Tag: philanthropy

Fundraising in the Middle East: How, Why and What?

Posted on by Chris

People give.

Wherever you are, at whatever time in history, you will see people giving to help others. Poor people give, rich people give, young and old give.

Our role as professionals in fundraising is to mediate the giving, to help people find the cause that best fits their vision of how the world should be. We help people to structure and organise their giving, show how they are making a change to the lives of others, and stand as guarantors for the honesty and impact of our organisations.

That is what is happening in the Middle East and across the Arabic-speaking world. Ancient traditions of personal philanthropy – a cultural norm and a religious requirement – are evolving rapidly thanks to the work of philanthropists, governments and rulers…and fundraisers.

I’m giving a Masterclass with UNHCR’s Reem Abdelhamid on fundraising in the Middle East, at the International Fundraising Congress, 18-21 October, Noordwijkerhout, Netherlands

A LOT OF WORLD

The total population of the Arabic-speaking world – the 22 nations of the League of Arab States – is 392m people (5% of the world’s population), of whom one-third are under 15 years old. Despite the horrors of war and of the forced movements of people – the stuff we see in our news media – the region is developing the social and cultural infrastructures that allow fundraising to evolve; education, taxation, financial systems, the legal and fiscal formalisation of charities and foundations, and personal wealth.

Fundraisers get a rush of blood to the head at the phrase ‘personal wealth.’ We have stereotype pictures of fabulously rich individuals dropping millions into the hands of eager fundraisers in Europe’s leading universities and museums. But that is only a small part of the story. Because personal wealth is spreading outward into a growing middle class, who are becoming the day-to-day donors of national and international organisations.

WHAT NOT TO DO

This is the third consecutive year when we have had IFC workshops or Masterclasses on fundraising in the Arabic-speaking world. Each time, we have learned a little more about how to operate in the region – and what not to do.

NOT A CASH MACHINE

Reem Abdelhamid, UNHCR Advisor for Private Sector Partnerships in the Kingdom of Saudi Arabia, warned early in the series that the region is not a cash-machine. No-one should be planning to hit the streets of Jeddah or Dubai, raise lots of money, and head off.

As UNHCR and other INGOs have found, the Arabic-speaking world requires – just like any other region – careful research, planning, long-term investment and clear links between the donor and the social or environmental problem they are solving.

IT’S NOT ONE PLACE

You would not treat Europe, Latin America, or Asia as one homogeneous region. The same is true of the Arabic-speaking world, where the fundraising that you might do in Kuwait is different from that you would do in Egypt. In part this is because a significant part of the region is a historic area of transit between Europe and Asia – so there are different mixtures of cultures, religions, languages, and thus of philanthropy in different states, and even in different cities. To get a clearer idea of the variation across the region, read the publications from The John D. Gerhart Center for Philanthropy & Civic Engagement at the American University of Cairo.

THINK LOCAL

To make sense of the region you are going to need local help. Houssam Chahin, who has years of experience in the region first with Greenpeace then with UNHCR, stresses the importance of recruiting and developing local teams. This is no different from opening a branch in Germany or Japan; you need people who not only speak the language but who understand the culture and know the market. People who know why this Sheikha is important, and who understand why she might not want to meet you but would meet a female colleague instead. People who can cope with the contradictions that emerge in any developing market, and who can help your organisation steer its way around the legal restrictions that may appear.

POLICY MATCH

In Western Europe we are used to the idea that NGOs challenge governments – campaigning for freedoms, rights and the environment. You are not going to get a warm welcome if you enter the Arabic-speaking region on a campaign ticket. Just reverse the situation and imagine a Kuwaiti foundation opening an office in Europe to campaign against – to pick a ridiculous example – vegetarianism, and you will see why. The developing states of the region have national plans and priorities, and philanthropy, especially strategic philanthropy or ‘major donors’ is often aligned to these priorities, so your fundraising is going to be aligned that way too.

