Philanthropy is entering what some economists and academics believe is another golden age. Previously, there were booms in giving in Renaissance Europe, 18th-century Britain, the Victorian era, and during the age of industrialization in the 19th-century.
It is hardly surprising, considering how the number of millionaires has increased across the world. But inequality remains widespread. Besides the fact that giving makes one feel good for various reasons, it also makes business sense.
“Philanthropy in Africa, strateg-ically pursued, will contribute to broad-based growth, which creates markets, which in turn enables commerce. How could it not make good business sense?” says Jane Wales, who is the CEO of the Global Philanthropy Forum (GPF).
Mona T Brooks |
Besides opening up markets, many philanthropists are able to provide risk capital for social innovation where governments and businesses are averse to go. John D. Rockefeller, who was one of the first philanthropists in the United States (US), was key to helping eradicate yellow fever and hookworm.
A contemporary example is Eli Broad, whose Broad Foundation is sponsoring medical research in human genomics to revolutionize clinical medicine and make that knowledge freely available across the globe.
“Philanthropy is not and should not be about sure bets. It should include a very healthy dose of risk taking. In fact, in an era of 24-hour news cycles, snap judgments, and the tyranny of quarterly reports, one could argue that the philanthropic sector is the only societal actor that can take risks, withstand short-term setbacks and make long-term investments in the social good,” says Wales.
In the US, philanthropy and charities are encouraged through massive tax breaks. This is very different in Africa, where there is little legal framework for philanthropy. However, there is a push by philanthropic organizations, such as the Kenya Community Development Foundation, for governments to adopt policies that are favorable for philanthropy.
But what is philanthropy? The most common definition is that it is a humane act aimed at creating a better life. So how do we value human life?
Acclaimed philosopher Peter Singer believes that if we were forced to put a price tag on human life, we would say it is in the millions.
He then goes onto to argue that we are all created equal, “at least to the extent of denying that differences of sex, ethnicity, nationality and place of residence change the value of a human life”.
This is especially true for many Africans, who continue to live in abject poverty and survive on handouts.
But its not all doom and gloom. This picture is changing, albeit it painfully slowly in some areas. Philanthropy is gaining momentum in Africa, and it is not only international do-gooders who are helping communities uplift themselves in a sustainable way.
Africans are increasingly becoming involved in philanthropic projects, with the belief that we should be driving the broad-based growth on the continent.
In South Africa, the tax regime is slightly more beneficial. Currently, donations to public benefit organizations are deductible up to 10% of an individual’s taxable income in the year the donation is made.
But the South African Revenue Service (Sars) has noted that large donations are discouraged, because donations in excess of the limit cannot be carried over. It is now looking at allowing donations in excess of 10% of taxable income in any given year to be rolled over as allowable deductions in subsequent years.
According to Nedbank’s Giving Report II, which surveys the giving practices of high-net worth individuals in South Africa, respondents highlighted insufficient tax benefits as a reason for not being philanthropic.
“In 2012 a total of 29% of donors (104) said they would give more if there were more tax perks for giving. This is almost double the 15% of respondents in 2010 who said that changes to the tax regime would influence their giving behavior.”
The Private Philanthropy Circle (PPC), an independent forum of individual philanthropists, is in the process of preparing a formal submission to Sars and the National Treasury on amending the tax regime.
“We believe that tax legislation that promotes philanthropy through benefits or relief for the establishment and growth of philanthropic foundations (institutionalized giving) will ultimately encourage and ensure the sustained strategic support of civil society. Likewise, the non-profit sector would benefit from a more enabling environment for their donors a well,” says PPC member Amanda Bloch. The forum wants a number of changes, including an increase in the upper limit of 10%, the lengthy turnaround times at the Tax Exemption Unit to be addressed, and a clarification from Sars on gifts in kind and services donated, such as time, skill and effort.
Many types of philanthropy are practiced around the world and they all have varying benefits.
“Impact investing”, which aims to achieve financial and social environmental gain at the same time, is becoming more popular. Bill Gates, the founder of Microsoft and one of the greatest philanthropists of our time, is an advocate for program-related investments (PRIs).
