Last month, we were very fortunate to have Mae Hong, Vice-President, Rockefeller Philanthropy Advisers (USA) and Chair of Grantmakers for Effective Organisations present at our ‘Philanthropy conversation series’ - a series of events which brings together individuals who are committed to growing philanthropy in Australia.
In a ‘Q&A’ style session chaired by Ben Clark, Head of Philanthropy, AET, Mae shared her experiences and insights into the US philanthropy sector and strategies for effective giving.
Ben Clark (BC):
Please elaborate on your role at Rockefeller Philanthropy Advisors and as Chair of Grantmakers for Effective Organisations.
Mae Hong (MH):
The mission of Rockefeller Philanthropy Advisors (USA) (RPA) is ‘to help donors create thoughtful, effective philanthropy throughout the world.’ In service of that mission, I work with high-net-worth individuals, families, and foundations to help them develop and implement their giving in a way that is meaningful and which achieves the most impact possible.
Grantmakers for Effective Organizations (GEO) is a network of nearly 600 funders who believe that grant makers are successful only to the extent that their grantees achieve meaningful results. Toward that end, GEO promotes strategies and practices which contribute to grantee success. Both organisations reflect a growing obsession in the US with ensuring philanthropy is effective.
As a sector, we are wrestling with tough questions about how we do our work and what difference, if any, philanthropy really makes. A critical aspect of demonstrating and improving our effectiveness requires increased rigor in the field of evaluation and learning. We continually ask ourselves hard questions about whether, and how, we are actually achieving the outcomes we desire.
Another topic garnering a great deal of attention is the issue of donor intent. What is the best way to honour the wishes of the original donors while still remaining nimble and flexible to be able to respond to changing needs? There are no easy answers to either of these questions, which is why both RPA and GEO are trying to support the field with resources, ideas and connections.
RPA, through its Theory of Foundation , created a virtual ‘strategic’ blueprint for the US foundation sector (which has now been adopted by large UK and European foundations under the auspices of the Marshall Institute, London School of Economics). How has this been applied by RPA’s clients, and do you think it is relevant in the Australian sector (given its scale and size)?
The ‘Theory of the Foundation’ is a multi-year collaborative research effort to explore the fundamental nature of foundations as institutions. The concept is built off an essay by management icon Peter Drucker in 1994 entitled the ‘Theory of the Business’. He asserted that every organisation needs to define and regularly refine its theory of itself, which constitutes its mission, core competencies and environment. We believe a foundation’s theory of itself consists of its charter, social compact, and operating capabilities. These elements can be adapted to any context and would certainly apply to Australia’s growing foundation sector.
Your recent address at the Philanthropy Australia 2016 National Conference focused on shifting granting from ‘transactional’ to ‘transformative’ funding. What are some key takeaways you would provide to people on how to achieve this through their philanthropy?
I have worked in philanthropy and nonprofits for two decades, and the single most important lesson that comes back over and over is that we need our nonprofits who are doing the actual work on the front lines of our society to be as strong, thriving and resilient as possible. This seems obvious, but the truth is that we do not fund non-governmental organisations (NGOs) with that intent or goal in mind. We want to direct our resources at the issues or problems the NGOs are addressing, but we set them up for failure when we do not invest in their infrastructure and capacity.
No foundation can achieve its goals or fully realise its potential impact unless it also builds the capacity of its grantees to carry out the work. This requires flexible, unrestricted, consistent funding, open and honest relationships with grantees, and a new understanding of how nonprofits actually work.
The USA market is at a point of maturity where it values, and is preferred to pay, for advice. Please provide insight into the development of this sector and the nexus between the adviser, trustee and/or funding partner.
The concept of a philanthropic adviser is still relatively new. When donors and families reach a substantial level of giving, it often exceeds what they can manage on their own in their spare time. We say that the giving has ‘outgrown the kitchen table’ in terms of decision-making, relationship management, and tracking. So donors begin to see their philanthropy as another area of their lives – much like other personal or financial matters such as investments, real estate, business or legal affairs – that requires dedicated outside professional counsel.
In addition, the very practice of giving has become a lot more sophisticated and complex in the last 20 years, and not just in terms of the technical aspects of tax structures and legal considerations.
Donors are getting smarter and asking harder questions, of both themselves and of their grantees, about how to tackle society’s critical problems. There is a different level of engagement and rigor in giving, and now there are resources to support that. This can range from joining professional associations like Philanthropy Australia, to taking courses, attending conferences, and hiring consultants to help with any aspect of giving.
Until recently, the dominant model for philanthropic advising was the ‘solo practitioner’ model. Now there is an increase in institutional firms that are taking this on. These vary widely in size and structure. We see this as a healthy and encouraging movement for the field overall.
Growth of philanthropy in the US over the last decade has been significant. What have been the critical cultural and system elements underpinning this growth?
Research and data continue to show that giving is reaching unprecedented levels (US$ 375 billion for 2015) and has regained the lost ground which followed the global financial crisis. There are several drivers for this. Giving has become popularised in mainstream culture through such high-visibility donors as Bill and Melinda Gates, Warren Buffett, Mark Zuckerberg and even Bono. There is also expected to be a massive transfer of wealth from one generation to the next as the ageing population peaks, and some of this is expected to be directed to charity. There are also new ways to give, both through new financial structures and new technology platforms. Taken together, these are all making it easier to give, and to give more often. It feels like philanthropy is everywhere nowadays.
How is philanthropy in the US applying its capital to contribute to effective philanthropy?
Foundations and donors are increasingly asking themselves, “Am I leveraging all of my assets to achieve my mission?”They realise they have more to deploy than just the minimum amount they are required to distribute. This often includes non-financial tools as well, such as social capital, influence and visibility, but endowments and investments are a significant piece of this question. Foundations and donors do not want to be limited to just making grants to NGOs. They can invest in for-profit businesses, they can make loans, they can provide equity investments, just to name a few. Private donors have more flexibility in this area than foundations, which need to be careful about the fiduciary stewardship of resources, but in general, they all have more creative leeway than many realise.
As a result of this growing interest, there is a whole new industry blossoming up to develop research, data, tools, and to generate deal flow. Without question, this is going to continue to be a major force in how we address the world’s most pressing needs.
For more information on the event visit our website.
To find out more about our philanthropic services visit the philanthropy section of our website or call one of our trustee specialists on 1800 684 672.