alleviating global poverty catalysts of change - forbes

ALLEVIATING GLOBAL POVERTY CATALYSTS OF CHANGE

Foreword ................................................................................................................................................... 2

Credit Suisse Snap Poll at the Forbes 400 Summit on Philanthropy ............................... 3

Key Findings............................................................................................................................................ 4

Enormity of the Task: Understanding Global Poverty ............................................................ 6

Future Focus: Moving Toward Systemic Sustainability. Empowering Women. ........... 8

Case Study: A New Look at Capitalism ...................................................................................... 10

Systemic Giving: Creating a Self-Multiplying Dynamic .......................................................... 12

Case Study: You Have to Bring Your Heart as Well as Your Head .................................... 14

The Role of Wealth Creation in Solving Global Poverty ....................................................... 16

Case Study: Standing Tall ................................................................................................................. 18

Sidebar: Gathering Intelligence ..................................................................................................... 19

Driving Philanthropy to More Cohesion ..................................................................................20

Bolstering the Effectiveness of Philanthropy: Partnering, Collaboration, Resources .......22

Sidebar: Best Practices to Bolster Philanthropic Effectiveness ....................................... 23

Sidebar: Becoming a Venture Philanthropist ...........................................................................24

Success in Philanthropy .....................................................................................................................25

Creating Your Philanthropy Portfolio .......................................................................................... 26

Next Generation .................................................................................................................................. 28

Conclusion ............................................................................................................................................. 29

Making It Happen: A Philanthropist’s Guide ........................................................................... 30

Methodology ....................................................................................................................................... 32

Contents

FoReWoRDThe Second Annual Forbes 400 Summit on Philanthropy, supported by Credit Suisse,

brought together 150 of the world’s most actively engaged philanthropists to compare notes,

share lessons and find inspiration. The theme was Solutions for Extreme Poverty, which

served as a prism through which participants viewed the larger scope of philanthropy, looking

for applications for anyone who believes in market-based, permanent solutions to large-scale

social problems.

2 | ALLEVIATING GLOBAL POVERTY: CATALYSTS OF CHANGE

“This partnership speaks to Credit Suisse’s larger commitment to corporate responsibility and, specifically, global poverty.”

—DR. PhiliP Vasan Head of Credit Suisse Private Banking for the Americas

“The Forbes Summit is helping spur action by uni-fying the dialogue among some of the world’s most significant philanthropists,” said Dr. Philip Vasan, head of Credit Suisse Private Banking for the Americas. “This year’s meeting was a breakthrough event, in which leaders in philanthropy pooled their ideas and inspired each other. We believe that initiatives like this will touch many lives and ultimately help alleviate pov-erty across the globe.”

In tandem with the summit, which took place at the United Nations in June, Credit Suisse and Forbes Insights conducted a global survey of 317 individuals

with investable assets of $1 million or more: this was an in-depth survey of global philanthropists regarding their views on alleviating global poverty, as well as their personal philanthropic attitudes and practices.

In this research Credit Suisse engaged philanthro-pists around the world on how they see their role in addressing systemic issues to alleviate global poverty, as well as the part they play in local and targeted giv-ing to their own communities. Credit Suisse sought to help answer the question of how best to build a philan-thropy portfolio, and how to pass on values to the next generation.

38%38%

54%

Europeans see prime causes of global poverty as lack of access to healthcare and to water (each cited by 38%).

They are less likely than those in other regions to point to abuse by those in power (21%).

54% of North Americans focus on local, targeted giving.

They see lack of access to education as the prime cause of poverty (cited by 47%).

38% of Latin Americans say scope of need motivates their giving, the highest percentage of any region.

65% of them, the highest percentage of any region, believe K-12 education should be the top philanthropic priority for the next five years.

CReDit suisse snaP Poll AT THE FORBES 400 SUMMIT ON PHILANTHROPY

COPYRIGHT © 2013 FoRbes insights | 3

While the participants of the Forbes 400 Summit on Philanthropy, supported by Credit Suisse, shared their views and exchanged ex-periences, Credit Suisse took the opportunity to conduct a short poll among this unique group. The attendees answered questions about local versus global allocation of their philanthropic efforts, the basis for their funding decisions and their thinking about the role their chil-dren will play in philanthropy.

“Not only do the attendees have tremendous wealth, but so much of their wealth is dedicated to philanthropy. They are very experienced in their philanthropy and very motivated. Others will learn from them and follow their lead,” says Bill Woodson, co-head of Credit Suisse’s Private Banking Americas Ultra-High Net Worth Business.

While more of the wealthiest philanthropists focus on global issues, which require international resources and experience, even at these highest levels, local causes remain a priority as well. Roughly a third (34%) of the attendees said that less than 10% of their philanthropy is focused on global causes, and another third said that they focus more than 50% of their philanthropy on global causes. “This finding may reflect the saying that like all politics, philanthropy is often lo-cal,” says Julia Chu, head of Credit Suisse’s Private Banking North America Philanthropy.

In choosing which initiative to fund, the actual idea or concept was considered the most critical factor by the largest percentage of at-tendees (45%), followed by a third who pointed to the leader (32%) in charge of the initiative, and 23% who cited the organization imple-menting the initiative.

It is an interesting finding considering that the overall effectiveness of philanthropy is driven by the leadership and the organization. In the case of the wealthiest philanthropists, the idea itself may matter more, as with their resources they may be able to supply the leader-ship and staffing to successfully implement the idea. It also under-scores that philanthropy is, at its core, based on passion.

A majority of attendees of the Forbes 400 Summit on Philanthropy (64%) said that it was not important for their children to focus on the same areas of philanthropy that they are focused on.

This may seem somewhat counterintuitive, considering the longtime tradition of family foundations and legacy. However, the findings may have been affected by the fact that many of the attendees made their fortunes relatively early in life, and are themselves self-made. Thus, what they wish to impart is not so much a specific cause as the general importance of philanthropic principles and values. In fact, al-most half (49%) said that there is a desire to see their children exhibit greater drive and initiative.

What percentage of your philanthropy focuses on global causes as opposed to local, domestic initiatives?

34%

21%

23%

11%

10%

Less than 10%

10% to 24%

25% to 49%

50% to 74%

75% or more

Which is the most critical in choosing which initiative to fund?

45%

32%

23% The idea or premise of the initiative

The leader in charge of the initiative

The organization implementing the initiative

Is it important that your children focus on the same areas of philanthropic interests as yours?

Yes, very important

Yes, somewhat important

No, not important at all

27%

64%

9%

What have you found to be the greatest challenge on cultivating responsible wealth stewardship among your children?

Need to develop financially sound judgment

Need to cultivate philanthropic inclinations

Need for greater self-sufficiency and initiative

26%

25%

49%

Key FinDingsIn this year’s report Credit Suisse and Forbes Insights investigate how philanthropists around

the world work toward alleviating global poverty and how they balance their philanthropy

portfolios among long-term and immediate impact, as well as local and global giving:

Philanthropy can be viewed as a portfolio, with some assets devoted to global initiatives—which entail systemic

change and have longer turnarounds—and some to local initiatives, which can have a necessary, immediate impact. Of

the philanthropists surveyed, roughly equal numbers (26% and 23%, respectively) define success as long-term impact

versus alleviating physical suffering or meeting immediate needs. Global giving, which requires international exposure

and resources, is more prevalent among the wealthiest group of respondents.

tackling global poverty is a long-term undertaking. Simply finding the best methods to embark on this undertaking

requires first understanding the causes of poverty. And philanthropists from different regions tend to focus on varying

causes as fundamental: lack of access to education is perceived as the top cause by philanthropists in the Americas,

while scarcity of food and shelter is considered the top cause by those in Asia Pacific and lack of access to healthcare

and to water by those in Europe.

Women’s health issues continue to gain in importance. Family planning and contraception becomes one of the five

areas that should be a top priority over the next five years, with 33% of respondents pointing to it. Women’s health is

also the area to which the third-largest percentage of respondents (15%) say they have personally made the greatest

contribution (after children’s health and development, and nutrition and food supply).

a problem as huge as global poverty can only be alleviated by systemic change, as opposed to specific projects. In fact, “pattern change” is an emerging focus among philanthropists Forbes Insights spoke with. Fifty-seven percent

of survey respondents agree that wealth creation, understood as economic growth that benefits most of society, is an

effective means to alleviate or eradicate poverty.


ambitions run high, with 73% of philanthropists saying they want to see pattern changes at the highest levels, as

they seek to affect international or government policies right at the start of their giving. It is, of course, true that ulti-

mately global poverty cannot be eradicated without the right international and national policies. But is shaping those

policies too tall a task for an individual philanthropist?

