Opinion: In a time of multiple crises and societal fragmentation, what roles can philanthropy play?

Introduction by Croakey: Just a few weeks after the release of a Productivity Commission report making recommendations for how to boost philanthropic giving, more than 1,000 people gathered on Kaurna Country in Adelaide earlier this month for the Philanthropy Australia conference.

Maree Sidey, CEO of Philanthropy Australia, told participants that philanthropy had been behind some of the most significant forces for positive change in this country – from marriage equality, to gun control, abortion rights, welfare reform, sustainable housing, gambling reform, and to supporting the climate movement and self determination.

She challenged stakeholders to acknowledge that philanthropy, by its very nature is also an outcome of wealth and privilege, and that the sector sits at the heart of the tension “of the biggest ever gap between the haves and have nots”.

She cited Warren Miller, a proud Wirangu and Kokatha man from South Australia, who had told her recently, “Our people were the first philanthropists… and you white fellas have spent the last 65,000 years catching up”.

“I have spent a lot of time reflecting on those words coming into this role  – and the powerful re-framing it offers for how we think about giving in this country,” she said.

The conference discussions are timely for the health sector, report two of the participants, Professor Pat McGorry, Executive Director of Orygen, and Stephen May, Director of Fundraising at Orygen.

Pat McGorry and Stephen May write:

Australia has witnessed an enormous surge in wealth over the past two decades and at the same time a dramatic increase in wealth inequality and intergenerational inequality.

For example, the wealth of the richest 200 people in Australia has more than tripled in the past two decades, from 8.4 percent of Australia’s GDP in 2004 to 23.7 percent of GDP in 2024, with the top fifth of households holding wealth 146 times greater than the bottom fifth, according to research released last week by the Australia Institute.

At the same time, we are experiencing a cost of living crisis, a climate crisis, a youth mental health crisis, a housing crisis and a general fragmentation of our critical public services in health, education and social services, and arguably society as a whole.

Our medical research institutes and a whole range of NGOs across the health and social sectors and the arts and culture sector are finding it much more difficult to attract donors, especially donors of the right kind.

In medical research, it is well known and deeply problematic that the major funding bodies, notably the National Health and Medical Research Council and the Medical Research Future Fund, do not fund the full costs of research.

Universities can only sustain their research programs through cross subsidising them from teaching revenue and the latter is now contracting. Most medical research institutes and Universities are running deficits.

The role of the philanthropic sector is therefore more crucial than ever.

However, it has moved to funding projects with increasingly tight management and “paying by results”, rather than providing the essential core funding to catalyse innovation, cover infrastructure and sustainability, and fill the hole created by the under-funding of government research bodies.

This can be seen as signalling a shift from traditional trust philanthropy and an intrusion of corporate or commercial culture and operational models into a world where the outcomes are oriented towards social good.

Civil society matters

It was in this context that the Australian philanthropic sector came together recently in Adelaide for the Philanthropy Australia annual conference, said to be the first outside of Sydney or Melbourne and yet the largest so far with over 1,000 participants.

The overarching theme of the conference was “shifting perspective, shifting practice”.

The conference was opened by the South Australian Premier, Peter Malinauskas, in an inspiring address in which he characterised the challenges facing us as in large part a consequence of the “Great Fragmentation” of society wrought by current economic and social policies, which can be seen as based on the “invisible” economic doctrine of neoliberalism that has dominated the world in recent decades.

He was followed by the newly minted CEO of Philanthropy Australia, the impressive Maree Sidey, who challenged attendees to consider the need to build deep and meaningful partnerships to rebuild a robust civil society.

This theme was reinforced in sessions focused on “moonshot philanthropy”, “trust philanthropy” and accelerating impact at scale through multi-year, multi-faceted philanthropic partnerships. These latter themes were attuned to the structural problems outlined above.

Sidey also proposed that the need for change was urgent and that philanthropy “should not merely be a pastime for the privileged: it is a vital component of a strong democracy and a crucial force for social good”.

This message – that growing giving from all sources is critical to fostering a thriving civil society – came through in sessions around community giving and giving circles as tools to mobilise local giving to support local communities.

Sidey’s final message was around the imperative for change in the practice of philanthropy due to the urgency of the issues faced by society as outlined above.

Key themes that were particularly relevant to the health sector, especially medical research and health reform, included:

• Moonshot philanthropy
• Trust philanthropy
• Impact investing and other innovative ways to unlock philanthropic capital
• The importance of reporting on impact
• The pay what it takes movement (which means that the full cost of supporting the project for an organisation is covered with a grant and no short changing occurs).

Moonshot

James Chen, Chair of The Chen Yet-Sen Family Foundation, spoke about his journey to provide “vision for everyone”, accelerating affordable eye care for all – a ten-year journey to address the lack of accessible eye care throughout developing countries around the world.

