A roadmap for the philanthropreneur
There are millions of charities around the world. As a prospective donor or philanthropist, where do you start ? London based philanthropy advisor, Plum Lomax, from charity think tank NPC gives us some guidance.Plum Lomax is Deputy Head of the Funder Team at NPC, where she advises philanthropists on the ways to achieve the greatest impact with their giving. Before joining NPC in 2003, Plum was Head of European Equity Strategy at Merrill Lynch. She has also worked with small businesses and charities in London and Cape Town.
Could you describe the galaxy of charities that exist? There must be millions. How would you help an outsider categorize this galaxy to make sense of it?
In the UK there are more than 160,000 registered charities—not quite millions, but certainly a big and broad voluntary sector, covering everything from tiny outfits run from a local church to international development charities which control huge amounts of money in public contracts.
The sheer size tends to surprise the public, and also poses a challenge for philanthropists: how can you navigate your way through so many organisations to do the most social good possible? People may well find that there are thousands of charities working on children’s rights, or protecting animals from harm, or whatever their chosen cause is.
We advise potential donors to start by thinking top-down—narrow the field by selecting causes close to their heart before delving into specific charities. It is then usually straightforward to identify the biggest players in each field.
However if they want to give to smaller organisations, or to charities working in underfunded areas, working locally or addressing an unmet need, it can be challenging to find appropriate organisations where the donor can be confident that their donation will have an impact. Good ways to access information include online research, linking with existing experts in the field, or through specialist advisors.
Almost all these charities will have websites and public information about how they operate and what they are trying to achieve. For those who want a bit more detail, charities must publish their annual accounts, so you can see where their money is going. The Charity Commission (which regulates UK charities) has more details still.
Can you tell us about the “science” behind impact giving? What are the techniques and services for assessing charities?
It’s a reasonably simple science. The first essential question for any philanthropist is: what do they want to achieve? Then they will want to match-up their aims with the amount of money they want to commit. The ambition of completely ending child poverty, for example, however attractive, is beyond the reach of even the biggest givers. But smaller sums, well-directed, can make a real difference to problems that the philanthropist cares about.
After that, it’s about making sure that your money has the most impact. That can require a bit of legwork. Philanthropists will need to conduct some due diligence into charities, or get someone else to do so for them, and check out how effectively they think their money might be put to work. But here too there are simple places to start. The key questions to ask a charity are: What’s the problem that you are trying to address?; What are you doing to address this need?; How will you know if you’ve been successful?; What have been your results so far?; What are the most important lessons you’ve learnt?
Increasingly the charity will have an impact report on its website, which gives potential philanthropists a way to understand the real effect that the charity is having. If you call a charity and ask, are they prepared to have that sort of conversation with you?
What option would you advise to choose between participating to an existing program and starting one’s own?
It is often an attractive idea to set up a charity or project from scratch, as a way to realise the ‘vision’ you have as a philanthropist. And that can be great—but it isn’t the only option.
Given the sheer size of the charity sector in the UK, the risk of replicating work (and wasting vital resources along the way) is a very real one. There is no point starting a new charity in an area already crowded with organisations aiming for the same sort of impact and competing for the same supporters and funders. This just isn’t in the interests of the beneficiaries.
However, a philanthropist might think about which existing charities are best prepared to use an injection of both cash and new ideas. For instance, helping an existing charity scale-up and develop its most effective programmes for even more people can be a great way to build on potential which is already out there.
In your experience what is and how long is the exploration process to find one’s niche for someone looking to start his own program?
It really depends. Some people have a good idea of what they want to do from the very start. It can be quite personal—if someone is moved by seeing more homeless people on the streets, for example, they might need a review of the charities which are out there to find the right specialist area to fund.
Less often, but equally important, philanthropists come to us knowing that they want to make a difference in the world, but are not yet sure where they want to put their money. This can be really exciting. You start work with someone full of enthusiasm and ideas and a blank bit of paper, and have so many options.
In both cases, philanthropy is an evolving thing. Strategies for where to invest and which projects to support are always being revisited and tweaked, which is exactly what a good philanthropist should do. So it never really ends!
How would you advise a new philanthropreneur who decides to start on his own to build his program?
The most important thing when starting out is to set clear objectives about what you would like to achieve with your giving. This provides the starting point for working out how to make that vision come to fruition. Your objectives should reflect what is important to you and what is motivating you to give, and can be broader than simply choosing a cause to support. For some, their main objective is to improve their local community, whilst for others it’s about bringing together their wider family. Clear objectives provide you with a set of priorities to help inform your decision-making, and enable you to look back and assess the impact and success of your giving.
