5 common philanthropy myths
Isabelle Hayhoe, Senior Philanthropy Adviser, Barclays Private Bank
Please note: This article does not constitute advice.
If you have the resources and motivation to do so, supporting the causes you care about can be one of the greatest privileges of wealth.
But despite its ample rewards, modern philanthropy is surrounded by myths and misconceptions, and their collective ability to distract donors can be one of the biggest pitfalls on any giving journey. John D. Rockefeller called this “the difficult art of giving”1.
In some cases, these misconceptions could lead to a potential donor believing that they don’t fit the model of what a philanthropist ‘ought’ to be – perhaps because of their background, their resources or their motivations.
In this article, we explore the reality behind some of the more common misconceptions.
Myth 1: I don’t have enough wealth to get involved in philanthropy
True philanthropy is more than a simple act of charity. Charity can be described as the “uncomplicated benevolence that takes the form of a gift”2 and often involves alleviating the immediate suffering of those in distress. An example could be the outpouring of donations for those in the Ukraine in the aftermath of Russia’s invasion last year.
In contrast, philanthropy takes a strategic and forward-thinking view of these problems and seeks to address the underlying causes, resulting in lasting impact.
It can be easy to look at multi-million-pound gifts from the world’s best-known philanthropists and believe that you’re ill equipped to match their efforts. In reality, most non-profit organisations rely on smaller, regular donations for their survival. While mega, one-off donations are not to be sniffed at, it is regular, reliable income that allows charities to plan for the future with greater certainty. For instance, an ongoing supply of funds may allow a charity to commit to a substantial programme of activity – such as a youth education programme – that can make a longer-term difference.
Crucially, philanthropy is about far more than writing cheques. Consider the other resources that you have at your disposal. You may, for instance, be able to mobilise your network to raise a charity’s profile or facilitate introductions to others who can provide support.
Myth 2: Wealth holders intuitively understand what communities need
No matter how well-intentioned a donor’s motivations might be, it is very difficult to make a difference to vulnerable communities without first seeking their views, and acting on what those with lived experience tell you.
Trust-based philanthropy focuses on shifting the traditional balance of power between donors and recipients. Its goal is to ensure those with lived experience of an issue have a voice in determining the nature of the support they need.
One of the key characteristics of trust-based philanthropy is its focus on offering unrestricted funding. Under this model, the recipient of a donation has the power to decide on the most appropriate use of these funds.
Myth 3: Donating to large global organisations is always the best way to give
When you’re new to philanthropy, your first instinct may be to align yourself with high-profile international organisations, especially if their work is widely covered in the mainstream media.
Many of these organisations do invaluable work, particularly in bringing key issues to the world’s attention, and they may well align to your personal interests.
Furthermore, large humanitarian charities are often given access to disaster zones very quickly and can then deliver immediate aid as we saw in Ukraine last year.
However, it could be an error to discard a charity based on its size, and smaller local organisations on the ground can often have a more nuanced understanding of the issues. Many of their staff or volunteers may have experienced these struggles at first hand, or have connections to local communities and networks.
Funding these smaller charities, either in parallel with, or instead of donations to larger groups, could allow you to play a transformative role in their development and have a lasting impact in your cause area.
Myth 4: Charities with high expenses are careless with resources
There is commonly a belief that charities with low overheads provide greater benefit and efficiency than organisations with higher spending levels.
This is frequently not the case. While transparency on cost management is vital in building trust between donor and charity, a distorted picture risks being seen if higher costs are viewed in isolation. In fact, the majority of a charity’s overheads often relate to essential spending that allows it to carry out vital work, such as remunerating its employees or investing in necessary infrastructure.
Likewise, the kind of work a charity does may require extensive – and often costly – staff training, which is expensive but necessary. An example could be specialist training for staff who support patients with complex needs, or teach animals to assist those with disabilities.
When funding becomes dependent on a recipient being able to demonstrate that operational costs are low, some charities may feel compelled to underspend on key functions. Ultimately, this can compromise the quality of support provided to those in need.
Looking at a charity’s leadership style instead could provide greater insights into the value it delivers. The experience of its board members, the robustness of its financial position and reporting, or the relevance of its performance metrics, are areas commonly reviewed by donors.
Ask yourself this: Would you drive a car that hadn’t been designed and built by qualified engineers, rigorously safety checked, and made from the appropriate materials?
Myth 5: Setting up a charity is the most effective way to give
Creating a charity or foundation may instinctively feel like the best way to make an impact.
However, unless you’re working in an especially underfunded area, this could mean that you find yourself duplicating the efforts of existing charities, as well as spending considerable time and funding on administration.
In the UK, for example, there are approximately 170,0003 registered charities. Consider all the charities supporting people with cancer or those experiencing sight loss. Sadly, the sheer number of charities often means these organisations are competing with one another for vital funding.
A more effective approach could be to collaborate with those already making a difference in your field of interest. Donors who go down this route can then identify areas in which they may be able to share learning and pool resources.
Moving beyond the misconceptions
The term ‘philanthropy’ has its origins in two Greek words. The first is ‘philein’, which translates as ‘to love’, and the second is ‘anthropos’, meaning ‘humankind’. This is the essence of philanthropy – a demonstration of love for others.
For beginners and more experienced donors, the act of giving is a journey of discovery, evaluation and ongoing learning. In many cases, simply listening can be the key to seeing beyond myths surrounding philanthropy and understanding what communities really need.
In fact, philanthropy’s greatest reward often lies in collaborating with marginalised communities and implementing a plan that is truly fit for purpose.
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