The South African Donor MarketImpact on Higher Education

MACE Conference November 2013

© Shelagh GastrowExecutive Director : Inyathelo : the South African Institute for Advancement1

Is there a funding crisis?

• Media tells us so.• Many well known civil society

organisations closing their doors.• Have the opportunities really

declined?• Have we adapted to the current

context?• Are we looking in the right

places?• Are we busy doing the wrong

thing?• What are the trends?

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Do we understand new trends in philanthropy?

• Venture philanthropy• Impact philanthropy• Strategic philanthropy• Catalytic philanthropy• Impact investing• Resilient organisations• Social return on investment/social profit• “Harnessing financial innovation for real social impact”. - See more

at: http://philanthrocapitalism.net/#sthash.Xt4iM0Mc.dpuf• Social Impact Bonds/Development Impact Bonds according to the

Philanthrocapitalism website are “the hottest innovation in social policy of the last decade….”

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Modern Philanthropy

• The pioneers of modern philanthropy were the Carnegie Corporation of New York (1911) and the Rockefeller Foundation (1913)

• Shifted philanthropic paradigm from charity to innovative programmes dealing with the socio-economic factors impacting on society.

• This led to international grantmaking

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Modern Philanthropy

• Bill Gates• Philanthrocapitalists• Clinton Global Initiative

– “philanthrocapitalist market place with an emphasis on making explicit commitments to take action to tackle global problems.”

• Social Good Summit• Partnerships between governments, multilaterals, business, non-profits

and civil society. “The age of the posse, when global problems are tackled by ad hoc coalitions of the positive.”

• World Economic Forum : Council on Philanthropy and Social Investing : impact investing to fund a better world.

• G20 asked Bill Gates how to finance the MDGs.• Size of their endowments put them on equal terms with some

governments. • Global Fund to Fight Aids, Tuberculosis and Malaria – donors and business

on the board. Prefer their own control than donating money to the WHO.

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http://philanthrocapitalism.net/

International Private Foundations

Current context

•Come and go in South Africa•Atlantic, Kellogg, Rockefeller Bros, van Leer•Mellon, Carnegie, Ford, Kresge, Mott, Open Society, Wellcome Trust, •Elma, Dell, Bertha, MasterCard

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International private foundations

Changing requirements•More accountability•More measurement•Influence of the philanthro-capitalists :•Social enterprises, impact investing, catalytic philanthropy•Monetarisation of impact

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International private foundations

• Non-governmental

• Non-profit

• Have their own endowments (principal funds)

• Managed by own trustees and directors

• Established to maintain or aid charitable, educational, religious and other activities serving the public good.

• Make grants to non-profit organisations

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Regulations regarding US Foundations

• Grants only to non-profits classified as public charities

• International funding can be awarded – Through an intermediary organisation in the USA,UK or

Europe• OR– In the USA an Equivalency determination has to be made

(would overseas charity qualify as a public charity in terms of US Internal Revenue Code?)

• Post 9-11 Patriot Act rules require foundations to confirm that grantees are not funding terrorism.

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International foundation process

• The background investigation

• The Review

• The Grant Agreement

• Monitoring and Evaluation

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Background investigation

To assess :•If the organisation can deliver what they envisage in the proposal.•If the organisation is the equivalent of a public charity•If the organisation can meet the reporting and accounting requirements•Past performance•Understanding the broader context and long-term impact.•The political environment•If the programme has community support•If there is duplication of effort by other projects•Long-term sustainability (multiple sources of income)•Evaluation and monitoring.

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Background investigation

• To build the case for support

• This may involve an in loco visit or meetings with project leaders

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Proposal Review

• Anticipating the concerns and queries of the board

• Seeking additional information or budget queries

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The grant agreement

Conditions are intended to meet their regulations governing foundations.

The agreement will explain :•Funds can only be used for the purpose of the approved proposal•Changes need to to agreed in writing by the foundation•The duration of the grant and disbursements•Monies not used will need to be returned, or extension of the grant by written request for rescheduling•Reporting and accounting requirements

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Oversight

• Programme officers may visit the project

• The visit is to check compliance with the grant agreement and to observe progress

• May require independent evaluation

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Building relationships

• Programme officers are your advocates and champions within the foundation.

• They therefore need answers to questions.• They become invested in the success of your

project.• They continue to monitor and champion the

success of your project.

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Reporting

• Courtesy• Reassurance• Transparency• Contractual obligation

• Negotiate any changes that you might want to implement.

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Local philanthropic foundations

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Fuchs Foundation

DG MurrayTrust

Hans Hoheisen

Trust

Oppenheimer Memorial

Fund

Lewis Foundation

NussbaumFoundation

Shuttleworth Foundation

MotsepeFamily

Foundation

Institutionalised Philanthropy in South Africa

Business and Corporate Social Investment

Current Context•Trialogue : R6,9 billion invested in social projects (32 companies accounting for half the spend)•BEE Codes•Triple bottom line : impact measurement – integrated reporting•Lack of confidence in the SA economy

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Corporate giving : motivation

• Enlightened self-interest to ensure a contented labour force

• Direct commercial benefits

• Community investment – helps build a stable society

• Social responsibility and BEE points

• Tax benefits

• Inter-corporate competition for social standing

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Good Corporate Citizenship

Increased focus on BUSINESS ETHICS in the light of

•Globalisation•Environmental and health issues•Sustainable development issues•Employee relations (decent standards)•Government relations•Community relations•Corporate governance (Enron and WorldCom scandals)•Investors requiring greater transparency•Corporate reputation•Good governance

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• The relation of business to society is changing fundamentally.