Philanthropists can act as catalysts of systemic change, changing attitudes and patterns around the world. But for

an individual philanthropist, the most effective approach may be to join forces with other experienced philanthropists

or organizations. In other words, the best way to create impact may be by using funds as seed money, becoming a

venture philanthropist by backing an existing idea or organization.

the way forward lies in cooperation and consolidation of efforts. “There are two crushing weaknesses with the phil-

anthropic model today,” says Michael Porter, Harvard Business School professor and chairman of AllWorld Network,

which aims to rank all the scalable growth entrepreneurs in the developing world. “There is not enough money to give

away. And there is too much fragmentation and not enough large-scale impact. That is why we haven’t gotten a lot of

great results yet.” Forty-eight percent of survey respondents agree that there are too many overlapping organizations

within the non-profit sector.

no matter how systemic its ambitions, however, philanthropy is at its core a matter of heart and nostalgia. The

highest percentage of respondents (32%) say that they are most motivated to alleviate poverty in their own commu-

nities, towns or countries of birth. Not only can such local giving yield satisfying immediate results—while global, pat-

tern-changing philanthropy has longer time horizons—but philanthropists also understand local needs better and can

react to sudden crisis with more flexibility. In fact, just about half of wealthy donors in the Americas focus on targeted

local giving. “It is important for people in any field to do what they love. We need both local and global giving,” sums

up Bill Drayton, CEO and founder of social entrepreneur network Ashoka: Innovators for the Public.


Global poverty can result from many different causes, or a combination of causes, whose immediacy and gravity vary by region. Our research shows fragmentation in how philanthropists from different regions of the world view the causes of poverty (see Fig. 1). Their knowledge about other regions of the world is based on their own travels and expe-riences, philanthropic work or on having done business in other parts of the world. It is also enriched by how they see the effectiveness of their own countries’ infrastructure in handling poverty.

Those in the Americas as a whole, for example, were far more likely to point to lack of access to education, while those in Latin America were significantly more likely to single out abuse by those in power and insufficient invest-ment in infrastructure as issues contributing to poverty. Respondents from Europe, however, felt lack of access to education and income inequality were far less of an issue, as well as abuse by those in power—and were far more likely to point to lack of access to healthcare and to water as key issues leading directly to global poverty.

The different emphases on abuse of power appear to reflect the relative political stability historically in the nations of each region. However, while different regions prioritize different causes, it is worth noting that they are all focused on the same cluster of causes as the top three or four.

Interestingly, there is also some correlation between lev-els of wealth and how philanthropists view the causes of poverty. The wealthiest individuals—those with $10 million or more in investable assets—are much more likely to point to lack of access to healthcare and water, at 38% and 37%, respectively. That is an important observation, because the wealthiest individuals tend to have a more global approach to philanthropy, and thus play a bigger role in defining the global approach to fighting poverty. The findings may point to their focus on the most basic issues.

“Region by region there are different constraints,” says AllWorld’s Michael Porter. “But everywhere there is the same need for bottom-up economic activity.”

enoRMity oF the tasK UNDERSTANDING GLOBAL POVERTY


Figure 1 : What do you consider to be the primary roots of poverty?

0% 50% 100%

TOTAL rESPONdENTSLack of access to education

Scarcity of food and shelter

Abuse by those in power/weak governance

37%

33%

31%

NOrTH AmErICA Lack of access to education



47%

34%

31%

LATIN AmErICA Lack of access to education


Investment in infrastructure/economic development

49%

44%

38%

EurOPE Lack of access to healthcare

Lack of access to water


38%

38%

34%

ASIA-PACIFICScarcity of food and shelter

Lack of access to education


36%

35%

33%


Bono presents Warren Buffett with the inaugural Forbes 400 Lifetime Achievement Award for Philanthropy

While the need for bottom-up economic activity may be universal, the plethora of causes underlying poverty makes it impossible to focus on just one issue, or even a set of dominant issues. No single issue is a core focus for alle-viating poverty among the philanthropists surveyed, and there is little difference in each region. Children’s health and development and children’s education are the core focus for close to four in 10 total respondents each, fol-lowed by nutrition and food supply (see Fig. 2).

Apart from the areas that philanthropists already focus on, some new areas are emerging as future priorities (see Fig. 3). These emerging areas build on current causes, complementing them as the next logical step along the life-cycle of poverty.

For example, family planning and contraception, the cause mentioned by the fourth-largest group of respon-dents as a most important priority over the next five years, is a natural extension of women’s health and children’s well-being. If women can plan their own pregnancies and control the size of their own families, they can potentially become better equipped to provide for the families they have and ensure improved health and possibly education as well.

According to the Bill & Melinda Gates Foundation: “More than 220 million women in developing countries who do not want to get pregnant lack access to effective methods of contraception and voluntary family plan-ning information and services. Less than 20% of women in Sub-Saharan Africa and barely one-third of women in South Asia use modern contraceptives. In 2012, an esti-mated 80 million women in developing countries had an unintended pregnancy and at least one in four resorted to an unsafe abortion.

“Significant challenges stand in the way of mak-ing contraceptives more widely available and accessible, including the high cost of quality mid- to long-acting contraceptives, unpredictable donor funding, cultural and knowledge barriers, and lack of coordination in procure-ment processes.”

Takahisa Takahara, second-generation head of his family’s diaper-maker, Unicharm, also believes his com-pany’s diaper and sanitary products will improve health in developing markets, and has promoted education efforts as part of Unicharm’s local outreach programs in the areas in which it operates. “We are carrying out educational activ-ities at hospitals, health centers and schools, teaching these people that the use of feminine napkins and disposable dia-pers contributes in providing a sanitary environment and, thus, maintaining good health. In 2012, we provided as many as 10,000 female students in agricultural villages in India with first-menstruation education. We taught them that having the correct knowledge about menstruation will result in a life with less anxiety, proper understanding by their family members and maintenance of good health.”

Philanthropists are discovering that empowering women may be the fastest and most efficient way to further

FutuRe FoCus MOVING TOWARD SYSTEMIC SUSTAINABILITY. EMPOWERING WOMEN.


“We create job opportunities in these countries. We also expand job

opportunities for women.”

—taKahisa taKahaRa President and CEO, unicharm


their cause, since women (more so than men) tend to pri-oritize the needs of their children over their own personal gratification. As a result, women are more effective agents of change, and their efforts are sustainable in areas such as literacy or education: it is the women who spend time with their children, so once women get educated, they in turn educate future generations.

Women are the focus of the American Nicaraguan Foundation, established by Alfredo and Theresa Pellas, which helps Nicaragua’s poorest with health, education and sustainable development. Eighty percent of the peo-ple involved in ANF sustainable development programs are women. ANF focuses on empowering women because “women are the spine that holds the family together,” says Alfredo Pellas. In ANF’s housing program, villas are pro-vided to women. Says Theresa, “A woman is the one who takes care of her mother, her children, her grandchildren. Sometimes men come and go. So only women can have the title to the homes we build, so they can provide a safe shelter for their families.”

At the same time, sustainable resource management appears to be emerging as an increased priority over the coming five years. As with family planning and wom-en’s health, sustainable resource management is a natural extension of the current priorities placed on nutrition and food supply—with the former being the prerequisite for the long-term success of the latter.

Regional differences emerge in this five-year outlook. In the Americas, a strong focus on K-12 education remains an important issue. Sixty-five percent of philanthropists in Latin America and 57% in North America specified K-12 as a top priority for charitable giving over the next five years. Interestingly, respondents in Latin America also plan to prioritize nutrition and food supply at notably higher rates than those in other regions.

At the same time, no clear leading priorities appear to be emerging in Europe for the coming half-decade; while it shares the top five causes with other regions, all fall within just a few percentage points of one another, and all are deemed a “top emerging priority” by less than 40% of respondents from that region.

In the APAC region, children’s health and development remains the top priority for the coming five years, fol-lowed again by sustainable resource management, which remains in the second slot for the region.

Figure 2. Your core focus—How do you prioritize issues in the fight to end global poverty? (Top Five)

K-12

Children’s health and development

Nutrition and food supply

Pre-school and early education

Education

38%

37%

33%

31%

29%

Figure 3. And which areas should be the top priorities over the next five years?

