I just returned to the U.S. after five years of living in Singapore and working with philanthropists and NGOs across Asia. As I resettle and reconnect, friends ask how I’ve changed since I left. While there are many things I learned in Asia, I am overwhelmed by how much I missed the “nonprofit-ness” of the U.S. I missed the way the third sector in the U.S. is understood to be a vibrant part of society. I missed the way nonprofits create public spaces for caring, inclusion, and recovery.
Nonprofits raise unpopular issues and express opinions that often lead to policy changes. From Black Lives Matter to Mothers Against Drunk Driving, World Wildlife Fund, Special Olympics, or Freedom to Marry, nonprofits create a collective space for conversations that need to happen. These nonprofits spark dialogue and build momentum for shifting public opinion and policy action.
Nonprofits open a window into beauty and poetry. Public art, theatre, and dance (to name just a few artistic forms) are critical expressions of our individual and collective identities. Diversity is increasing in every country and the process of how “they” become “us” is often described and facilitated through the arts. Small and large nonprofits alike give us a taste of the uniqueness of other cultures, even while we identify universal themes. Nonprofits hold space for new, outside, or “other” artists that might not get distribution in market-mediated venues.
Nonprofits can also establish ideals for leadership. The magnitude of public anger when nonprofit scandals break is in direct proportion to the public’s expectation that nonprofit leaders should hold themselves to even higher ethical standards than their counterparts in business or in government. While the sector may not always live up to those standards, it is an important role we in the third sector should embrace. This is not about taking vows of poverty or perfection, but is rather about maintaining critical inquiry of institutions on issues of governance, hierarchy, fairness, and equity.
Meanwhile, across Asia the role of nonprofits is being curtailed like never before. NGO voices are being silenced and regulated. And yet in my five years abroad, I regularly met people in China, India, and Southeast Asia who are dedicating themselves to starting and working in nonprofits. And not just to provide services, but to build community. These people — many of them newly-degreed young people — want to build meaning in their lives beyond wealth accumulation. Bucking roles assigned by family or society, they exhibit tremendous strength of spirit in their efforts to build robust nonprofit ecosystems.
My time abroad brought into stark relief the critical role our nonprofits play in weaving together the threads of our communities. Sure, we can get a lot better. But absence from this nonprofit community did indeed make my heart grow fonder.
Crystal Hayling is former CEO of the Blue Shield California Foundation and a member of the CEP Board of Directors. Follow her on Twitter at @CHayling.
‘Kids are the canaries in the coalmine. Where kids are doing well, communities are doing well. Where kids are not doing well, communities are not doing well,’ came the challenge from an audience member.
‘True, but many foundations decide, for example, that education is THE answer to community improvement. That’s like saying, “If only the canaries were smarter …”’ responded John A Powell, director of the Haas Institute, in a breakout session on inequality at the Center for Effective Philanthropy’s 2015 conference in San Francisco on 19–21 May. The purpose of the canary, he stressed, is to tell us what’s wrong with the environment, with the system that surrounds us.
This exchange captured a theme that ran throughout CEP’s conference—the importance of understanding systems, not just symptoms, in order to drive philanthropic impact and effectiveness.
Van Jones, who received a standing ovation for his remarks, challenged the more than 300 foundation leaders to consider systemic bias and not just individual outcomes. He gave as example working to close prisons rather than just treating individual offenders. The latter is certainly important, but the former is an upstream, system change that has the potential to shift the trajectory of the problem, not just outcomes for x number of individuals.
Jones, a CNN correspondent and non-profit leader who worked in the Obama White House, encouraged foundations to step outside of their comfort zone to build allies for change, citing his current prison reform initiative in partnership with Newt Gingrich. ‘Turns out you can work with people you disagree with, on the issues you agree on.’
Further encouragement to push past business as usual was delivered by Henry Timms, founder of #GivingTuesday and exec director of 92nd Street Y, one of the largest social service non-profits in NYC.
Henry put the crowd through exercises to uncover their understanding of what he and Jeremy Heimans in their much-discussed Harvard Business Review article coined ‘new power’ and the way it will transform how people engage in good works.
The power to do good will no longer be concentrated in the hands of large incumbent organizations filled with professionals, but will likely be more distributed through technology-enabled networks where messages are not centrally controlled and brands will be co-created by aligned publics.
Echoing themes of partnership and alliances, Barbara Kellerman of the Harvard Kennedy School challenged our current fixation on what she called ‘the $50 billion leadership industry’.
Why, she asked, have we created a culture where following is seen as less than and inferior?
A terrific challenge for our times as we see foundations with giant communications budgets and branding strategies that trumpet their leadership and distinctiveness from others.
Maybe she’s on to something.
This theme of followership and partnership also appeared in breakout sessions highlighting foundation collaboration, co-creation and examples of shared impact.
