NEW TRENDS IN PHILANTHROPY FOR GRANT-SEEKERS FROM A SOCIAL INNOVATION PERSPECTIVE

Webinar presented by: Tim Brodhead

EVOLUTION OF “PHILANTHROPY”

1.0 CHARITY 2.0 PHILANTHROPY 3.0 “GOOD CITIZENSHIP”

Purpose Alleviate Suffering Problem-Solving Effect change(responsive) (analytic) (strategic)

Create Public Value

Motivation virtue generosityengagement

compassion altruismcontributing to one’s community

SOURCES OF FUNDING

Governments 40%Corporate 3%Foundation 5%Individual 25%Earned revenue 20%

SOURCES OF FUNDING DIFFER ACCORDING TO TYPE OF CHARITY

From “Not Letting a Crisis Go to Waste” (pg.19)

NEW CONTEXT FOR VOLUNTARY SECTOR / NOT FOR PROFIT ACTIVITY

o Slow growth economyo Aging population, inadequate provision for pensionso More competitive environmento New attitudes / expectations among donorso Stagnating donor baseo Changed terms for federal Gs & Cs: performance-based,

leverage private funding, more ‘accountability’o Many provinces dealing with deficits

EVOLVING MOTIVATIONS / EXPECTATIONS

Old NewSocial Innovation

Government ‘contracting out’ / delivery of public

services (core and program costs)

Corporate PR ‘’giving back” CSR

Individual charity organizational loyalty

Foundations legacy, perpetuity, project funding responsive

project-basedaccountabilityfor results

strategiclinked tocorporateObjectives

cause-basedEpisodic

hands-onstrategicventurephilanthropy

pay-for performanceLeverage private Fundssocial impact bonds

‘shared value’ – socialand economic returns

direct, by-passingIntermediaries

impact-mobilizing all assetscollaborative‘funding plus’

TRENDS IN GRANTING FROM A SOCIAL INNOVATION PERSPECTIVE

o Social Innovation: any product, process, design , program or initiative that profoundly changes the defining routines and laws, resource and authority flows, cultural beliefs and practices of a given social system. Social innovations transform intractable problem domains.

- Slide referenced from Dr. Frances Westley

Social Innovation Spectrum – Canada

Centre for Social

Innovation

Food Banks, The

Hub, 10 Carden

JumpMath, Pathways

to Education, SNAP

Centre for Impact

Investing; SVX

Centre for Natural

Care

RDSP, Microfinance

Sustainable Food

Lab, Solutions Lab

Social innovations grouped along the spectrum

Jane’s Walk, Inner

City Renovations,

Social Enterprise

Fund

Canada Impact Fund

Great Bear

Rainforest

CSI’s Community

Bonds

- Slide referenced from Tim Draimin

Local Impact System-Wide

NEW FUNDING MODELS

FINANCING

Problem

Solution

Business model (for-profit, n-f-p, charity)

Financing (loans, equity, subsidy)

FUNDING

Problem

Solution

Funding (grants)

Business model (charity)

RESULTS-BASED FUNDING, e.g. SOCIAL FINANCE

social financesocial finance[soh-shuhl fi-nans, fahy-nans], n.; synonym: impact investing

Social finance is an investment approach to solve social or environmental challenges while generating financial return. This includes investments that range from only producing a return of principal capital, to offering market-rate or even market-beating financial returns. Social finance encourages positive social or environmental solutions at a scale that neither purely philanthropic supports nor traditional investment alone can reach.

- Slide referenced from Tim Draimin

“Canadians have long relied on governments and community organizations to meet evolving social needs, while leaving markets, private capital and the business sector to seek and deliver financial returns. However, this binary system is breaking down as profound societal challenges require us to find new ways to fully mobilize our ingenuity and resources in the search for effective, long-term solutions. Mobilizing private capital to generate, not just economic value, but also social and environmental value, represents our best strategy for moving forward.”

Dr. Ilse TreurnichtTask Force Chair

CEO MaRSDecember 2010

- Slide referenced from Tim Draimin

Social finance approaches support a spectrum of organizational business models

Social & Financial Return Continuum

Non-profit For-profit

- Slide referenced from Tim Draimin

Public Sector

Social Impact Bond Delivery Agency Investors

Service Providers

Target population

Payments based on defined outcomes

Returns dependant on outcomes

Services

Funds

Information

Social Impact Bond 101

The Model “T”

1

2

3 4

TRENDS FOR GOVERNMENT FUNDING

• Reduced capacity due to deficit cutting• Performance-based• Leveraging private resources• Focus on accountability• Need to cut transaction costs• Open to innovative approaches (social

finance, social impact bonds...)

TRENDS FOR CORPORATE PHILANTHROPY

• Highly competitive• Linked to corporate objectives• Moving beyond corporate social responsibility

TRENDS FOR INDIVIDUAL DONORS

• Levels of giving not growing: fewer giving more• Donor base aging• Less attachment to organizations rather than

'causes‘• More concerned with 'results' and 'solutions‘• By-passing intermediaries to be more 'hands-on‘• Using IT and non-traditional ways of giving

TRENDS FOR GRANT-MAKERS/FOUNDATIONS

• Less capacity due to low market returns• More competitive environment for funders• Higher visibility may increase risk aversion• Having a strategic focus - fewer responsive grants• Greater emphasis on results• Continued reluctance to supply operating support• Importance of learning and knowledge development• Use of evaluation to improve practice• More willing to collaborate, including across sectors• Funding + (going beyond grants)• Growing willingness to leverage assets (eg impact investing)

CONCLUSIONS : GENERAL

FROM TO

Status quo Present situation not sustainable

“Doing good” is worthwhile in itself Demonstrate value

The “cause” motivates people to give Results motivate people to give

Philanthropy is purely voluntary Social change is needed; we all have a

(and dependant on emotional appeals) responsibility to engage

CONCLUSIONS

1. The present business model is not sustainable

2. Funding strategy must be based on organizational needs, mission, capacity.

3. There is a need to diversify, adapt and innovate

4. This is as much a challenge for funders as for grant-seekers.