Children’s health and development

K-12

Nutrition and food supply

Family planning and contraception

Sustainable resource management (e.g., water, land)

40%

39%

36%

33%

31%

Coming of age in Ireland in the 1970s, Irish billionaire Denis O’Brien was surrounded by a culture of giving. Since the late 1880s, the Catholic and Protestant churches in Ireland were very active in sending missionaries around the globe, and there was a constant stream of people col-lecting money for favorite missions. “Giving is ingrained in Irish culture,” explains O’Brien. As is an awareness of global causes. “There were missions in the developing world. We had tin cans to collect money in every school across the country. It taught a child to help others,” he says.

Over time, these missions, which had originated in 19th- and 20th-century efforts by churches to do good while spreading the faith, were supplanted by aid efforts run by large NGOs, like Concern Worldwide, Trócaire

and Save the Children. O’Brien had seen these changes, and when he made his first fortune by selling his first mobile business to British Telecom in 2000, he upped his philanthropic efforts. He founded the Iris O’Brien Foundation, chaired by his mother, to focus on helping disadvantaged communities in Ireland and Africa.

But the bulk of O’Brien’s charitable efforts are focused in emerging markets, just like the missions he contrib-uted to as a child. Much of this philanthropy is conducted through Digicel, founded in 2000, which offers GSM cel-lular phone service in the Caribbean. Today Digicel has operations in 31 markets, with over 13 million subscribers in the Caribbean, Central America and the Pacific region. Many of these areas are among the poorest in the world. O’Brien thinks he can make a difference.

“I learned as I went along,” O’Brien says. “When you write a check, you never know what happens to your money. You have to define the success of your invest-ment by meeting people, visiting projects. That is the most effective philanthropy.”

O’Brien, whose net worth is $5.3 billion (as of March 2013), according to Forbes, operates his companies on an 80%-business, 20%-philanthropy ethic. O’Brien explains his modus operandi as developing a new kind of capital-ism: “So many companies in emerging markets do nothing for the country or the people. We are not modern-day conquistadors. We want to do some real good in the coun-tries we invest in.

“Major public companies who do business in emerging markets need to put profits into social projects. There needs to be a new look at capitalism,” he explains his vision.

O’Brien runs his charitable efforts like a business, with a core focus on project management. “We’re an emerg-ing-markets company,” he says. “When you build a business from scratch, it is not that different from doing philanthropy. You have to start on the ground.”

The Digicel Foundation has branches in the three countries where Digicel mainly operates—Haiti, Papua New Guinea and Jamaica. A separate Foundation man-agement team in each country is dedicated to pursuing philanthropic projects and reporting back at the compa-ny’s monthly board meetings. “The philanthropy results are given equal billing as business results,” says O’Brien.

a neW looK at CaPitalisM


“You have to define the success of your investment by meeting people,

visiting projects. That is the most effective philanthropy.”

—Denis o’bRien Chairman, digicel Group

CASE STudY


In Haiti, where Digicel is the largest single inves-tor—it has invested more than $750 million there—this has proven especially important in the aftermath of the devastating earthquake in 2010. O’Brien has merged his business and philanthropy into a force to be reckoned with, emerging as a de facto ambassador for a business-centered approach to Haiti’s redevelopment, which has traditionally relied on NGOs.

Digicel has invested millions in the country’s recon-struction by funding schools and mobile clinics, and rebuilding the historic Iron Market in the capital city Port-au-Prince, financed with $16.5 million of O’Brien’s own money.

O’Brien gravitated toward education because, he explains, “I think what transformed Ireland in the 1950s and 1960s was education.” He is looking for a similar change in Haiti, where Digicel has built 115 schools to date, with 150 schools as the target by 2014. “We’re build-ing well-designed and well-built schools,” says O’Brien. “We’re the biggest school builders in the Caribbean.” This includes such efforts as installing solar panels for energy and targeting communities that will support schools, in partic-ular identifying women who will be community leaders.

Once school building got under way, O’Brien realized children needed to be fed, and developed food programs with partners like Food for the Poor, CRS, Care, BND and PNCS. He also saw that teachers, many of whom had completed only second grade, needed better train-ing. Within two years of the teachers’ receiving training, the number of children passing the primary certification increased by 42%. “We’ve funded many other projects,” says O’Brien. “It all comes back to what is the raison d’être, which has to be education.”

O’Brien is focused on long-term results: “We have a 60- to 80-year horizon. We look at how we can fill the massive gap because the government [of Haiti] doesn’t have any money.” In the short term, O’Brien looks to improving results in national exams to check the effective-ness of schools.

O’Brien knows partnerships are important to get things done (something he has learned from his friend and men-tor Bill Clinton). Now he chairs the Haiti Action Network of the Clinton Global Initiative (CGI), which coordi-nates some 80 support organizations in Haiti. Traveling to Davos for the last decade as Haiti’s goodwill ambassa-dor, O’Brien is continually tapping his network. He cites former President Clinton as the best peer-to-peer engager: “President Clinton has brought CEOs together and reshaped philanthropy on the corporate side worldwide.”

All of O’Brien’s children—bar his youngest, who is five—have traveled to see his philanthropy at work in Haiti. Though O’Brien has not yet decided how much of his net worth to leave to charity, he plans to do much more over the coming years.

As stated previously, a solution to the issue of global pov-erty can be achieved only by creating systemic and pattern change. Survey respondents agree, with a majority (62%) saying that providing those in need with a means to support themselves is more useful than simply providing money.

Bill Drayton, founder of Ashoka, stresses that it is important to focus not only on the direct service, such as measuring how many students are educated or how many wells have been dug to provide water as a result of a specific donation or philanthropic initiative. Drayton says that this direct impact will not lead to systemic change. Only a focus on changing patterns of behavior and then social frame-works can make headway in alleviating global poverty.

Such systemic change involves the difference between being impact-oriented and output-driven, and is an important lesson to learn, explains Roger Federer, whose

Roger Federer Foundation reached almost 50,000 children last year. “Understanding the difference between impact and output has been a tough lesson for me. It is not about supplying a school with books. It is about the proper use of these books in order to improve the performance of chil-dren in that school to prepare them for a successful and self-driven life,” he says.

“My most surprising realization was the fact that we can really change things for the better if we do it right. It is not easy and means a major investment in terms of time, learning and know-how,” adds Federer.

Achieving sustainable results requires creating change-makers who will be able to continue to carry the mantle. Take Ashoka’s belief that empathy is a learnable skill and its impact on teaching it in schools. Drayton has moved the needle from getting U.S. schools on board to commitments from Scotland and Ireland to include it in their curriculum. Says Drayton, “Cognitive empathy is necessary to play in the game. When you have a person that has this power, they can become a change-maker.” Drayton believes that with technology, change-makers will be unstoppable. “As the world becomes more inter-connected, framework change is possible within a five- to six-year period,” he says.

This impact is true globally. “If South Africa is going to succeed, members of the young generation need to be change-makers,” says Drayton. A good example of such a change-maker in South Africa is Ashoka fellow Taddy Blecher, who has created a university model that enables poor students to acquire a free education by helping run and maintain the university while completing their stud-ies. The scalable project can help create a new framework for a broken South African educational system.

Peggy Dulany, fourth-generation Rockefeller philan-thropist and founder of the non-profit Synergos Institute, recommends a three-pronged approach to creating bot-tom-up systemic change, which starts off with Drayton’s idea of developing a set of leaders across a cross section of society who will be change-makers. These are grass-roots leaders in the trenches committing their whole lives to making change. The second is to create large-scale part-nerships with corporations and governments. The third is to focus on long-term scalable solutions.

systeMiC giVing CREATING A SELF-MULTIPLYING DYNAMIC


“My most surprising realization was the fact that we can really change things for

the better if we do it right.”

—RogeR FeDeReR Founder and President of the Board,

roger Federer Foundation


“After many years of experimentation, my approach to addressing global poverty is to seek scaled solutions,” says Dulany. In one eight-year project in India’s State of Maharashtra, Synergos facilitated the drive to reduce pov-erty by focusing on improving nutrition. Partnerships among UNICEF, state government, local NGOs and cor-porations like Nike were key to making changes from fixing the food supply chain to teaching nutrition, leading to a reduction in stunting from 39% to 23%.