He provided an example of “moonshot philanthropy”, which calls upon high-net-worth individuals to invest capital, time, expertise into high-risk early-stage innovations to achieve global impact.

James Chen challenged Australian philanthropists, suggesting that they were too risk averse to achieve real change and suggested that long-term, high-risk capital was required to build a “launchpad not just the rocket”.

His underlying message was that philanthropy’s freedom to take risks is its superpower.

Moonshot philanthropy is key for major reforms and building new fields and requires a different  risk appetite with the capacity to value failures along the way. To succeed in any long term, overarching significant mission, failures are not only inevitable but essential stepping stones and learning experiences.

The moonshot paradigm also assumes, as with all moonshot missions (Mazzucato 2023) that the funding and technical knowledge to reach the end goal will be secured and developed along the way. The lack of certainty about these elements is not allowed to prevent a commitment to the moonshot.

There are some wonderful examples of this approach which are successful or on the road to success, including our own work in building the new field of youth mental health globally, which was powerfully catalysed until recently by the Colonial Foundation.

Too few philanthropists have this vision to commit, partner without micromanagement and generally trust the team or organisation to reach their goal. There needs to be more of these funders or coalitions of funders, and they can even begin and pass the baton to others along the way, because these types of moonshots typically take several decades, not short term, three to five-year cycles.

Trust philanthropy

Safeena Husain from Educate Girls – an Indian non-profit working towards empowering communities for girls’ education in some of India’s hardest to reach villages – spoke about the role trust philanthropy had played in allowing her organisation to scale their work over 14 years to support over 1.9 million underprivileged girls to complete their education.

Throughout this time Educate Girls has had a small group of philanthropic partners, including Mindaroo, that have provided long-term, flexible multi-year philanthropic capital that has allowed them to scale their impact.

Safeena Hussein’s core message was that this trust philanthropy had provided them the ability to move to “solve problems rather than just deliver projects”.

Both James Chen and Safeena Hussain reinforced the importance of building partnerships between NGOs and funders, and the importance of partnerships “staying the distance” through building trust, transparency and communication to deliver on the shared vision.

Andy Bryant, Executive Director of the Segal Family Foundation, spoke about the Foundation’s work in Africa and the role of local partners to achieve the Foundation’s aims. The Foundation provides more than $18M a year to address significant issues in developing African nations and works with a network of over 300 local organisations.

Bryant outlined the principles of Trust Philanthropy that guides the Foundation’s giving.

Impact investing

A number of sessions focused on impact investing and other innovative models to unlock philanthropic capital sitting in endowment funds. The sessions explored how philanthropists could better utilise the 95 percent of their capital, currently ringfenced by private ancillary funds (PAFs), to deliver impact.

Although impact investing as a concept has been around for some years, there is recognition that most non-profits can’t deliver a financial return on capital and therefore new and innovative ways to access these funds could deliver significantly greater impact than the five percent currently contributed by most PAFs.

Consistent with the Productivity Commission’s inquiry into philanthropy, there was an extensive theme exploring First Nations people and philanthropy.

Further to CEO Maree Sidey’s observations about increasing participation in giving, the question of the role of First Nations people as both participants and recipients of philanthropy was explored. A clear message was communicated that philanthropic engagement with First Nations people should be built around partnerships.

Barriers to effective partnerships were explored, including the question of whether philanthropists had obtained their wealth at the detriment of First Nations people and how philanthropy could align to the values and interests of Aboriginal and Torres Strait Islander organisations.

This issue was brought into focus through a powerful presentation by the CEO of The Wyatt Trust, Stacey Thomas, who outlined the Trust’s journey of Truth Telling that has examined the Trust’s Founder, William Wyatt’s time in the new colony of South Australia and his interactions and influence on the lives of Aboriginal peoples.

Pay what it takes

The final theme came from a group calling themselves the “pay what it takes” movement.

A number of high profile philanthropists and philanthropic organisations, including the Paul Ramsay Foundation, have recognised that non profits’ work includes indirect costs that typically are not funded by donors, placing them at significant operational risk.

This movement aims to educate the philanthropic community on the importance of funding all costs associated with a project or program and to raise awareness of the significant financial burden that comes with underfunding.

The tendency of many funders to underfund this aspect and yet to tie recipients into tight and constraining contracts with very specific deliverables, stressing the need for accountability, works against this principle, limits creativity and innovation and threatens sustainability.

A final highlight was the session with Minister Amanda Rishworth and Paul Ramsay Foundation CEO Kristy Muir, which revealed the Minister’s perspective on how the philanthropic sector and government should work together.

While the executives of the major philanthropic organisations in Australia attended the conference in large numbers, it was noteworthy that few high net worth individuals did so.

It would be important in future to see these individuals become more directly involved in expanding this sector and reforming its approach to solving Australia’s and the world’s crises and challenges.

Re-produced with permission. First published in Croakey Health Media.