COME AND FIND OUT MORE

The Arabic-speaking world and within that, the Middle East, is a fascinating, fast-changing, challenging environment for fundraising, with huge potential. Come and join Reem Abdelhamid and me for our Masterclass on ‘Fundraising in the Middle East: How, Why and What?’ at IFC 2016, or one of our workshops that will focus on key issues in fundraising in the region.

But do it now; there are only two places left on the Masterclass!

Follow us on Twitter:

@chrisfactary
@reemgazzaz

A Window on Philanthropy in Italy

Posted on by Chris

Another window on high-value philanthropy just opened in Italy thanks to UNHCR and Gruppo Kairos, a private banking and wealth management firm. In March, UNHCR published the results of a survey carried out with the finance firm. I am grateful to Giovanna Li Perni at UNHCR for a copy of the report, and for her presentation of the results at last week’s Festival del Fundraising.

During October-November 2015 Kairos asked its HNWI clients to complete a questionnaire; 91 of them, 44% women, 56% men, did so. This is not therefore a balanced representative sample of people of wealth in Italy (so we cannot safely extrapolate the results) but does give us at least some insight into how this group of people reacted. The group included a wide range of wealth levels from €1m to more than €30m, and a spread of age groups with, as you would expect, a bias toward middle age and older (85% were aged 46 or over). Almost all of the group were donors – 91% had made at least one donation to a social cause in the previous year (against 26% of the general population). The percentage who gave rose with increasing wealth, reaching 100% of people with wealth over €30m.

When asked about their largest gift during 2015 to any one organisation, most reported €5,000, with 73% of women giving at this level and 49% of men. Older people tended to give more, so 22% of the over-65s gave €25,000 and 11% gave €50,000. Of course these people were giving to a number of organisations, so 30% of this older group gave away a total of between €50,000-€100,000 in 2015.

Asked about the causes to which they made their largest gift in 2015, 21% chose scientific or medical research, 19% favoured children’s causes, and 16% poverty in Italy. Importantly for UNHCR, 10% chose help and protection for refugees as their top cause. 62% gave principally to causes in Italy.

Why did they give?

More than half (52%) said that their main reason for giving was because they felt privileged. 26% said it was giving made them feel useful. Interestingly just 4% of donors said that they gave because of their religious values, with 9% saying that they want to change things, to make a difference and the same percentage saying that they gave to continue a family tradition of philanthropy.

In choosing a non-profit, two major reasons stood out; the cause, and ‘transparency of the organisation and exhaustive documentation on results.’ This focus on transparency is interesting and is part of a trend we can see across Europe toward greater transparency in the non-profit sector. New laws (for example, in Holland) and new organisations (for example Fundación Lealtad in Spain) are encouraging this trend toward transparency.

Italians will tell you that business in the country is based on personal connections, and it seems that this might be true for philanthropy also. It is certainly the case for this group of philanthropists, who say that the most common channel for hearing about the organisations they support is via their personal network (28% of respondents, the largest single group), while 15% say that they chose the cause because they knew the leader of the organisation in person.

What does this tell us about strategy?

The information in this report is gathered from the clients of one bank, so we should be careful about extrapolating from it. But given that there is almost nothing else available on HNWI philanthropy in the Italian market, we might at least test some conclusions.

The research should help push up the pricing of ‘major donor’ programmes. Individuals responding to this survey have made gifts in excess of €100,000 to single organisations, and 20% of them have made gifts of €25,000 or more. We can even venture a Gift Capacity calculation for this group, defining ‘Gift Capacity’ as ‘The largest total gift that one person could give to any one cause, in ideal conditions, over five years’ (see my previous blog on this topic.) Five of the respondents with net worth of €5-€10m made gifts to single organisations of €100,000 or more, between 1% and 2% of their net worth.

The research makes the case for prospect research. It shows that personal networks are the means by which these HNWIs have been reached by their non-profit partners, and that these networks are their primary source of information. Prospect research has the tools to identify personal networks. Sadly, the number of prospect researchers in Italy is still in single figures.