A great example of sustainability and the role of ben-eficiaries as change-makers came from Roger Federer, who described the school meal situation in a village in Zimbabwe. Everybody in the village agreed that feed-ing the children was the biggest challenge at the time. However, there was no way of finding an NGO to deliver food. Federer’s partner organization, Camfed, asked the simple but justified question: why didn’t the village itself establish a feeding program for the school? The initial answer was that it was quite simply impossible. After a rel-atively short while, however, groups of mothers took on the initiative. They planted crops, started micro-busi-nesses, collected food and pooled donations to provide around 300 children ages four to nine with a daily meal. The feeding program has already been running success-fully for 24 months. When asked why the village had not started the initiative much sooner, a local woman said that it sometimes takes an outside perspective to realize that one can solve problems by oneself.

“Our beneficiaries should be in the driver’s seat and take responsibility in every initiative. We thus clearly need to strengthen local capacities and not weaken them by reducing them to becoming receivers,” says Federer. “It is thus of utmost importance that these people understand that the solutions of their problems, the change of their current situations, lie in their own hands and strengths.”

This comprehensive approach—of creating sustainable and scalable solutions and enabling local leaders to carry them out—is what makes framework change possible, according to Ashoka’s Drayton. In effect, the philanthro-pist becomes a catalyst for change by empowering the beneficiaries to become catalysts as well. “One person can’t change society by brute force, but together you can create a dynamic that self-multiplies,” says Drayton.

“One person can’t change society by brute force, but together you can create a

dynamic that self-multiplies.”

—bill DRayton Founder and CEO, Ashoka: Innovators for the Public

Peggy Dulany, a fourth-generation Rockefeller philan-thropist, was schooled in the importance of giving from an early age, and grew up with a myriad of role models, including her father, David Rockefeller, whose focus on improving international relations helped guide her efforts.

She made this family legacy her own by moving to Rio de Janeiro to work in squatter settlements at the age of 17. She eventually moved into a favela, spending a total of two years in Brazil. “The most important lesson is the first-hand experience of coming to understand the issues poor people

face by living in close proximity,” says Dulany. “For young people, this is the most mind-opening and value-creating experience.” As a result of her early lessons, Dulany devotes a large proportion of her philanthropy to global poverty alleviation efforts.

“I was given complete freedom to develop my pri-orities,” says Dulany. She has afforded her son the same opportunity: he has developed his passion in the arts and is focusing on promoting access to the arts.

“Being your most effective self is not just about giving money,” explains Dulany. “You have to give your whole self: your skills, connections, influence and willingness to listen. You have to bring your heart as well as your head.”

Dulany learned this by working with her father at the non-profit he founded in 1979, the Partnership for New York City. She spent five years focused on youth employ-ment and education issues, and worked with Fortune 500 CEOs who sat on the board. “These CEOs were not only business successes,” says Dulany. “They cared about social and economic issues and used their power to address them as well as attend to business.”

Dulany understands that such first-hand experiences and sharing opportunities are not always available to other philanthropists. This gap in shared learning pushed her to found her own non-profit, the Synergos Institute, whose mission is to “mobilize resources and bridge social and eco-nomic divides to reduce poverty and increase equity around the world.” One Synergos event—the “University for a Night”—brings together senior leaders from government and business to discuss how to better collaborate.

Synergos includes the “Global Philanthropists Circle” (GPC)—which Dulany co-founded with her father—a dynamic network of leading international philanthropists dedicated to eliminating poverty and increasing equity worldwide. The GPC currently has more than 85 mem-ber families from around the world, including South Africa, Brazil, Pakistan and the Philippines.

you haVe to bRing youR heaRt as Well as youR heaD


CASE STudY

“You have to give your whole self: your skills, connections, influence and

willingness to listen.”

—Peggy Dulany Founder and Chair, the Synergos Institute


dr. Philip Vasan, Head of Credit Suisse Private Banking for the Americas, speaks at the Forbes 400 Summit on Philanthropy

In the long run, wealth creation, understood as eco-nomic growth that benefits most of society, is an effective way to not only alleviate but also to solve global poverty. Nearly six in 10 survey respondents believe that wealth creation—most likely coupled with training and providing those in need with a means to support themselves—is an effective way to alleviate poverty.

The majority of survey respondents (51%) see lack of access to capital and lack of access to education as obstacles to wealth creation. Experienced philanthropists realize that despite the existence of many microfinance organizations

that provide credit, such organizations are not enough if fundamentals do not change. “Financial inclusion is not just about offering credit,” says Michael Schlein, president and CEO of microfinance leader Accion. “Financial inclu-sion is very important to solve poverty but just one piece of the puzzle. To really have a financially inclusive world, mobile network operators, banks, retailers, payment com-panies—all of these groups need to see they are part of a movement.”

Dr. Philip Vasan, head of Credit Suisse Private Banking for the Americas, comments, “Building on a decade of leadership in microfinance, Credit Suisse is committed to supporting the responsible development of new business. The Credit Suisse Microfinance Capacity Building Initiative aims to contribute to the strengthening of the manage-ment, products and processes of microfinance institutions and to promote dialogue and best practices.

“Similarly,” he adds, “to help enhance global con-sumer protection in the microfinance industry, the Smart Campaign was launched by the Center for Financial Inclusion, of which Credit Suisse is a founding part-ner. The initiative aims to rally participants in the sector behind the common goal of advancing consumer protec-tion, with the client’s best interests as the primary driver.

“The Credit Suisse Global Citizens Program was launched in 2011,” notes Dr. Vasan, “to help microfi-nance institutions master the management and business challenges they face and to strengthen their ability to man-age these in the future. The program aims to improve the exchange of know-how among our employees and partner organizations in the field of economic and social devel-opment—with qualified employees offering their skills to help our partner organizations in a variety of areas, rang-ing from risk management to the development of HR strategies and IT processes.”

Philanthropists Forbes Insights surveyed under-stand the complexity of what needs to be secured before wealth creation can take root. Fifty-eight percent agree that before the issue of wealth creation can be effectively implemented in most impoverished regions, other institu-tional issues must be tackled via philanthropic giving, such

the Role oF Wealth CReation in solVing global PoVeRty


“To really have a financially inclusive world, mobile network operators, banks,

retailers, payment companies— all of these groups need to see they

are part of a movement.”

—MiChael sChlein President and CEO, Accion


as those of health, gender equality, infrastructure chal-lenges or government corruption.

Philanthropists’ global work is further complicated, as obstacles to wealth creation vary by region (see Fig. 4).

For his part, Roger Federer focuses on education as a way to pave the way for wealth creation in Southern Africa: “In Southern Africa we enhance an environment where children living in poverty are able to take control of their future and actively shape it, thanks to early learn-ing and education on a high level of quality. Our strategic priority is the support of existing but poor support services in early childhood care centers, preschools and primary schools for children three to 12 years old. The quality of early support and basic education is crucial, as it is the foundation of all learning.”

Denis O’Brien, chairman of the Clinton Global Initiative Haiti Action Network—which coordinates some 80 support organizations in Haiti—and owner of Digicel, Haiti’s largest telecom, also supports education, as he cred-its it with the economic transformation of his own country. “I think what transformed Ireland in the 1950s and 1960s was education.” He is looking for a similar change in Haiti, where Digicel has built 115 primary schools to date, with 150 schools the target by 2014.

Philanthropist Takahara is creating economic oppor-tunities for women in the Middle East and North Africa. Unicharm’s target markets were less developed countries in the Middle East/North Africa and Asia (regions that pro-duce up to half of the company’s sales), and he wanted to make sure he was helping to break the cycle of poverty. “We create job opportunities in these countries. We also expand job opportunities for women, particularly in those countries where social advancement of women has not progressed as far as in advanced countries,” says Takahara. His goal is to employ 8,000 more women in Indonesia, India, Vietnam, Thailand, Saudi Arabia and Egypt by 2020—a doubling of the workforce that will have a multi-plier effect across society as women reinvest in health care, education for their children and home improvement.

“Poverty is a complex multidimensional phenome-non,” says AllWorld Network’s Michael Porter. “We can’t solve global poverty unless we build businesses that create robust sustainable incomes. What you find in the develop-ing world is an emerging group of entrepreneurs growing businesses that are creating thousands of jobs and creating ripple effects throughout society.”

Figure 4. What do you think are the most notable obstacles to wealth creation in regions of need?