• Technology has created transparency – the world can see– Child labour– Cheap labour– Environmental degradation– Profiteering– Abuse of resources in developing countries

• Community management is necessary to become successful in the social environment

• Responsibility in the way business is done, rather than the enlightened way profits are distributed

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Branding and social good

• Ethical branding – “This organic product is good for you – pay extra!”

• Brands are affected by environmental, ethical and social issues.

• Philanthropy integrated into the act of consumption

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What is the new CSI?

• OLD THINK :– Philanthropic giving by the company

• NEW THINK :– Leadership in social problem solving - Community involvement

(philanthropy) TOGETHER with• The way it does business• The way it creates jobs• How it produces wealth• If it pays taxes• Whether it is innovative (technology)• If it is environmentally friendly• How it impacts on the value chain – suppliers, distributors and

customers

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How is CSI evaluated?

• INPUT is the resources made available by a company for corporate social investment. These include– Funds– Employees’ time (support, advice)– Gifts in kind (products, use of facilities)

• OUTPUT is the benefit that emerges from the input and includes :– Community benefit (project implemented)– Business benefit (enhanced reputation, marketing benefits)– Leverage (other funds, volunteers etc)

• IMPACT is the effect over time and this includes :– Community impact (related to the project)– Business impact (new business generated, goodwill, brand recognition,

employee productivity, overcoming legislative obstacles etc)– Social profit

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Measuring Risk and outcomes

• Grantmaking means giving money to another institution/organisation/partner

• Impact is determined by the partner’s effectiveness

• The best partner gives more “bang for the buck” (“social impact per rand expended”)

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Where do you go in the corporate world?

• The Chief Executive Officer – Large donations.

• The Human Resources Manager – bursaries, career office

• The Marketing Department – sponsorships

• The Corporate Social Investment Office – projects or programmes

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Company Foundations

• Established by businesses for charitable giving or community investment

• Some have endowments

• Resources generally based on formula (percentage of profits)

• Generally managed by company representatives

• Generally give in areas where they do business.

• Debate as to whether they should be separate from the company’s corporate policies – cuts off information and discourse from other sectors such as civil society, academia, government.– Eg donations to universities where they recruit.– Insurers donate to non-profits dealing with health care transformation.– Art suppliers donate to organisations that promote the arts.

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International Development Aid

• Aid – a Foreign policy tool

• Choice between military and/or economic aid?

• Is Economic aid an only solution to global development challenges?

• Development Aid is always in line with foreign policy agendas.

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Is International Development Aid negotiated?

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THE END OF INTERNATIONAL AID? Presenter: Emmanuel Ramathuba | Senior Policy Analyst, National Treasury | 11 September 2013 Inyathelo : Breakfast on the Second FloorIMPLICATIONS FOR SOUTH AFRICA AND THE CIVIL SOCIETY SECTOR

International development aid

• Foreign government agencies– Not for general budget support– Requires synergy with government priorities– Fits with foreign policy issues– Global warming– HIV/AIDS declining– Sustainable development– Education– Bilateral relations (exchange)– Economic relations (building business relationships)– Extension of political strategies

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Foreign Political Agencies

• Westminster Foundation for Democracy (UK)• National Endowment for Democracy (US)• Friedrich Ebert Stiftung (Germany)

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International NGOs

• Global charities.• Raise funds to support projects in Developing

World• Themes usually include health, welfare,

environment, education and relief aid.• Examples : CARE, Oxfam

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Faith based funders

• Usually support religious community or relief causes

• Examples : Catholic Agency for Overseas Development (CAFOD); Christian Aid; Church World Service (CWS).

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Government funding

• Local government• Provincial government • National Government eg Ministries of Health,

Education, Public Welfare, Arts & Culture.

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Community Foundations

• Established locally to raise funds for community projects

• Examples– Social Change Assistance Trust– Uthungulu Community Foundation

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Individual stakeholders

• Staff• Beneficiaries• Parents• Service Providers• Board• People who use facilities (sports, library,

medical)• Individual citizens

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Why do people give

• They have a relationship with the organisation.

• Nobody goes from no relationship to being a donor

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Building and maintaining relationships

• How connected are you with your beneficiaries and other stakeholders?

• Do you have an accurate data base?• How frequently do you communicate with

them?• Do they give?

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Annual Fund

• If well planned it serves as– The framework around which all other individual

giving is based.– A way to identify an important base of donor

support.

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Annual fund

• Develops relationships• Encourages philanthropy• Identifies new donors• Renews previous donors• Can upgrade existing

donors• Opens space for bequests• Assists with tracing• Forces institution to

repriortise annually.

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Annual Fund

Least cost-effective form of fundraising initially– Printing– Postage– Staff costs– Materials design– Response from

unsegmented donor base is small

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Annual Fund : Benefits over time

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Alumni Relations as part of Advancement

– Key stakeholders– The only constant– Research required– Most interactive group– Life long learning– Value of the degree– Connecting alumni to the

institution– Relationship building

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Role of Marketing and Communications

Visibility and voice critical to raising awareness, building trust and confidence, identifying potential support :•Voice : opinion•Visibility : marketing•Image building : Vice Chancellor, the institution, other leaders.

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Marketing as part of Advancement

• Attracting support– Image and positioning of the institution : what is

unique– Image of the Vice Chancellor– Views of the Vice Chancellor– Stories of the university– Strategic meetings with stakeholders : follow up– Alumni achievements– Information for fundraising : fact sheets– Annual reports – strategic list – needs you are meeting– Case for support

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Advancement : attracting support

– Have focussed on donors

– Need to focus on how an institution engages with the external environment to attract resources

– The basis for advancement – creating an investment climate

Thank you

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