Instead of giving money away through grants, PRIs allow philanthropic foundations to make investments as loans or equity stakes, hoping to regain them at a later stage, plus a reasonable rate of return.
The Bill & Melinda Gates Foundation’s $400 million investment program encourages employees to weigh up the social and financial returns involved in proposed projects.
In 2009, non-profit social investment fund Root Capital was chosen as the foundation’s first PRI. The organiz-ation is expanding opportunities for 500,000 rural households in Africa with an investment of $10 million and a $4 million grant. It is being used to extend access to credit, financial management training, and global market opportunities for small and growing rural businesses.
As privatization and the scramble for Africa’s mineral wealth continues, some philanthropic organizations and academics believe there are new opportunities to harness these resources for the public good.
Lester Salamon, a director at the Institute for Policy Studies at John Hopkins University in the US, argues for what he calls “Philanthropication thru Privatization (PtP)”. Basically, it is the phenomenon of capturing, in charitable endowments, at least some of the proceeds of the sales of state-owned enterprises or common-use resources underway around the world.
In one study, Salamon says that more than 500 endowed, independent charitable foundations have been created or enriched during the privatizations, and together they control assets of $128 billion.
The African Grantmakers Network believes PtP will help to prevent the continent’s civil society from relying solely on external funding. An example cited is the Newmont Ahafo Dev-elopment Foundation in Ghana. It was formed in 2008 when Newmont Ghana Gold Limited and the Ahafo Social Responsibility Forum pledged to support community development programs near the mine.
The company contributes $1 per ounce of gold produced and 1% of net profits from the mine to the foundation. In turn, the foundation supports economic empowerment, infrastructure development and sports and social amenities.
Becoming financially self-sufficient and not over reliant on aid and donors is not to be scoffed at. But just how many good deeds can be done when the overwhelming leitmotif of the initiative is driven by profit? Surely a case can be made that profit would, in most instances, trump philanthropy?
Whatever the method of benevolence, Africans are stressing that it needs to be sustainable. Earlier this year, GPF launched its most recent regional affiliate, the African Philanthropy Forum (APF).
Its aim is to contribute to the expansion of strategic philanthropy by Africans in Africa by seeking to address the underlying causes of a given problem. Put differently, don’t give a handout; give a hand up.
“But it would be a mistake to assume that strategic philanthropists ignore such inputs as instinct and intuition. It would also be a mistake to assume that deep in their hearts they are not in search of a ‘silver bullet’ that will solve all. It’s human nature to be impatient in one’s search for a better world. And that’s a good thing,” says Wales. APF’s members define philanthropy broadly to encompass all private means of financing the social good – from grants and microfinance to investments in enterprises that provide goods, services and income-generating opportunities for the poor. Some put their companies to the service of social goals, pursuing what is known as a ‘shared value’ or ‘inclusive business’ strategy.
APF believes the next wave of philanthropic innovation will come from the continent. The forum’s impressive membership includes Nigerians Tony Elumelu and Hakeem Belo-Osagie. Elumelu wants to rewrite Africa’s story by leveraging markets in a strategy he refers to as ‘Africacapitalism’, while Belo-Osagie supports a number of higher-education institutions and philanthropic funds to advance education and build leadership skills among young Africans.
Other members are South Africans Hylton and Wendy Appelbaum, who support a variety of causes, and Benin’s Angelique Kidjo, who promotes the empowerment of women and girls.
One of Africa’s most well-known couples involved in philanthropy is mining magnate Patrice Motsepe and his wife, Precious Moloi-Motsepe, who is a key player in Africa’s fashion industry. They made headlines earlier this year when they announced that they would donate half of their wealth to their foundation, which is involved in a number of initiatives to uplift communities.
The Motsepes join the likes of Gates and US business magnate Warren Buffet, who started the Giving Pledge, which encourages the super-rich to donate at least half of their wealth to charities.
Although the super-rich are often criticized that their philanthropic efforts are in part motivated by self-interest, their impact on making changes for good cannot be scoffed at.
As Albert Einstein so aptly put it: “It is every man’s obligation to put back into the world at least the equivalent of what he takes out of it.”