TOTAL rESPONdENTS

Access to capital

Access to education

Political system

Mortality/health issues

Economic system

NOrTH AmErICA

Access to education

Access to capital

Political system


Business knowledge

LATIN AmErICA

Access to capital

Political system

Access to education

Infrastructure

Economic system

EurOPE

Access to capital

Access to education


Gender inequality

Political system

ASIA-PACIFIC

Access to education

Access to capital

Political system

Economic system

Business knowledge

51%

52%

58%

48%

50%

51%

65%

49%

40%

55%

44%

47%

53%

36%

45%

40%

45%

47%

40%

43%

39%

44%

38%

40%

44%

Theresa Pellas can see first hand the personal growth in the women helped by the American Nicaraguan Foundation, which she started with her husband, F. Alfredo Pellas Jr. “When you first meet these women,” says Theresa Pellas, “you see they feel vulnerable. They keep their heads down. Then you go back and you see how they stand tall.” ANF has a holistic approach. It helps Nicaragua’s poorest with health, education and sustainable development—through housing, agriculture and animal farming. Over 20 years ANF has distributed medicines and medical sup-plies valued at $1.1 billion as well as $93 million worth of school supplies; supported the construction of over 15,000 homes for underprivileged, low-income families;

and helped 3,700 families with economic initiatives built around things such as agricultural and livestock programs. Eighty percent of the people involved in ANF sustainable development programs are women.

ANF focuses on empowering women because “women are the spine that holds the family together,” says Alfredo Pellas. In the housing program, villas are pro-vided to women. Says Theresa, “A woman is the one who takes care of her mother, her children, her grandchildren. Sometimes men come and go. So only women can have the title to the homes we build, so they can provide a safe shelter for their families.”

Alfredo and Theresa Pellas started ANF 20 years ago. The 1980s were a difficult time in Nicaragua. Many busi-nesspeople opted to leave the country, as their assets and homes were nationalized. In the 1980s Nicaragua’s per capita GDP declined to one-third of its 1977 level due to inappropriate macroeconomic policies, civil strife and a trade embargo. Starting in 1991, the government initi-ated ambitious reforms to support Nicaragua’s transitions from war to peace, from dictatorship to democracy, and from central planning to a market economy. This is when the Pellases saw an opportunity to make a difference and started ANF.

They started with health by importing medical equip-ment. That first step was also their first lesson. The logistics of the import operation were too cumbersome and con-sumed too much in terms of resources. The Pellases switched to dispensing much needed medicines instead, to provide immediate relief to those in need.

It was then that they learned their second lesson—that health was just part of the problem. “Many of the places where we were giving medicine, we found kids did not go to school,” says Alfredo Pellas. “They were sent to work because the families needed food.” That’s when the Pellases added food to their philanthropic portfolio. Today ANF feeds 95,000 people a day.

As they worked on the twin goals of providing med-icine and food, the Pellases were approached by schools, which asked for help remodeling, such as putting in con-crete floors for students. They then saw the need for housing. “So we said maybe we should start building homes,” says Alfredo.

ANF now builds housing and creates communities to lift the cycle of poverty. The Pellases’ goal is to lift per capita income from $2 per day to $5 per day, and even $9 per day

stanDing tall


“You have to have continuity of programs. You have to continue to be open

for business.”

—theResa Pellas Co-Founder, American Nicaraguan Foundation

CASE STudY


with the proper sustainable development initiatives.Alfredo Pellas’s motivation for philanthropy comes

from Jesuit influence and the examples and achievements of other foundations, he says. “But mainly the love between my wife and me, coupled with the desire to make a change in the lives of the people of Nicaragua. My parents always implanted in us the necessity to share our blessings and the need to give back to society,” he adds.

Alfredo is a businessman and runs ANF like a business. ANF’s success in reaching hundreds of thousands of the country’s poorest relies on its network of 1,600 partners, which include government agencies, international organi-zations and local as well as external foundations. Theresa and Alfredo do not have the logistical reach to get to the

remotest towns, but partners have the local knowledge and hands-on tools to reach those most in need.

The pair note two challenges to running ANF and making an impact on poverty. The first is money and resources. Explains Theresa, “You have to have continuity of programs. You have to continue to be open for busi-ness. If we promise a meal a day, we have to provide a meal a day. That brings us to fundraising, one of our big-gest challenges. People give one time. We are trying to get that three-year pledge or even lifetime giving. That’s what makes it transformational.”

The second is leadership. Says Alfredo, “We need entrepreneurs. If you have good people, a lot of your prob-lems are taken care of.”

gatheRing intelligenCe “For a philanthropist it is important to be engaged in an active dialogue with communities that have similar global philanthropic interests, exchange intelligence with fellow funders, and scan the landscape to make sure he or she is not reinventing the same wheel over and over,” says Credit Suisse’s Julia Chu.

Extensive research is the first step in creating a business plan, and it needs to be the first step in creating a philan-thropic plan. Apart from talking with philanthropists who are active in similar regions, types of causes or types of solutions, it also makes sense to consult existing organi-zations and resources. Credit Suisse’s Chu suggests the following resources, in addition to regional associations of grantmakers:

grantmakers for education, which works to improve outcomes and expand opportunities for learners across the education spectrum, from early learning through postsecondary schooling and workforce development. It deepens the impact of education grantmakers by enhancing their knowledge about effective education strategies and high-impact grantmaking strategies. edfunders.org

grantmakers in health (GIH) is a nonprofit, educational organization dedicated to helping foundations and corporate giving programs improve the health of all people. gih.org

grantmakers for Children, youth, and Families (GCYF) serves as a point of contact for grantmakers seeking collegial and collaborative relationships with other funders concerned with children, youth, and families. gcyf.org

Foundation Center, a leading source on philanthropy worldwide, whose mission is to strengthen the social sector by advancing knowledge about philanthropy in the U.S. and around the world. foundationcenter.org

Council on Foundations, which serves foundations, family philanthropies and independent philanthropists. cof.org

association of small Foundations, which offers resources for starting a private foundation, getting to impact, streamlining grant making and disaster relief. smallfoundations.org

bolder giving, which promotes three ways to give boldly: Give more. Risk more. Inspire more. boldergiving.org

Philanthropists do not lack the will or ambition to think big. Three-quarters of philanthropists (73%) say they try to affect international or government policy immediately when they start their giving. But is this something individu-als can tackle on their own?

Many philanthropists, especially new philanthropists, have a strong inclination to try to do it themselves—over time they learn, and come to accept and appreciate, the importance of partnering and cooperation, says Bill Woodson of Credit Suisse. “At the beginning energy and excitement are the driving force. But once you are in it for some time, the realities and challenges become more appar-ent, and you start thinking more about the effectiveness of your philanthropy. And you ask yourself the question: Will I be more effective with others?”

“There are two crushing weaknesses with the phil-anthropic model today,” says AllWorld’s Michael Porter. “There is not enough money to give away. And there is too much fragmentation and not enough large-scale impact. That is why we haven’t gotten a lot of great results yet.”

A full 48% of survey respondents believe that there are too many overlapping organizations within the non-profit sector. Yet when asked how they realize their philanthropic ideas and goals, the highest percentage of respondents (34%) said that they look to their own business experience, while

the smallest percentage (20%) said that they partner with experts in the field (see Fig. 5).

The importance of business experience cannot be over-estimated. Philanthropists are applying the expertise from their business endeavors to address the challenges they face in their philanthropy. “Often they have succeeded in their business, and they have done so by creating systemic change in their respective industries,” says Credit Suisse’s Chu. “And similarly, they want to be just as disruptive in philanthropy, so rather than continuing to treat the symp-toms of the chronic issue, they have greater interest in addressing its roots in a long-term manner. They want to create part of a permanent solution long after their life-time because the high level of their ambition stems from the success they had as business leaders.”

And along these lines, when it comes to organizational structures, the largest percentage of philanthropists, 25%, believe that the most effective way to fight poverty is with corporate philanthropy through their business entities (see Fig. 6).

“There is an opportunity now for a business-led approach to poverty reduction,” says Porter. “I’m not saying we don’t need NGOs or government or private giving. Let’s craft a new model for people to get closer to the action.”

“All the philanthropy in the world is not sufficient to tackle global poverty. You have to tap the private sector,” says Accion’s Michael Schlein.

Challenges are approached slightly differently by region, but overall most philanthropists work to meet these challenges by applying their own business and professional

DRiVing PhilanthRoPy to MoRe Cohesion


Figure 5. How do you address your primary challenges in realizing your philanthropic ideas and goals?

