Venture Philanthropy

The enthusiasm for philanthropy grows thanks to rapid wealth accummulation. Richest American entrepreneurs are among the biggest donors. But it is not only the US who is a nursery of philanthropists; also in Europe wealthy businessmen increasingly give money to charity. For example, Bodyshop founder Anita Roddick, or the head of the French investment fund Arpad Busson. However, in continental Europe there is a tradition of anonymous giving, and not just to avoid the prying eyes of tax collectors – thus less data on these noble individuals. India’s new rich are becoming committed philanthropists too; Chinese and Russian tycoons follow them closely. For example, Roman Abramovich, Russian oligarch, has invested millions in improving the living conditions in Kamchatka.

However, compared with the state’s social benefits, donations are everywhere in the world tiny. In America, for example, spending for social security reaches 18 percent of GDP, while in the UK as much as 28 percent. Donations, however, in developed countries range from 1.85% of GDP in the US to 0.11% in Italy. This all suggests that philanthropists find it difficult to achieve real change with their money.

Philanthropists’ objective is not mere giving money for noble causes; to them it is also important whether the money is spent effectively. It is clear that philanthropy has for decades been running behind entrepreneurship when effective spending is in question.

In the next twenty years the world of donations could be transformed by learning from entrepreneurs. Many new donors, aware that traditional philanthropy is not entrepreneurial enough, would gladly manage donations as profit companies do.

Philanthropists now talk about socially responsible businesses, venture philanthropy, social investment. This gave rise to a new approach to philanthropy – strategic, market-oriented, based on knowledge, which aims to increase performance. This is especially important to donors, because they know that no matter the size of their personal wealth, they are dwarfed by the amount of assets available to the state, thus they promote projects that may involve their companies and their local communities. To really achieve something, it is necessary that their donations focus on the problems not addressed by a government or a profit organization. For example, they can venture into finding pioneering new solutions which could then be applied by governments and profit companies.

A corporate philanthropy trend of is also significant. Companies donate in two ways: by giving money and providing goods and services. In any case, companies nowadays work more in order to justify philanthropy on strategic grounds. Corporate philanthropy is becoming particularly important in developing countries, where companies feel the need to support local authorities with their contribution to health care, education, youth, etc.

Europska zaklada za filantropiju i društveni razvoj je korisnica financijske podrške Nacionalne zaklade u okviru Razvojne suradnje u području razvoja filantropije i zakladništva u Republici Hrvatskoj.