This research was carried out in partnership with Gruppo Kairos, and we have here a strategic clue that a number of NGOs in Europe are starting to follow up. Private wealth managers and bankers are increasingly interested in philanthropy, and we would all do well to focus more attention on this key group of intermediaries.

This is the second year in which UNHCR and Kairos have carried out this study, and the plan is to continue the annual series; another opening window on the world of HNWI philanthropy in Europe.

Bring in the New

Posted on by Chris

Q: Where can you find more than 9,000 philanthropists who took the brave and often complicated step of creating a new grant-making charitable trust (a ‘foundation’ in international terminology)?

A: In Factary’s new New Trust Update Archive.

The new NTU Archive is many things. It’s a simple, fast and efficient way to find trusts and foundations in the UK. It’s a great way of finding out about philanthropists, and it is a history of the last ten years of philanthropy in the UK.

Factary began recording the new wave of philanthropy back in 1993, when we noticed that the Charity Commission for England and Wales was experiencing a boom in trust registrations. We discovered that the registration documents for charities – which are in the public domain – contained information that allowed fundraisers to get a clearer idea of what the activities of new trusts, and who was behind them. This was not, at the start, an easy process. We had to take the train to Taunton (where the Charity Commission keeps part of its archive) and request, one by one, the registration documents for these new charities. We then had to go through each document by hand to pick out the charities that looked like they might be, or might become, grant-makers, and start the process of research.

The second part of this process has not varied much over the years – we still carry out detailed research on each trust, contacting trust administrators and aiming to establish who is behind the trust, what their interests are, and what they hope to do.

The Factary team moves fast on that research, and subscribers to New Trust Update (we limit the number of subscribers to 100) rely on us to be the first to hear about new grant-makers.

The result is a rich database of more than 2,500 trusts with interests in arts, rights, women, older people, animals, the environment… the whole range of charitable activity. Users of the NTU Archive can search the entire data set using combinations of codes (for example, ‘Education and Training’) and keywords, to find trusts that were created with those interests.

Users can research trustees by name. There are more than 9,000 trustees listed here, so this is a rich database on individual philanthropy – people who are concerned enough about a social or environmental issues to create a foundation or to join the board of a new foundation. Information on philanthropy in the UK – with the honourable exception of Factary Phi – is hard to find and this data, linking people to their philanthropic interests is invaluable to the non-profit sector.

Factary’s Will Whitefield emphasises that this is a record of the moment that the trust was created. ‘It’s like a birth photo of the trust. When we research the trust it is around a month or two old; so the trustees, objectives and finances are from those early days.’ But that in itself is valuable, because it allows a researcher to see who the baby was, and how it grew up.

There are plenty of examples of this. The Bernard Sunley Charitable Foundation that we reported in June 2005 topped £4m in income in March 2015, double its spend at start-up. The Schroder Foundation, reported by us in March 2005 and created with a £10 deposit, had grown to £2.2m by April 2015 – that’s 22 million percent growth if you do the maths.

But tracking less spectacular growth is also relevant. For example, a search using the keyword Africa throws up 167 trusts. Pick an early one, such as the Egmont Trust and compare it with the Charity Commission’s current record for the foundation you can see that founding trustees Clare Evans (who had worked with ActionAid in the 1990s) and Jeremy Evans are still in place, but that three others have joined (and two left) over the ten years since we reported its registration in our April 2005 edition.

In here you will find the origins of venture philanthropy and impact investment. The Private Equity Foundation – we reported on it in November 2006 – is in there as is the moment in 2013 when it merged with Impetus to form Impetus Private Equity Foundation. The Apax Foundation – we reported its registration in March 2006 – is there too.

Finally, there is all the great inventiveness of philanthropy here. There are foundations with names based on Beatles’ lyrics (“Love Is All We Need”, registered and reported in 2007), those with hopeful names (“The Making a Difference Foundation,” “Heaven Can Wait” or “The GoodFund”) and foundations from the UK’s vast pool of celebrities, from Gordan Ramsay, chef to the late Dan Maskell, tennis champion.