Once you have your objectives, you need to translate these into something practical and achievable that reflects your resources. Your objective maybe to help ‘disadvantaged youth’ in your own city, but there will be a multitude of different ways to achieve that. What you focus on and how you achieve that will depend on a combination of your own beliefs, your resources and your knowledge of what works best. It can be hard to do this alone—but there are plenty of people to help such as specialist advisors. Getting together with other philanthropists is also really valuable—sharing challenges and success stories, inspiring each other and often resulting in rewarding collaborations.
How large is the workforce working in nonprofit organizations? What advice would you give to someone looking to hire in this space?
In the UK this sort of data is collected by the National Council for Voluntary Organisations. According to their latest figures, around 821,000 people are employed by charities here, and there are more than 15m volunteers (of course, some people fall into both categories!)
Whether you’re recruiting people for a charitable trust or for a charity that works directly with beneficiaries, the chances are that you’ll attract people with a lot of passion for the cause. This is one of the most exciting things about charities the world over: the sector attracts loads of staff who are driven by enthusiasm to make a difference for the better.
For all the importance of this, though, we would argue that charities need a bit of hard-headedness, too. Passion has to be linked to a focus on some of the technical, structural things which ensure charities are making the biggest impact they can, from collecting and analysing complex data to auditing programmes to see whether they are reaching their potential. This second bit hasn’t always been a strength for charities, but it seems to be changing.
What help is available for someone looking for guidance for his giving? What professional advisors can I turn to?
There are a number of consultancies like NPC, with decades of experience, which can help philanthropists reach the best decisions for them. Increasing numbers of banks and other private client advisors are moving into this area and can offer advice, particularly at the start-up stage. And some of the wealthiest givers have philanthropy advisors on the staff of their family offices (although naturally this is less prominent than the people who manage their taxes and other investments!)
There is also an increasing amount of literature. UK philanthropists could do worse than start with NPC’s Little Blue Book, which is a great introduction to selecting the most effective organisations to support.
Can you tell us about your work at NPC? What role do you play in the charity eco system?
I am the Deputy Head of the Funder Team, which means I spend a lot of my time working directly with individuals and their families who want to use their money for good, and are looking for a bit of help from NPC. Sometimes this means working with someone from the very beginning—they have decided to give away a chunk of money and have asked us to help them set the whole thing up to have maximum impact. Other times it involves people who already know what they are doing but want to move into a new area for funding or make sure their effectiveness is still as sharp as possible.
The field of philanthropy advisors in the UK isn’t huge, but there are a healthy number of us, trying to make sure that people giving away their money do it in the smartest way. This is a personal cause for people—sometimes it is a trust started by their parents or grandparents which they are now taking charge of—so you feel the responsibility.
Can you give us examples of how you have helped a donor in the two situations we previously discussed (participating to a program, starting one’s own program)?
The first example is a donor that wanted to support refugees given the current crisis, but wanted to know how her money could be best used. To start with we provided her with an overview of the refugee sector—what were the different approaches being taken by various organisations, what was the government doing and how would private funding make a difference. We then provided her with a long-list of effective organisations and conducted due diligence on a selected few that met her specific criteria (size, geography, approach) so that she could make an informed decision on which to support and how they would use her funding.
In the case of helping a donor to drive forward their own program, we have been helping the Stone Family Foundation for almost 10 years, now one of the largest UK-based international grant-makers. It has an ambitious but achievable mission: to find and support lasting and effective ways to promote good sanitation, safe water and good hygiene across the world. In 2012, NPC launched a £100,000 Prize for the foundation. The prize was developed to identify and support early stage initiatives in the water sector. NPC managed the prize-giving process, from developing criteria, to sifting over 170 applications from approximately 40 countries, to convening an expert panel to choose the winners and co-ordinating publicity and communications. The prize winner was Dispensers for Safe Water for its innovative Chlorine Dispenser System, enabling rural communities in Kenya to access clean drinking water.
NPC is a charity itself. Are all organizations providing advice to philanthropists, charities as well?
Advisors don’t have to be charities. Many philanthropists will also call on lawyers and financial experts as part of investing their money to achieve social good.
But being a charity is a crucial part of NPC’s work. It means we have a charitable mission—transforming the charitable sector—which guides everything we do, including the way we advise philanthropists and the impact we help them have on civil society. It’s an ambitious aim, but as a charity is built into everything we do.
What sources of information would you advise a new donor to turn to?
There is a wealth of info for new donors – useful websites include the Charity Commission for info on individual charities, The Association of Charitable Foundations for guidance, advice and issue-based networks and of course NPC’s website for research into causes, trends in the sector, innovations in philanthropy and topical events for funders. Community Foundations are a great resource for local giving and two recommended books are Matthew Bishop and Michael Green’s ‘Philanthrocapitalism’ along with ‘Give Smart’ by Thomas Tierney and Joel Fleishman.