (last accessed 9.6.2016)

3. https://www.ashoka.org/story/rethinking-impact-spectrum (last accessed 8.6.2016)

4. http://www.huffingtonpost.com/gara-lamarche/what-we-learned-from-heal_b_603753.html (last accessed 22.6.2016)