Overall, the conference seemed to succeed in challenging current thinking while also providing tools and ideas for improving foundation effectiveness. New research by CEP showed the disconnect between foundation talk about social investing vs the actual work being done in this area.
Perhaps most fascinating was the success of a nine-person panel—which seemed like a terrible idea but actually worked because it showed the breadth of approaches foundations are taking to achieve their work.
Clara Miller from Heron pushed foundations to stop being ‘hedge funds with a tiny philanthropy office on the side’ and put the other 95 per cent of assets to work.
And Sylvia Yee shared the Haas Foundation’s experience of funding marriage equality from the early days of the movement to current successes—describing the donor commitment necessary to see through the many failures and setbacks along the way.
Do conferences change foundation practice? Perhaps yes. Certainly so if participants left with Lynn Perry Wooten’s opening remarks in mind, ‘A good leader’s role is not just to serve, but to enable others to act.’ CEP’s conference provided tools, if foundations want to take action.
Perhaps it was the unseasonably warm weather in Davos, Switzerland that caused the shift of attention at the World Economic Forum to challenges faced by the global south and increasingly by developed nations: rising income and social inequality. OxFam released a report called Working for the Few that starkly illustrated the divide quite: the number of people whose wealth equals 50% of global assets could all squeeze into a double-decker bus. International Monetary Fund leaders expressed concern about rising inequality and its effect on political stability. Clearly, the rising economic tide has failed to raise all boats. Under the circumstances, “winner takes all” may be a better catchphrase.
Another truism to be revisited is the notion that increasing wealth automatically results in increased relative or absolute amounts of philanthropic and charitable giving. More to the point is the question of whether the political and economic arrangements contributing to growing gaps can be addressed through voluntary giving or whether they require more structural approaches.
Those arguing that giving can and should play a role in contributing to gradual change, or at least in shielding the most vulnerable groups, remind us that it cannot spring from charitable impulses alone. What is needed is philanthropy, conceived as a set of socially-conscious capabilities and practices that can be encouraged and shaped by a blend of legal, fiscal, socio-cultural and economic factors. In this context, the presence of local philanthropy in new markets and emerging economies is hailed as a possible, albeit limited, answer to growing disparities and new population needs.
The Lien Centre for Social Innovation, a think-tank based at Singapore Management University, partnered with the International Development and Research Centre to study the extent of philanthropy in Southeast Asia and its link to public policy in four Southeast Asian economies (Indonesia, the Philippines, Singapore and Thailand). Our report, entitled Levers for Change: Philanthropy in Select Southeast Asian Countries sets out to answer the question: how has philanthropy developed in the region and how is public policy and practice encouraging or inhibiting its growth?
Rising Wealth, Lagging Philanthropy
The Giving Pledge now has 122 signatories in 11 countries, but only two of them are from South East Asia, despite the fact that Asia’s number of ultra high net worth (HNW) individuals (those with $30M US or more) has caught up to levels in the US and Europe and is expected to eclipse those regions within the next five to ten years. The Giving Pledge is only one marker, and there is no way to capture giving that is anonymous or unrecorded, but the available evidence suggests giving, especially by the wealthy in Asia, lags behind that of the West. Of course cultural differences should be acknowledged: giving and philanthropy will and should look different in Asia than they do in the West.
Previous surveys of HNWs in the region suggest a greater interest in preserving wealth for future generations than developing strategies for giving it away. Those studies have concluded donors are motivated to give primarily in order to pass values from one generation to the next; they fund education and religion far more than other issues, are family- and clan-oriented, prefer giving to services over causes, and like to give quietly.
So what does all this mean for those interested in increasing philanthropy to help it address social and economic inequity? The Lien Centre’s report reveals consistent evidence that thoughtful public policy can increase philanthropic giving, but it also uncovered many gaps and missed opportunities in policy and practice that hinder philanthropic growth, particularly philanthropy focused on addressing thorny social problems.
Innovations in Giving
The study found a number of approaches and innovations in giving practices–some encouraged by policies, but more frequently by civil society initiatives—that can serve as replicable models for the region and beyond:
- Singapore clearly emerged as a leader in driving increased giving through policies that encourage domestic contributions to voluntary organizations. Donors can deduct two and a half times the value of their donations to approved NGOs in their tax filings, resulting in Singapore’s charitable contributions consistently increasing.
- In Indonesia, a growing movement of nonprofit organizations collects and distributes zakat (alms) to support community development for poverty alleviation, a relatively new approach since these are funds had primarily been given to temples for relief of the needy. Given that Islam requires zakat of all able-bodied Muslims, it potentially constitutes a vast sum of money in this, the largest Muslim nation in the world.
- In the Philippines, networks of NGOs lobbied for the creation of The Foundation for the Philippine Environment, set up in 1992 through a unique debt swap that required government support and legal permission.
