Understanding Philanthropy

by Hamse Warfa

Recently, my niece, Ilhan, asked me: “What do you do for living, uncle?”

“I work in philanthropy, more specifically for a grantmaking foundation that provides funding to NGOs,” I responded.

“What is philanthropy, and what is a grantmaking foundation?”

Innocent as the girl’s questioning might have been, it got me wondering deep within how many other people wish to know what philanthropies really are and how philanthropies impact our everyday lives.

Wikipedia gives a simple definition of philanthropy as: “private initiatives, for public good, focusing on quality of life”. But how does this differ from charity, or are they one and same thing? The online resource center further helps us draw a line between the two: “…charity relieves the pains of social problems, whereas philanthropy attempts to solve those problems at their root causes (the difference between giving a hungry man a fish, and teaching him how to fish for himself)”.

Although philanthropy has existed in various forms in all cultures, religions and civilizations in documented history, few people can actually explain to you why it exists in the first place, and why it holds such a central role even in the most capitalistic societies such as the US.

Why Philanthropy?

To understand the motivation behind philanthropy, it would help to first interrogate the kind of thinking that motivates the giving. As Bill Clinton, former US president explains: “We live in an interdependent world.  Every time you cut off somebody else’s opportunities, you shrink your own horizons.” In other words, if you want to prosper you need to create opportunities for others.

According to Melinda Gates, wife to Bill gates (Microsoft’s founder, a multi-billionaire and co-founder of the Bill and Melinda Gates Foundation): “We started our foundation because we believe we have a real opportunity to help advance equity around the world, to help make sure that, no matter where a person is born, he or she has the chance to live a healthy, productive life”.

To Andrew Carnegie, one of America’s most celebrated philanthropists, “Wealth is not to feed our egos but to feed the hungry and to help people help themselves.” And to Albert Camus, “Real generosity toward the future lies in giving all to the present”.

From the four representatives above, it is clear that philanthropy is largely motivated by the desire to help others as opposed to a profit or selfish motive. It is the deep desire to help others live to their fullest potential by creating an enabling opportunity for them through good education, health and general living conditions.

Indeed, successful philanthropy begins with a personal commitment to create lasting change in the world. Usually this results from an attitude of caring enough about a particular issue, which gives one the power to sustain the engagement in the long-term. The resources that the philanthropist then commits to his or her chosen course are specifically directed towards achieving the desired positive change in people’s lives.

What hinders Giving?

But why are there so few people in the world engaging in philanthropy, noble as the intentions and deeds might be? There are many reasons that can be advanced to explain this phenomenon.

A major reason however lies in extending a business approach into social life, and seeking to enforce principles of economics into giving. Let me explain this. In economics, money is given out as payment for a product or service delivered. If you came to me for $ 100, for instance, economics dictates that you show me what you’ve done for me something that is equivalent or greater in value than the $100 that you ask from me. However, in philanthropy, while there is strong demand for accountability for money given, rarely will the donor be there to track down the expenditure for personal gains.

Another common misconception that I have encountered in my life in philanthropy is an attitude that the people in need of assistance are in such circumstances out of their own fault, and so they should sort out their own mess. Truth is that not all the people in need are in such circumstances out of their own making. For instance, my family and I survived years in a refugee camp in Kenya after escaping the war in my native country of Somalia. I was too young and innocent to have caused a war, but my family and I, like most of refugees here in the US, suffered more pain and sorrow than I had ever thought a soul can bear. Looking back, I am glad that there were philanthropists thousands of miles away making donations (to organizations like the Red Cross) to save souls that they might never meet. It is such experiences that formed the foundations of my career in philanthropy.

There is also the concern that giving to philanthropy causes dependency, something that most people would wish to avoid at all costs. I would say that this misperception comes from failure to distinguish between charity and philanthropy. If you recall our introduction above, we equated charity to giving someone a fish, and philanthropy to teaching someone how to fish.

In other words, philanthropy addresses the root cause of the problem. In the case of civil strife, a philanthropist will look into peace building and creating proper governance structures. He or she will be concerned with the recovery and long-term development of the people’s health care systems, education and social support among other issues. Certainly this goes beyond simply dishing out loaves of bread to hungry victims of the situation.

However, perhaps a greater factor hindering people’s engagement in philanthropy is lack of awareness of the benefits that philanthropists derive from the act of giving.

Benefits of Philanthropy

Before going deeper into the benefits, let’s look at some simple figures to aid our understanding.

According to a joint study by Giving USA Foundation and the Center on Philanthropy at Indiana University, total charitable contributions from U.S. individuals, corporations and foundations increased by 3.8 percent from 2009 to hit $290.89 billion in 2010.

The economic slowdown at the time notwithstanding, corporate giving increased 10.6 percent—up to $15.29 billion in 2010. So, tell me, why would corporate America spend such staggering amounts on undertakings that don’t seem to have direct links to the organizations’ core business – profits?

In most cases discussions on philanthropy focus on how the giver can help the recipient. And in most cases, the recipient has no relationship with the giver. This creates an impression of a “gainer and a loser”.

However, there is scientific evidence now showing that simple acts of philanthropy actually have immense benefits to the giver as well.

According to Stephen Post, professor of preventive medicine and bioethics at Stony Brook University School of Medicine: “Every great moral and spiritual tradition points to the truth that in the giving of self lies the discovery of a deeper self.” He adds, “When the happiness, security and well-being of others become real to us, we come into our own… Creativity, meaning, resilience, health and even longevity can be enhanced as a surprising byproduct of contributing to the lives of others. This is perennial wisdom, and science now says it is so.”

As a researcher, Dr. Post focuses on the relationship between giving and happiness, longevity and health, and is the author of “The Hidden Gifts of Helping and Why Good Things Happen to Good People.”

For business people, it would be rewarding to know that partnerships between corporations and nonprofits often greatly influence how people perceive the commercial enterprise. Indeed, research now shows that 60 percent of Americans are more likely to buy products from companies that are associated with the philanthropic partnerships.

From the above, it is clear that giving to philanthropy has benefits to both the giver and the recipient. It is the lack of information however that leads to misconceptions that show lack of balance in the giver – receiver equation in the game of giving. Interestingly, evidence shows that it is easier for someone who has given to philanthropy before to give again, than for someone who never engaged in philanthropy, further underlying the sense of gains that the giver receives.

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Hamse Warfa is a writer, speaker and trusted adviser in philanthropy and he is Somalicurrent Blogger.