What is strategic philanthropy and what are its pillars? Over the past ten years, there have been significant changes in the approach of philanthropy to address some of the biggest problems in society. Philanthropy has in fact changed its appearance, and way of acting, and ideas such as shared values. Companies that favor the social good compared to a pure economic gain or impact investments have become common. Strategic philanthropy and private equity used to be very distant worlds, today they are increasingly widespread.
How does strategic philanthropy work?
Organizations and individuals have long understood what are the benefits of strategic philanthropy are in support of the community, employees and investor interests. Only in recent years have organizations formalized and integrated philanthropic decisions into corporate citizenship. On the one hand, (philanthropy)it is one of the oldest forms of social behavior and is so well rooted in both public and private mentality, that it is taken for granted in our culture. On the other hand, it is completely ignored.
Today’s philanthropy is not the philanthropy of the past. The term “philanthropy” refers, in the common imagination, to the gentlemen of the late ‘800 dedicated to charity works. Contemporary philanthropy, on the other hand, refers to organizational and managerial models borrowed from the business economy such as performance evaluation or impact measurement.
Today a philanthropic act cannot be considered individual and linked to the feelings of the individual entrepreneur or financier, but must be the product of networks that circulate practices, evaluation tools and organizational models capable of truly affecting people’s lives.
In his essay on Strategic Philanthropy, found in The SAGE Encyclopedia of Business Ethics and Society, Archie B. Carroll observes that one of the main characteristics of strategic philanthropy is the fact that he is not exclusively altruistic, but has the aim of helping both the company and society.
The strategic philanthropy approach cannot be separated from the Theory of Change developed by David Hunter. The Theory of Change which defines the methodology for carrying out an intervention and provides the tools for analyzing the situation before and after. The Theory of change requires you to starting at the end, that is, from the result you want to obtain, and then go backwards and define the steps to get you there.
21st century organizations are increasingly concerned about managing social issues in marketing for the benefit of key stakeholder interests. A new definition of strategic philanthropy was developed and contrasted with other initiatives that connect marketing and society.
The Italian scenario:
In Italy there are over 7,000 foundations, including 88 bank foundations and almost 200 business foundations, the remaining are private foundations both of a grant-making and operating nature. Western welfare systems are undergoing a phase of transformation which sees the role of private actors, both profit and non-profit, grow. But, if the relevance of private actors increases, especially if they are profit, the development of techniques and tools that describe and reinforce the methods of intervention in the social sphere is necessary. In this sense, new models of intervention and management have spread, such as “strategic philanthropy”, which in Italy is promoted by the Lang Italia Foundation. The essential concept of this approach is “social change”. This means that transformation is brought about by the philanthropic act, through a non-financial, but social return. In this perspective, a supply therefore acquires meaning if it is allowed to achieve the set objectives and improve the quality of life of the recipients: if not it is not given to produce change not just to donate. The mission of the Foundation is to make the organizations and initiatives that respond to social needs in Italy stronger, effective and more sustainable. Their activity is also included in a broader and more international framework. Globally, the commitment of the Lang Italia Foundation is part of the European Venture Philantropy Association and the Leap of Reason Ambassadors Community.
Specifically, what does the Lang Foundation do?
It offers support and advice to clients by providing them with data collection and analysis. Strategic philanthropy aims not only to give donations to non-profit organizations, beneficiaries and those who support themselves. It also gives a network approach to capacity building and in some cases, assets within social enterprises.
A package of information is made available to philanthropists who turn to the foundation. There are various reasons that can lead a philanthropist (be it a person or an organization) to ask for advice or another type of intervention. For example, there are entrepreneurs who want to devote themselves to philanthropy in order to transmit their values or perpetuate their memory to the next generation, but they do not have the skills to identify the most suitable way. There are family foundations that have already been established for years but, have remained inactive because they lack adequate tools, or supply foundations. Companies who want to measure and improve their impact after starting philanthropic activities also reach out.
Every non-profit organization can be an engine of change if it adopts organizational and management tools, aimed at evaluating and improving performance in order to produce an effective change. Providers (individual philanthropists or organizations) operating in a strategic philanthropy perspective build a strong relationship with the beneficiary organization. This leads them to carry out carefully measured financing in relation to the project supported by organizational and management consultancy. Evaluating the results shows that the best time to place an intervention is over a medium or long period of time.
The Lang Foundation case in three points:
The case of Fondazione Lang, in short, highlights at least three significant elements: 1) the ongoing transformation in social policies and welfare systems among the intervention factors, the cultural elaboration of new approaches, and new ways of intervention within the scientific and professional communities involved; 2) territorial levels differ from the nation-state, such as the supranational level. In this case for the development of practices and models, and regional and local levels, in this case for implementation, are relevant; 3) a political phase, in which public resources are increasingly reduced and third sector organizations are pushed to increase fundraising to ensure their sustainability. The importance of large private donors grows and can therefore determine development and growth specific sectors of intervention.