Types of Philanthropy

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There are many different ways to be a philanthropist and the style or approach to philanthropy is a very individual one. In recent years, the study and practice of philanthropy has grown rapidly and there is now a great deal of literature, and supporting professionals, which deal with various options. Here are just a few of the different approaches available to philanthropists. Most philanthropists adopt one or even more of these approaches when giving in order to maximize impact.

  • Unconditional donations to non-profits/community-based organizations.
  • Usually an upfront assessment of the project with little follow up.

  • Grants usually with conditions attached to non-profits.
  • Based on assignment usually with trustees or board with set criteria.
  • Some follow up with report submitted. Grant-making philanthropy.

  • Similar to grant-making but selection criteria lines up against a clear strategy and theory of change.
  • Clearly articulated outcomes and impact expected with M&E processes.

  • Philanthropist sets up entity to run charitable programs of their own (Foundation).
  • Foundation channels money exclusively to the implementing non-profit or will directly support a non-profit to run programmes.
  • Rarely, if any, grants to outside organizations

  • Particular driving vision to establish a “bricks and mortar”,capital project legacy.
  • Completion of project marks the end of relationship (Building a school/hospital)

  • Applying principles and techniques of entrepreneurship to address social development issues.
  • Directly engaged with the execution of programs (intensive hands on management).

  • Soft loans to social development orgs (non-profit or for profit).
  • Patient capital with longer repayment time and lower interest rates.
  • Ability to repay loan and interest is often a key consideration.

  • Applying principles and techniques of venture capitalists to address social development issues.
  • High engagement approach to improving the performance of social change org with finance and other non-financial resources, such as business management skills.
  • Full M&E procedures undertaken.

  • Similar to venture philanthropy whereby the philanthropist seeks to build and grow an org over the long terms by investing in the capabilities of the org, not just individual projects.
  • Full M&E procedures undertaken
  • The investor can look for both social and financial returns.

  • Philanthropist makes an investment into a for-profit/ non-profit/ NGO, with a clear expectation of a financial return as well a social or environmental benefit or “return”.

  • Similar to impact investing the emphasis is on the investment the philanthropist makes, with the expectation of a return.
  • The return is measured by an improvement in some social or environmental issue.
  • There may also be a financial return, usually below market rate.
  • This definition helps to differentiate the “social investor” from a “normal” investor

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