Factary’s new NTU Archive is an open book on the growth of organised philanthropy in the UK. For more information just get in touch with Nicola Williams.

I want to be in America

Posted on by Chris

It’s frustrating, living in Europe (no, this is not going to be a piece about Mr Cameron and his referendum…)

It’s frustrating because we have so little data on philanthropy. Everywhere I look there is data on philanthropy in the USA, and a stream of clever academic research papers from across the Atlantic on who is giving, why they are giving and what they are giving.

But Europe? Yes, there are some very good centres of research, but there are not nearly enough of them.

This morning I checked the listings for academic centres of research into philanthropy, at the International Society for Third Sector Research. The results? Of the 153 academic centres of research identified by ISTR, 53 are in just one country. Yes,the USA. The next nearest country by volume of research centres is the UK, with just 11. Counting all of the centres across Europe, we still come to a smaller total than the USA with 36 centres against their 53.

Here are the (approximately) 50 countries of Europe:

Academic Research Centres in Philanthropy, Europe
Academic Research Centres in Philanthropy, Europe

And here is the single United States of America:

Academic Research Centres in Philanthropy, USA
Academic Research Centres in Philanthropy, USA

Quantity is not the same as quality, and Europe’s research centres produce a lot of very useful and valuable data. But we are being held back in our understanding of philanthropy in Europe because we have not built the academic power-houses that our colleagues in the US have created. This is a source of bias in our research – with all that wealth of data from the USA the models from across the Atlantic have become the norm. In Europe this has led a few people – notably in France – to look for new paradigms, different models, in philanthropy research. Good news, if we are to build a balanced, culturally-sensitive, understanding of philanthropy.

Still wondering about major donors?

Posted on by Chris

If you had any doubts about “major donor” fundraising – at Factary we use the term “strategic donor” – then today’s article by Martin Wolf should help dispel them (Wolf, M., 2016. The economic losers are in revolt against the elites. Financial Times).

In the article, Wolf reviews the work of Branko Milanovic, previously Lead Economist at the World Bank’s research department, who showed in a 2013 paper (Milanovic, B., 2013. Global Income Inequality by the Numbers: In History and Now. An Overview. Global Policy (May 2013), pp.198–208.) how personal incomes for the majority of people in Europe and the US have stagnated whilst the incomes of the wealthiest 10% have grown. This we knew from other studies of the wealth gap. But what makes this chart so interesting is that there is another group of people whose incomes have stagnated – the poorest 10% globally.

Change in real income between 1988 and 2008 at various percentiles of global income distribution (calculated in 2005 international dollars)

income distribution global

Notes: This is global income, so the middle class in Europe is in the 70%-80% range. The vertical axis shows the percentage change in real income, measured in constant international dollars. The horizontal axis shows the percentile position in the global income distribution. The percentile positions run from 5 to 95, in increments of five, while the top 5% are divided into two groups: the top 1%, and those between 95th and 99th percentiles.

So here is a demand and a supply argument for strategic donor fundraising. On the demand side (of the non-profit world) the poorest of the poor are staying poor or getting poorer. Non-profits have more to do, must raise more to help more.

On the supply side, the “normal” donors (or “consumer donors”) who provide the bulk of donations to Europe’s non-profits are earning the same as they earned in 1998, or less. Perhaps this is part of the reason why regular fundraising has been struggling for so long; middle income donors (in Europe) have been taking home the same wages for the last ten years, so they are unable to increase their gifts, despite the best efforts of fundraising. As Prof Adrian Sargeant never tires of telling us,

‘In the UK, charitable giving is estimated to be around one per cent of gross domestic product and while there are annual variations, this figure has proved remarkably static over time. Despite the best efforts of governments, philanthropists and a generation of fundraisers, the needle hasn’t moved much on giving since data were first recorded.’