Unique approach based on expertise in business/wealth management

Use lessons from past philanthropic experiences Use philanthropic lessons of others Solicit advice from experts in the field Inquire from friends, contacts with philanthropy experience Partner with experts in the field

34%

33%

27%

27%

21%

20%

Philanthropy through my business entity Underwriting operational expenses of certain organizations

Funding social entrepreneurship Creating de novo organizations

Figure 6. What have you discovered to be the best way to effectively address issues of global poverty?

25%

22%

22%

21%

expertise to their philanthropic endeavors. North Americans are most likely to do so, along the model of Scott Harrison and his non-profit, charity: water. Harrison uses his prior expertise as a club promoter to spread the word and generate interest in solving the global water crisis.

European philanthropists are more likely to apply their own personal experience from past philanthropy. Digicel owner Denis O’Brien says all of his philanthropic efforts are seeded personally and from his mobile telecom busi-ness expertise: “We’re an emerging-markets company. When you build a business from scratch, it is not that different from doing philanthropy. You have to start on the ground.” And he adds that updates on the company’s philanthropic endeavors are just as important as sales or competitor updates at board meetings.

Roger Federer adds, “Just like any other business, philanthropy needs to be professional: a strategic, focused, cost-efficient and cost-effective engagement.”

For Lauren Bush Lauren, who founded FEED, a social business that donates a portion of profits to provide meals for the world’s hungry, philanthropy and work are inter-twined. “We create and sell products to raise money, which then provides food to people in need, but also to raise awareness surrounding the issue of hunger and promote conscious consumerism. We stay focused on these goals.”

“There is an opportunity now for a business-led approach to

poverty reduction.”

—MiChael PoRteR Harvard Business School Professor and Chairman,

AllWorld Network


There are some regional differences in what philan-thropists struggle with. North Americans found securing funding to be the most challenging, at 40%, and making a satisfactory impact (35%), while Latin Americans were most challenged by forging alliances, at 38%. European respon-dents found it most difficult to prioritize (39%).

Some of the most successful philanthropists Forbes Insights spoke with built their own philanthropic success based on the experience and advice of others.

Theresa and Alfredo Pellas have built the American Nicaraguan Foundation, which helps Nicaragua’s poor-est with health, education and sustainable development, based on its network of 1,600 partners, which include gov-ernment agencies, international organizations, and local as well as external foundations. Theresa and Alfredo do not have the logistical reach to get to the remotest towns, but having 1,600 partners with local knowledge and hands-on tools to reach those most in need, ANF makes its impact felt throughout the country.

Unicharm’s Takahisa Takahara uses corporate net-works to make a philanthropic impact across the developing world. Working with the United Nations Development Programme (UNDP), he has joined over 55 companies at the Business Call to Action (BCtA), a global initiative to reduce poverty and promote sustainable development with innovative business models.

Lauren Bush Lauren’s FEED partners with UNICEF and the UN World Food Programme to achieve its goal of feeding the world’s hungry. She also partnered with Target on a lifestyle collection of more than 50 co-branded prod-ucts (FEED USA + Target) to provide meals to Americans in need through Feeding America, which also helped those affected by Hurricane Sandy. This summer, FEED met its goal of providing 10 million meals through this lim-ited time program. FEED also (not in collaboration with Target) made a FEED NYC bag and hoodie to specifically benefit Hurricane Sandy victims.

Rockefeller heir Peggy Dulany had generations of experience in giving that she wanted to share by creating a philanthropic networking group, Global Philanthropists Circle, an initiative of Synergos. “We [Rockefeller cousins] were trained early on about how to be on a board. We have

bolsteRing the eFFeCtiVeness oF PhilanthRoPy PARTNERING, COLLABORATION, RESOURCES


Effectiveness in philanthropy can be bolstered by shar-ing, cooperation and learning from one another. Indeed, the wealthiest of givers are likeliest to look to the philanthropic success of their peers as a guide for meeting the challenges they personally face. The biggest challenge is prioritizing initiatives, with 32% of respondents citing it (see Fig. 7). But forging alliances is not far behind, with 27%, which points to the fact that philanthropists are aware that while difficult, this is an important area.

Figure 7. What are the primary impediments to achieving your philanthropic mission?

32%Prioritizing

your initiatives

29%securing funding

28%Clarifying

your mission

27%Forging alliances

26%Making a satisfactory

impact / meeting your expectations

for results


Ambitions in philanthropy run high, with 73% of philanthro-

pists saying that they want to see pattern changes at the

highest levels, as they seek to affect international or govern-

ment policies right at the start of their giving. Is this too tall a

task for an individual philanthropist?

“If effectiveness is a goal, a philanthropist should ask himself

or herself the question: ‘Will I be more effective on my own

or with others?’” says Credit Suisse’s Woodson.

Intellectually, philanthropists understand that it is beneficial

to work with organizations that are established in the field

and have much experience. While such organizations will

tend to be biased toward solving a problem in a way con-

sistent with their mission—an approach that may be at odds

with the philanthropist’s point of view—they also are knowl-

edgeable about other proven problem-solving methods, and

also how other organizations deal with various issues.

But given the emotional component of philanthropy, the ma-

jority of new philanthropists want to put their unique imprint

on their favored cause. “Though we understand the desire

to put your own imprint on your philanthropy very strongly,

we feel that often it would be more effective if you learn

from others, collaborating on achieving systemic solutions to

global issues,” says Woodson.

One solution to the tension between the intellectual and the

emotional is to separate philanthropic activities into two or

more categories—the ones where you can do a great job

and give it your own imprint, such as local or region-specific

charities, and those areas in which you cannot be the most

effective without partnering or collaborating with larger

charities, governments or corporate partners.

best PRaCtiCes to bolsteR PhilanthRoPiC eFFeCtiVeness

“I wanted to address the most basic need first to try to break the cycle of poverty.”

—lauRen bush lauRen Founder and CEO, FEEd

multiple family foundations. There is no one right answer. It is important for the individuals or families to think through what makes sense at each point in their giving cycle,” explains Dulany. Her Synergos Institute provides a forum where philanthropists can meet face to face and then com-municate via a closed website and social media.

Dulany explains why she created the network and how it aids philanthropists. “One reason I decided to build a global network is that there are different advantages in different parts of the world. In the U.S., philanthropy is a more common part of our culture. Other people want to learn from the U.S. expe-rience. On the flip side, aside from the Bill & Melinda Gates Foundation, over 90% of U.S. giving is local, so for those who want to give abroad, we provide a network. In Europe, there is no tax incentive to give, so many give privately and want to remain anonymous. There is less sharing of experience there. In Asia, people have been quite specific and personal in their giving, for example, supporting a school from their local vil-lage. It is not yet strategic philanthropy,” says Dulany. Put all these people in the mix, and key lessons result.

Sums up Roger Federer: “We all want to achieve the same in the end: a positive and systemic change of nega-tive realities. We will never be able to reach that goal on our own. We need the best partners in the countries to imple-ment our programs. We need to share knowledge with other donors about lessons learned as well as errors committed.”


beCoMing a VentuRe PhilanthRoPist

One way to be active on the global scene is to become a venture philanthropist, making a

bigger impact by seeding other organizations or people with your money. The term evolved

from venture capital and is based on the same principles of high risk and high impact: having

a whole portfolio of investments and aiming for a couple of home runs.

There are differences between the worlds of business

and philanthropy, including different time horizons.

While it takes five to 10 years to reach a successful exit

for a commercial enterprise, in philanthropy it can take

twice or thrice as long. But there are similarities as well,

the most important being that due diligence in venture

philanthropy needs to be equally thorough. Since due

diligence often needs to be conducted also in the field,

sometimes under difficult circumstances, Credit Suisse’s

Chu recommends leveraging existing resources.

One option is to invest via non-profit organizations like

the Acumen Fund that raise charitable donations that

allow them to make patient, long-term debt or equity

investments in early-stage companies that, in turn, pro-

vide reliable and affordable access to agricultural inputs

and markets, quality education, clean energy, health-

care services, formal housing and safe drinking water to

low-income customers.

“Venture philanthropy channels philanthropic capital

to foster innovative solutions, in the same way venture

capitalists use their capital to exploit untapped oppor-

tunities,” sums up Chu. “Philanthropy serves as a critical

lifeline of early funding in areas that do not provide an

immediate financial return for commercial or govern-

ment investors.”

