The ‘Impatient’ 21st Century Philanthropists
7 May 2013 at 10:57 am
The modern day philanthropists in 2013 are ‘impatient’ with self-made wealth who want to see the end of big issues in their lifetime and be able to measure their impact, a high impact philanthropy event in Melbourne has been told.
Photo: Daniel Mendelbaum
Peter Hero, founder and principal of the US-based Hero Group, told the Lord Mayor’s Charitable Foundation 100-person delegation that giving tends to peak at around the 50 year mark, as opposed to 70 back in the 20th century.
“They are giving their money away earlier,” Hero said.
“They want to give it away in their lifetime.”
Richard Fahey, Chief Operating Officer at the Skoll Foundation and Dipender Saluja, Managing Director of the Capricorn Investment Group also spoke at the event focussing on Social Investment & High Impact Philanthropy.
The wealth of 21st century philanthropists is predominantly self-made at 93% across the United States, according to Hero. This shift differs from 40 years ago when 50% of wealth was inherited and the mindset of giving was different.
In an interview with Pro Bono Australia News, Hero explained that modern day philanthropists in California’s Silicon Valley are more interested in giving money to solutions, not to problems.
“They are compelled to action by plans and ideas to solve problems,” he said.
“Making a difference now, in their lifetime, has a higher impact.
“There’s an ‘impatience’ about them – they want to see the end of a big issue in their lifetime.”
According to Hero, 21st century philanthropists who make their own decisions and “figured out” success in their own companies want to also “follow their own drum” when it comes to solving social problems and work out the best way for their money to have an impact in their lifetime.
This trend differs from the 20th century when philanthropists using money they inherited were more inclined to make a donation to an organisation like UnitedWay in the US who use these donations to fund their own social programs.
When asked if the new method has more value to society, Hero said that “the jury is still out”.
“The premise that a donor has a job, makes money and then gives it away (to an organisation like UnitedWay) is treating the symptoms but not the problem,” Hero said.
By conducting their own research into how their money can be best spent, 21st century philanthropists are taking “a big swing at the problem," Hero explains.
“There’s a possibility they may miss by a big margin. But at the same time there’s a chance that they might connect.”
Another new trend for philanthropists in the modern era is the idea of a ‘donor circle’- where people can make decisions collectively to make a more successful impact.
“In the Silicon Valley, these people turn to their peers about all kinds of decisions. When they’re thinking about a new car or wife they talk to each other. It’s the same with philanthropy.”
Donor circles have links to ideas like ‘collective impact’ – where organisations work together to see large scale social change. While still in its infancy in the United States, social change activists like Dawn O’Neil and Kerry Graham are looking at this model to see how it could work in an Australian context.
“It’s like plain old collaboration with new twists,” Hero said.
“It makes philanthropy more effective.”
Lord Mayor's Charitable Foundation CEO Catherine Brown with Peter Hero. Photo: Daniel Mendelbaum
However, due to some donors “obsession” with achieving success in their lifetime, some philanthropists are staying clear of some of the bigger issues in society.
“There’s an obsession with measurement that can lead donors to avoid the big problems,” Hero said.
“It can be hard to measure progress and they are not sure how to measure it.”
While the future of giving and what the next generation of philanthropists will look like is unclear, Hero provided three possible suggestions:
- It will become more global. In the Silicon Valley, 60% of charity leaves the region to go either internationally or to other parts of the United States. This is due to the international nature of these companies and their staff.
- Further collaborations between government, business and philanthropy by clustering donors.
- The rise of collective impact and working together to achieve large scale social change.
“The big open questions are who are the next generation of philanthropists? Are they involved? Will they be brought into the mix?
“Will they create a legacy of philanthropy or not?
Hero, a regular visitor to Australia, is credited with growing Silicon Valley Community Foundation's assets from US$7 million to over US$1.6 billion during his time as president of the Foundation, making it the fourth largest community foundation in the US – now distributing US$3 million a week in grants.