(Sargeant, A. & Shang, J., 2011. Growing Philanthropy in the United Kingdom. A Report on the July 2011 Growing Philanthropy Summit, Bristol, UK: University of the West of England. Available here.)

But up there among the elites the picture is very different. The top ten percent of earners enjoyed real-term income growth over the period 1998-2008 with the top 1% winning increases of 60% on average, world-wide. Yes, the subsequent recession may have taken a little off the top of that, but as the annual European wealth lists show us, wealth has survived the recession in remarkably good shape.

So at both ends of our work as fundraisers there is a case for strategic donors; at the poorest end where we have to do more and more for people with less and less, and at the wealthiest end where we can see a significant segment of the population heading up the income ladder.

Time to chase after your well researched prospect pool…with a strong, well-researched, case statement.

Which leaves me – and many fundraisers – in the ethical soup. I joined fundraising as a means to an end – the end of social inequalities, of poverty, of human suffering. So while I celebrate the growth of the strategic philanthropy market…I disapprove of the system that makes a few rich and leaves the rest poor.

Difficult dilemma.

But there is a lot of potentially philanthropic money out there, and a lot more people who need it; so stop wondering about major donors and get on with it.

The Laboratory for Philanthropy

Posted on by Chris

I am just back from the annual European Venture Philanthropy Association conference, this year in Madrid. I have attended most of the organisation’s fifteen conferences – because venture philanthropy is at the cutting edge of all of Europe’s philanthropy.

The conference is increasingly focused on impact investing. This phrase has as many interpretations as there are official languages in the EU – but it covers the broad range, from grants, to projects that can demonstrate social impact, to for-profit investments in social enterprises that deliver near-market rates of return. There were a mixture of social enterprises, charities and foundations pitching for business at the event, but all of them were able to show precisely what return – social or financial or both – they could offer. More, to be blunt, than many of our largest charities can manage.

Scale is a central theme. This word is used to mean “growth” as in: ‘We’ve got a great idea – how can we scale it up?’ It is the obsession of my friend Miquel de Paladella who announced a successful second round of investment – €430,000 – to expand the JumpMath franchise in Spain. Visit their website (in English) and you’ll see that their impact indicators are on the front page. This display of impact is not the only reason for their success, but it is central to explaining why they raised finance.

Crowdfunding was popular at the conference. It’s growing fast in all its varied flavours, from crowdfunding for equity through crowdfunding for loans. Factary’s former landlord, Jamie Hartzell of Ethex, gave a concise description of the ethical issues that surround this type of finance. The first social stock exchange in Spain, La Bolsa Social presented its crowdfunded equity programme, and we also heard from Babyloan (yes, that is its real name) in France. Babyloan has tied up with Total, the French energy company, to crowdfund microfinance for green energy projects there.

We discussed the role of foundations and trusts in all this. BMW Foundation described their work in professionalising ‘pro bono’ support for non-profits, working with their alumni and staff. Seb Elsworth of Access Capital described the blend of loans and capacity building that they are planning to offer smaller organisations in the UK, some via Community Foundations. And Arnaud Gillin of Innpact in Luxembourg described the Shell Foundation’s involvement in creating loan structures to support small, growing enterprises through GroFin; it looked complicated but in essence it involves the foundation providing a grant to a lending entity to encourage other investors to join a structured, layered, lending scheme. If the loans fail, the grant money takes the burden of failure, giving lenders higher up the tree greater security. Innpact demonstrated that a grant-maker could multiply by at least four, and sometimes up to 20, the impact of a grant by working in this way.

How can we use all this? In past blogs about EVPA I have emphasised the need to keep an eye on what is happening. Now it’s time to move from watching, to action. Take a look at the extraordinary growth of crowdfunding for example. Robert Wardrop, a Research Fellow at the Cambridge Centre for Alternative Finance showed figures from their 2015 report that indicate a 104% increase in donation-based crowdfunding 2012-2014 in Europe excluding the UK. Reward-based crowdfunding is growing even faster at 127%. There are opportunities for fundraisers here.

