BLOG: The Spillover Effect: Philanthropic Responsibility?

In this latest Blog, Not for Profit Fulbright Scholar, Dr Tessa Boyd Caine writes that discussion in the US moves far beyond any notion that philanthropy is a matter for philanthropists alone – both in amount and what is funded and asks what are the implications for Australia.

In my first blog I talked about the origins of the title ‘The Spillover Effect’. It comes from the Productivity Commission’s landmark study into the contribution of the Not for Profit sector in 2010, which talked about the broad contribution charities make to community development and wellbeing as a ‘spillover’ effect of their charitable activities.

The PC made some laudable arguments on this assumption, including that it warranted extending of deductible gift recipient tax status to registered charities. However the idea that a charity’s community benefit is an unintended consequence or spillover of its true purpose doesn’t sit well among charitable sector colleagues who feel such a contribution is central to their work. The altruistic mission and the organisational priority on people not profits are defining, not peripheral values.

I think about this often: in discussions about the professionalising of the sector and how we support the talent of our workforce; when challenged about whether ‘non-profit’ is anything more than a business model; and when reading others’ views on the values connection in our work (see for example Paul T. Hogan’s blog below).

As part of my research into transparency and accountability within the US charitable sector, I’ve been exploring this values connection in philanthropy. A couple of points to note about American philanthropy initially. Firstly, the sheer volume of funding is astonishing: “in 2011 the USA was home to 81,777 foundations with $662 billion in assets and $49 billion in giving.”

Secondly, and perhaps unsurprisingly given this scale, a significant sector has develop around philanthropic grant-makers including researchers, evaluators and groups that scrutinise the effectiveness of this philanthropic activity.

From this environment, a vibrant discussion has emerged in recent years about the distribution of philanthropic funding, not just its quantum, particularly to those in greatest need. Early interest in the extent to which philanthropic funding reached diverse communities has evolved into looking at that distribution to specific groups: a recently-released Foundation Center report on strengthening the field of black male achievement looks at how philanthropy can better support black men and boys; another project with philanthropic network Funders for LGBTQ looks at who's giving and who's getting LGBTQ grants.

What’s engaging about this discussion is that it moves us far beyond any notion that philanthropy is a matter for philanthropists alone – both in amount and what is funded. It is argued strongly that philanthropists have a responsibility to direct their giving to those most disadvantaged; and that there is a public interest in transparency over that giving. Insisting that philanthropy must be responsive to diverse community need, the National Committee on Responsive Philanthropy has called specifically for “improving government oversight of the philanthropic sector to ensure ethical behavior, transparency and responsiveness to the needs of underserved communities”.

Meanwhile Edward Skloot, Director of the Center for Strategic Philanthropy and Civil Society at Duke University, argues that transparency in philanthropic decision-making is warranted “precisely because of its scale, size and capacity to both help and hurt”.

I think there are a number of spillover effects here. The first is the broadening remit of accountability and transparency being applied, appropriately, not just to charities but to the philanthropic funding that supports their activity. By implication, the right to confidentiality over privately-generated money is challenged by legitimate public interest in how it is spent philanthropically.

There is also a spillover into the broader culture with which we view philanthropy. In the US, one manifestation of this is the expectation that philanthropy be directed towards reducing inequality.

So are there implications here for Australia? For one thing, it re-asserts a public policy argument for transparency over philanthropic funding; underpinned by a legitimate public interest in the value, distribution and outcomes of philanthropic spending, and beyond a reporting accountability to regulators and the tax office. Yet as Liu and Baker’s research in Australia points out, media representations of philanthropists “are mediated by Australian cultural norms and serve to conceal yet ultimately reinforce social and economic inequality”.

If we are serious about seeking to increase philanthropic activity in Australia, as advocated by perspectives ranging from Federal Social Services Minister Kevin Andrews and the ALP to philanthropic heavyweights such as Bill Gates and Warren Buffett, we need to do so within a culture that recognises the social responsibility not just of giving, but of its effect.

And now in the interests of personal transparency, I would like to share with you some of the sources I am discovering through my Fulbright experience.

I’m reading … Lucy Bernholz’ blog and Non-profit Quarterly, including Boards cannot be sacred, staff cannot be saints and founders should never be martyrs, by Paul T. Hogan.

I’m watching … Question Bridge, an amazingly innovative transmedia platform for black men in America to speak about their lived experience.

About the Author: Dr Tessa Boyd-Caine is on leave as the Deputy CEO of the Australian Council of Social Service, the peak body for charities and social services and the voice for people experiencing poverty and inequality in Australia. She was awarded the inaugural Fulbright Professional Scholarship in non-profit leadership in 2013 and is currently undertaking her Fulbright at the Foundation Center in New York City and the National Center for Charitable Statistics within the Urban Institute in Washington DC.

The Fulbright Professional Scholarship in non-profit leadership is sponsored by the Origin Foundation and supported by the Australian Scholarships Foundation. Applications for the Fulbright Scholarship opened on May 1 and closes August 1.