“Venture philanthropy channels philanthropic capital to foster

innovative solutions.”

—Julia Chu Head of Private Banking North America Philanthropy,

Credit Suisse


suCCess in PhilanthRoPy Despite the importance of a systemic approach, philanthropists have very different views

when it comes to immediate or long-term perspectives.

Success is defined by an almost equal group of philan-thropists (26% and 23%, respectively) as long-term impact or immediate alleviation of physical suffering and needs. That’s also a vote for combining giving to systemic, long-term causes with local and targeted giving. The latter more often leads to immediate alleviation of suffering.

Credit Suisse’s Woodson stresses that all levels of philanthropy warrant support, and that determining effectiveness in philanthropy is subjective and is often dependent on what the philanthropist feels is effective.

In terms of alleviating global poverty, some philan-thropists help feed local families and improve one life at a time. Others help communities grow crops, develop technologies or build water treatment systems and touch greater numbers of lives. But both types of help are needed. These different approaches translate into other areas such as education. There are scholarships for individual students and also systemic efforts, such as the Gates Foundation’s investment dedicated to bold cooperation between pub-lic charter and traditional schools. “We need both types of philanthropy. Success is doing what you are interested in, what motivates you,” sums up Woodson.

In terms of regional approaches, more North Americans and Europeans focus on long-term impact as the definition of success, while Latin Americans focus on immediate needs, pointing perhaps to the different level of need and different stages of philanthropy. Asians are almost equally divided between the two.

“People are beginning to recognize change takes time,” says Accion’s Michael Schlein. In microfinance, there is a 10- to 12-year time horizon to get an institution fully mature. In the new area of impact investing—pro-ducing social or environmental good as well as financial return—there is impatience for results but not enough projects that meet the criteria. Moreover, the time horizon is still at least a decade before results are in.

A vast majority—84%—of philanthropists would like to see a meaningful return on their philanthropic invest-ment in less than 20 years, or within one generation. They are evenly split into those who would like to see the return in less than 10 years, and those who are willing to wait between 10 and 20 years. The minority—16% of the

total—are willing to wait more than 20 years, and beyond their lifetime. Philanthropists in the Americas are the most short-term oriented, while Europeans and Asians are the most patient.

Perhaps some of the anxiety about slow returns may be alleviated if they split their efforts between global and local, immediate and long-term causes.

“Success is doing what you are interested in, what motivates you.”

—bill WooDson Co-Head of Private Banking Americas

ultra-High Net Worth Business, Credit Suisse


CReating youR PhilanthRoPy PoRtFolio

UN Secretary-General Ban Ki-moon speaks at the Forbes 400 Summit on Philanthropy

Bill Drayton, himself a proponent of systemic change and social entrepreneurship, believes that “it is important for people in any field to do what they love. We need both local and global giving.” Giving to local and direct causes is closer to the heart, and philanthropists understand the needs better. It can also be more satisfying, as the results are usually more immediate.

Philanthropy is, after all, a very personal issue. Personal connection to culture, region or locality (29% of respon-dents) and knowledge of the geographic area (29% of respondents) are key drivers in prioritizing giving efforts of the world’s wealthiest. Another 32% felt a need to give back to their own community, while 27% and 28%, respectively, were driven by a formative experience and familiarity with the issue.

Philanthropists interviewed by Forbes Insights went

back to their childhood memories and experiences as motivation for their giving,

Swiss tennis ace Roger Federer set up his own phil-anthropic foundation when he was 22, based on lessons learned from his parents and from his personal experience as a child spending holidays in South Africa. “[I was] con-fronted directly with poverty. This made me aware of the fact that not everybody has the same privileges as I do.” Federer’s foundation now helps children in Southern Africa because this is clearly a part of the world that he feels close to, so it must feel to him like local giving in a sense.

Ireland’s mobile mogul Denis O’Brien grew up in Ireland in the 1970s, when collecting for missions in the developing world was the cause at every school. This set the stage for his interest in global issues. He also contin-ues to run his own foundation in Ireland focused on social

entrepreneurship, autism, suicide prevention and educa-tion, and gives money to causes that pitch to him.

In fact, the biggest group of survey respondents, 42%, say that their giving is local and targeted. Regional dif-ferences abound. A total of 51% of wealthy donors in the Americas focus on targeted, local giving, with the high-est percentage of philanthropists in North America (54%) spending time giving back in their own communities; 48% say the same in Latin America. This contrasts with Europe, which has the highest percentage of respondents saying that they focus on global giving (34%). Four in 10 donors (39%) in APAC focus on global causes or a combination of global and local.

At the same time, some donors seem to treat their philanthropy as a flexible portfolio, ready to make adjust-ments when need be, and are open to switching between global and local giving, depending on where their cause takes them. Fully 22% of respondents train their focus on whichever type of giving will advance their own personal agenda the most at that moment, with those in APAC the most flexible at 25% (see Fig. 8).

Being flexible also allows a quick reaction when sudden needs emerge, the way Lauren Bush Lauren’s FEED orga-nization was able to respond real-time to disasters such as Hurricane Sandy or the tsunami in Japan by selling prod-ucts whose profits flow directly to emergency food relief in affected areas.

But, says Accion’s Michael Schlein, after the first disas-ter response, people talk about recovery. It is this mode of recovery that will lead to solutions. Accion, which is the largest microlender in the U.S., put together a Sandy Relief Fund to provide small loans to small businesses to assist in recovery efforts.

Global giving, which requires international experi-ence and resources, is more prevalent among the wealthiest group of philanthropists, with 40% of those with invest-able assets of $50 million or more saying that their giving is focused on issues that are global in scope, as compared with 29% of all philanthropists surveyed.

This finding is borne out at the very highest lev-els of giving as well. Indeed, the gathering of the world’s

wealthiest at the Forbes 400 Summit on Philanthropy at the United Nations in June reflected a similar sen-timent—33% responded in a snap poll that they focused more than half of their giving on global causes.

Interestingly, some of the motivation for this global giving also comes from the childhood or personal experi-ences of philanthropists Forbes Insights spoke with. Peggy Dulany worked in squatter settlements in Rio de Janeiro and eventually moved into a favela. Now she directs a large proportion of what she gives to focus on global poverty, and plans to give well over half her wealth to charity.

Lauren Bush Lauren founded FEED, a for-profit, social business, based on her first-hand experience with the United Nations World Food Programme’s (WFP) School Feeding program. “As a student, I was able to travel with the World Food program. That was my touch point. I wanted to address the most basic need first to try to break the cycle of poverty.” Part of FEED’s profits are aimed at providing meals to the hungry. To date, FEED has donated over $6 million and nearly 60 million meals worldwide as well as supported nutrition programs globally, which have provided vitamin supplements to over 3.5 million children.


Figure 8. do you focus on global or local, targeted giving?

29%

42%

22%

7%

Global giving

Local, targeted giving

Either, whichever advances my cause the most

Both


neXt geneRation The next generation of philanthropists is being groomed to take over where their parents leave

off. Three-quarters of wealthy respondents in North America and Europe have made an active

effort to engender an interest in philanthropy in their children.

“The most complete example is by example,” says Synergos’s Dulany. She exposed her son to her philanthropic work around the globe by taking him on trips and talking with him about what he was seeing.

Philanthropists in other parts of the world seem to agree. Three-quarters of those in Latin America say that it is very important to them that their children make philanthropy a priority in their adult lives, and see their children as “the next generation” of philanthropists, while fully 71% plan to leave their children an inheritance meant partly for giv-ing, and will divert a significant portion of their wealth to philanthropy instead of their children. Those in APAC, on the other hand, are the least likely to divert inheritance away from their children and to their charitable endeavors, at 48% (see Fig. 9).

While values are being passed on to the next generation,

funds may not be. The world’s wealthiest plan to give away a greater proportion of their wealth than ever before. Nearly one in five plan to give away more than half of their wealth upon their death, with 31% of those with assets of $10 mil-lion or more planning to do so. Close to half (46%) of those with $50 million or more plan to do so, while just 7% of those with assets between $1 million and $3 million are planning the same. Eleven percent of respondents plan to give more than half of their wealth away during their life-time; this increases to 29% for those with $50 million or more in investable assets.

Synergos’s Peggy Dulany gives away half of what she makes each year. “Apart from a few personal bequests, the rest of my net worth will go to charity, well over 50%,” says Dulany. She clearly means it when she says she leads by example.