Or take the new financial models for foundations – could your organisation structure an entity to offer loans to, say, small farmers, using the expertise you already have and a few of your foundation partners?

And finally, one cheering fact. Despite concerns that we have expressed before (see our report Trust Women for example) about the lack of women in senior positions in European philanthropy, this year’s conference had a majority of women present; 51% of participants were women. A strong message for the future.

The EVPA conference is the bubbling laboratory for philanthropy in Europe. It is where you will meet new people with new ideas – some scary, some brilliant – and see where the mainstream will be, five years later.

Next year’s conference is in Paris. See you there?

Philanthropy in the Gulf – Reporting from Takaful 2015

Posted on by Chris

I am at Takaful 2015 in Abu Dhabi, the conference on philanthropy organised annually by the Gerhart Center, American University of Cairo. It is a fascinating insight into how philanthropy functions in societies in transition – a single frame in a long movie whose end we cannot see.

The big theme on day one of the conference was youth. Defined here as anyone under 35, youth were the focus of the keynote speech by Sheika Al Zain Al Sabah, the head of the Ministry of Youth Affairs in Kuwait. She described how the ministry is working as a lightning conductor for the views of young people in the country. It was the educated younger people of these societies in transition who led the demonstrations and protests of the Arab Spring, and Kuwait has responded by creating a Government department, led by a young member of the Royal Family, to channel their views into policy. Young people were also the focus of a presentation by Lina Hourani, Director of CSR at Al Ahly Group (http://www.csralahligroup.com/), who run 10 day training courses for young social entrepreneurs – next year they run the course at the University of Bristol.

Venture philanthropy is present in the region, and Khulood El Nawas, Chief Officer for Sustainability, Emirates Foundation (http://www.emiratesfoundation.ae/EF/en/about-us/vision-mission) described their four-stage Incubate – Pilot – Scale – Spinoff model for developing programmes. The big gap for them and other speakers was the lack of data – baseline data on young people was absent or unreliable, so measuring impact was difficult or impossible.

The traditional forms of giving are evolving rapidly in these societies, and Omar Bortolazzi of the University of Bologna (https://www.unibo.it/sitoweb/omar.bortolazzi2/cv-en) described the ways in which awqaf (endowed foundations) are changing in Muslim countries in South East Asia, where donors can give through the internet to “e-waqf” set up for a variety of charitable purposes. Dr Youcef Benyza from the University of Batna, Algeria (http://www.univ-batna.dz/index.php/en/) tackled the governance of Zakat funds. Zakat (https://en.wikipedia.org/wiki/ZakaT), the third pillar of Islam, is a form of religious giving based on income and assets such as savings that are not being circulated. In Algeria each mosque collects zakat and passes the money up to a regional zakat office, who report to a government sponsored zakat agency. The process lacks transparency (there is no auditing, and no public reporting) and as a consequence there are regular newspaper reports of corruption in the system. But there is also strong resistance to reform because the funds are regarded as sacred and thus outwith the realm of government or auditors.

I ran a workshop on building partnerships with philanthropic foundations, where we talked about some of the barriers in the region to partnering with outside agencies. In some parts of the region there is suspicion of external funding partners (from Europe or the USA) and there is also a strong sense that regional nonprofits should be raising funds in their own countries, not depending on outsiders. There are legal constraints too – sometimes not clearly defined – that make it hard for organisations here to accept financial support from external partners. But there is a real interest in sharing expertise and knowledge, so we focused on building partnerships at the technician (specialist, expert) level; nonprofits here have developed clever ways of dealing with social problems, and I am looking forward to hearing today (Thursday) about the Wataneya Society for the Development of Orphans (https://www.linkedin.com/company/wataneya-society), who developed a quality standards scheme as a way of improving the conditions for the thousands of children in Egyptian orphanages.