- The Thai Health Foundation, the nation’s largest philanthropic institution, established under the Health Promotion Act of 2001, is funded by a 2% excise tax on alcohol and tobacco products sold. The fund disburses about $100M US each year.
- Disaster relief has grown significantly in all four countries and is raising the profile of community-wide giving rather than just giving by the extremely wealthy.
- Nascent efforts to start community foundations shows promise as a way of focusing resources on community needs while also providing donor education.
Challenges for Philanthropy
Lack of Data. A number of significant challenges remain, however. Limited data on philanthropy and nonprofits inhibits growth in all four countries. This makes it difficult to accurately capture the state of giving, while resistance to data collection inhibits public faith in the sector as well as entrenching inefficiencies in funds disbursement and donor isolation.
Awareness of the need for philanthropic efforts is limited. Focus on the high average income has, until very recently, overshadowed discussions of poverty pockets in Singapore. Similarly for the region, the focus on rapid economic growth limits attention for wealth disparities and persistent poverty. Moreover, there is a perception among many HNW individuals that socio-economic issues are the responsibility of governments and international aid bodies.
Limitations of Tax Policies. Individual income tax policy (which in the US is considered a key driver of charitable giving) is underutilized in the region, with the exception of Singapore, largely because of the limited potential of individual taxes as a lever for change in emerging economies. In these countries, a small portion of the population pays income taxes and the effective tax rate is relatively low. Tax collectors face highly mobile, extremely savvy HNW individuals who will unlikely be swayed by modest deductions on taxes they may in any case be able to avoid.
Nor does this tend to be a high priority for NGO activists. Much of the wealth in the region rests with individuals and families in privately held conglomerates with close government connections. Transparency in corporate and inheritance tax policy is a critical work in progress. NGO activists, who in the West fight for the charitable deduction, may understandably choose to focus on government accountability and transparency rather than tax breaks for the wealthy.
While the possibilities of individual income tax may be limited, corporate or industry taxes may prove to be an area of opportunity for spurring institutional philanthropy. In 2007, Indonesia passed Law No 40 on limited Liability Companies requiring extractive industries to contribute 2% of profits to community benefit. Without transparency and clear reporting, it is currently impossible to measure the impact of this law, but many hope such funds could eventually be channeled into local grantmaking.
Skepticism about corporate giving. Corporate giving is increasingly viewed with skepticism by NGOs because more corporations are now fundraising for company-run programmes. In Indonesia, NGOs have developed a set of recommended ethics for media fundraising as they have watched newspapers raise millions for disaster relief, with little accountability for how funds were distributed.
Distrust of NGO’s. The fact that regulation of NGOs is either nonexistent or unenforcement creates confusion in the field and undermines public faith and support in nonprofit and philanthropic institutions. In the Philippines, a voluntary ‘accreditation’ for NGOs is being tried as a way to break through donor distrust for the sector.
The symbiotic, yet sometimes uneasy, relationship between nonprofits and donors was highlighted as a challenge in all four countries. NGOs would prefer donors to offer longer-term support to build institutional capacity, while many donors cite lack of accountability as a reason many create their own projects rather than working with NGOs. Robust networks of donors and NGOs, as evidenced in the Philippines and increasingly in Singapore, can begin to help overcome these challenges through knowledge sharing of best practice.
Some strategies to be considered. To help offset these obstacles, the study suggested a number of approaches worth exploring:
- Singapore’s tax benefits for charitable giving currently do not apply to NGOs working outside of Singapore. As an economic and policy leader in the region, expansion of those policies could significantly spur giving especially since so much of the region’s wealth sits in Singapore’s private banks.
- All four countries would benefit from concerted donor education to advance strategic philanthropy and move beyond chequebook charity. A promising sign is the nascent development of community foundations and giving circles where donors, large and small, can pool financial resources and match funds with expertise on community needs to support worthy NGOs.
- Regional collaboration could help each country align interests in maximizing revenues while also encouraging philanthropy. Could ASEAN (Association of Southeast Asian Nations) consider philanthropic policy as part of its mandate?
- Social media may be a means of increasing broad-based community fundraising. Mobile technology has a strong presence in all of the countries studied and has the potential to be a platform for change.
Ultimately, philanthropy’s singular value is its ability to be seed capital and patient capital for civil society. Governments and markets cannot build equitable societies without a vibrant civil society. And civil society needs strategic, thoughtful, educated and engaged donors as partners. The enabling environment for strategic philanthropy can be improved through policies that encourage innovation in civil society, increase non-profit and philanthropic accountability, improve data collection, and celebrate risk-taking leaders. Maybe this will be a topic for next year’s Davos.
This piece, written in collaboration with Rosalia Sciortino and Prapti Upadhay, originally appeared in March 2014 issue of Alliance magazine.