Figure 9. Please rate your agreement with the following statements (percentage who agree)

I have made an active effort to engender an interest in philanthropy in my children

It is very important to me that my children recognize the importance of philanthropy and make it a priority in their own adult lives

I plan to leave my children an inheritance that is meant— at least in part—for charitable giving only

I am actively preparing my children to manage my philanthropic endeavors

I see my children as part of the next generation of philanthropists

My children play an active role in my philanthropic foundation and/or giving activities

To raise self-sufficient children, I divert a significant portion of my wealth to philanthropy instead of my descendants

ToTAL RESPoNdENTS NoRTh AMERICA LATIN AMERICA EURoPE ASIA-PACIFIC

66% 74% 58% 73%

63% 66% 74% 62% 59%

63% 64% 71% 64% 58%

61% 70% 68% 61% 54%

63% 64% 73% 56% 63%

60% 66% 60% 65% 53%

58% 62% 71% 59% 48%

58%


ConClusionBuilding a philanthropy portfolio can be a daunting task. As this report has shown, the world’s

issues, such as global poverty, require systemic solutions based not just on funds, but on

know-how and connections. Below are some key themes.

Prioritizing initiatives is a top challenge for philanthropists. Keeping track of new emerging approaches, such as pat-

tern change, or areas of giving, is challenging as well. Consider advice from other philanthropists or networks they

have formed to share their experiences. (See sidebar: Gathering Intelligence, page 19.)

With systemic global problems, individuals may accomplish more if they join forces with others. Consider becoming

a venture philanthropist, seeding an existing idea or organization. In this way one person can achieve a much bigger

effect than by deploying only an individual’s money or expertise. (See sidebar: Becoming a Venture Philanthropist,

page 24.)

Philanthropy is often about what an individual knows and loves. Giving locally to one’s town or community allows a

philanthropist to address immediate issues as well as long-term change. Expertise and knowledge about community

needs, as well as connections to the local population, are invaluable.

An open mind about one’s philanthropy portfolio is advisable. Staying flexible allows a faster and more effective

response to sudden crises or natural disasters.

Moreover, efficiency in philanthropic efforts—while certainly worthwhile—is not the only end or value. Pursuing your

philanthropic passion is both noble and notable in and of itself.


MaKing it haPPen A PHILANTHROPIST’S GUIDE

View your philanthropy as a portfolio of investments. With your financial investments, each asset class has its re-

spective risk and return profile as well as best-in-class performers. Similarly, your philanthropic interests may include

different topics and regions of the globe. Each sector may entail different horizons and approaches towards effecting

change, and defining the allocation of your capital among each of these areas can help you monitor your progress and

maintain your focus on best-in-class organizations with which to partner. Understanding the longer horizons needed

to effect long-term change also helps to set your philanthropic expectations of return.

Consider investing in women’s health and empowerment as a potent philanthropic lever. The successes of

microfinance demonstrate that women continue to serve as the most effective stewards of a family’s financial capital,

providing the greatest return on social investment by deploying profits directly back toward the well-being of their

children. Supporting the health, education and economic access of mothers may yield significant results in advancing

the ability of families to survive and thrive.

To attain meaningful impact in combating global poverty, Julia Chu of Credit Suisse recom-

mends the following actionable steps to apply the lessons revealed in the Forbes Summit and

subsequent research:

From left: Dikembe Mutombo, Chairman and President of the Dikembe Mutombo Foundation; Jorge M. Pérez, Chairman of The Related Group; and Stephen Ross, Chairman of Related Companies

Steve Forbes, Chairman of Forbes Media, presents Nobel Laureate Muhammad Yunus with the Lifetime Achievement Award for Social Entrepreneurship


think outside the project. A self-sufficient populace ultimately needs a baseline of civic stability and functional infra-

structure in order for individual projects like water wells and schools to take root. Before constructing a specific build-

ing or facility, take the time to understand the root causes of the problem you seek to solve. This process of discovery

may then illuminate what strategic approach to use.

Collaborate with others to accelerate the pace of systemic change. Since private philanthropic capital constitutes

only a small percentage of the resources needed to solve chronic problems, teaming up with other funders, as well as

government and business allies, may significantly increase the scale and momentum necessary to move the needle

on chronic issues.

invest in cultivating the leadership of others. As an extension of their prior business success, philanthropists may

initially view themselves as the sole leader or solution-provider of a particular issue. However, it takes more than one

visionary to galvanize and change the mind-sets of whole populations toward solving their own social and environ-

mental issues. Given the great instability and unrest that emanates from disenfranchised youth, imbuing them with

the education, skill-sets and values necessary to lead others constructively may exponentially provide returns on a

single investment.

inspire and celebrate the passions of your children. Many philanthropists do not feel the need to have their children

duplicate their charitable projects; however, they do want to see their children exhibit the same level of drive and initia-

tive in applying their talents and resources. Having them accompany you on your next site visit, as well as encouraging

them to pursue their own philanthropic path, may foster a dialogue of best practices within your respective passions.

Do not be reluctant to ask for advice. The world’s most seasoned philanthropists find that they learn the most from

the experience of their predecessors and peers. This natural curiosity and humility helps to maintain an open and flex-

ible perspective, allowing you to adapt in a rapidly changing landscape.


MethoDology

aCKnoWleDgMentsForbes Insights and Credit Suisse would like to thank the following individuals for generously sharing

their time, expertise and insights:

Julia Chu, Head of Private Banking North America Philanthropy, Credit Suisse

Cédric Daetwyler, Senior Philanthropy Specialist, Premium Clients Switzerland and Global External Asset Managers, Credit Suisse

bill Drayton, Founder and CEO, Ashoka: Innovators for the Public

Peggy Dulany, Founder and Chair, the Synergos Institute

Patrick elmer, Head Philanthropy and Responsible Investments, Premium Clients Switzerland and Global External Asset Managers, Credit Suisse

Roger Federer, Founder and President of the Board, Roger Federer Foundation

bernard Fung, Head, Family Office Services and Philanthropy Advisory APAC, Credit Suisse

lauren bush lauren, Founder and CEO, FEED

Denis o’brien, Chairman, Digicel Group

Michael o’sullivan, Chief Investment Officer, Credit Suisse Private Banking UK and EEMEA

alfredo and theresa Pellas, Founders, American Nicaraguan Foundation

Michael Porter, Harvard Business School Professor and Chairman, AllWorld Network

Michael schlein, President and CEO, Accion

heiko specking, Director, Philanthropy and Social Responsible Investment Advisory, Credit Suisse Solution Partners

takahisa takahara, President and CEO, Unicharm

Dr. Philip Vasan, Head of Private Banking for the Americas, Credit Suisse

bill Woodson, Co-Head of Private Banking Americas Ultra-High Net Worth Business, Credit Suisse

The survey tapped 317 high net worth individuals across the globe, in the Americas, Asia-Pacific and Europe.

Fifty-four percent of the respondents had net investable assets of $1 million to $4.9 million or less, 31% of respon-

dents had net investable assets of $5 million to $19.9 million, and the remaining respondents reported net investable

assets of $20 million or more. Fifty-six percent of respondents were male and 44% were female.

About Forbes InsIghts

Forbes Insights is the strategic research and Thought Leadership practice of Forbes media, publisher of Forbes magazine and Forbes.com, whose combined media properties reach nearly 50 million business decision makers worldwide on a monthly basis. Taking advantage of a proprietary database of senior-level executives in the Forbes community, Forbes Insights conducts research on a host of topics of interest to C-level executives, senior marketing professionals, small business owners and those who aspire to positions of leadership, as well as providing deep insights into issues and trends surrounding wealth creation and wealth management.

Bruce rogers ChIeF InsIghts oFFICer

Brenna Sniderman senIor DIreCtor

Kasia moreno eDItorIAl DIreCtor

Brian mcLeod MAnAger, north AMerICA

Lawrence Bowden MAnAger, eMeA

Curtis Bergh DePutY DIreCtor, APAC

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Credit suisse Ag

Credit Suisse AG is one of the world’s leading financial services providers and is part of the Credit Suisse group of companies (referred to here as ‘Credit Suisse’). As an integrated bank, Credit Suisse is able to offer clients its expertise in the areas of private banking, investment banking and asset management from a single source. Credit Suisse provides specialist advisory services, comprehensive solutions and innovative products to companies, institutional clients and high net worth private clients worldwide, and also to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 46,300 people. The registered shares (CSGN) of Credit Suisse’s parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.

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