Plea for a more effective philanthropy

Degroof Petercam - Marketing & Communication Specialist

'Philanthropy' means love for humanity and a commitment to better living conditions (and more recently the environment). There is therefore a desire for results, for progress, for the resolution of a problem.

"Knowing who to give to, how much, when, for what purpose and in what way, is not something that everyone can do, and is difficult. Therefore, the good use of money is rare, as much as it is praiseworthy and beautiful." ¹

Aristotle's words continue to guide the Degroof Petercam Foundation. Financial resources are a precious commodity, and many pressing issues need to be addressed. But how is that done most efficiently?

Strategic philanthropy

What do we want to accomplish with the donation? What problem are we going to address? And how? That's where strategic philanthropy makes a difference.

In 2016, the Degroof Petercam Foundation decided to move from a model of reactive philanthropy to a 'strategic' model in which donations are a means to address a societal challenge. The DPF Award was launched to annually endorse 1 organisation committed to employment, the chosen theme. The winner receives one million euros and enjoys support for 5 years.

At the end of 2023, the support of the first DPF Award laureate ended: DUO for a JOB, which was chosen for its excellent results in supporting job-seeking young people with a migration background.

Learning curve

The past few years have proved to be a good learning experience and a lesson in humility, thanks to the close relationship with grassroots organisations that we have worked alongside. Here are just a few of the things we've learned:

How do you bring about change? This requires a certain amount of power. Philanthropy is often described as a soft power that relies on two basic elements: capital and talented people who are well organised. If you want change, find the right people, allow them to be very well organised and give them the financial resources to make it happen. A foundation is, in short, like an army general sending an elite team to tackle a very complex problem. Organisations need to be able to find, keep and train the best talent.

It is possible to increase the value of your donation by giving several years in a row. Various organisations have already been made to understand that they should spend 20% of their budget on fundraising. For example: if a donor donates a value of 100, 20% of that is used to seek new donations the second year. If he decides to donate in 3 years, the value of this donation increases by 20x2 in fundraising savings.

The reasoning can be extended if the donor decides to donate a larger amount. The average acquisition cost is the same for large, medium and small donors. For example, finding and managing 2 donors who give 100 costs less than 4 philanthropists who give 50 each. A professional donor such as a foundation can significantly reduce these acquisition costs by concentrating more resources in one organisation.

Meeting donor requirements, such as preparing comprehensive reports, has a heavy financial impact. The Chemins d'avenirs association currently has a team of three people dealing with the 58 ongoing cooperation agreements. Consequently, you can easily increase the value of a donation by reducing reporting (or aligning with what already exists).

Associations need to be transparent, but it can also be balanced by greater trust on the part of donors. The funder can provide a space for reflection, help the charity take a step back and share observations, but one thing is certain: real expertise comes from the field. Sharing a coffee with those who are there every day will provide far more transparency than any Excel spreadsheet. Working with a small number of associations also gives us the time to get to know and understand each other.

Philanthropic money is venture capital. It is used to exploit areas where no one is active (yet). The challenges facing philanthropy are colossal. How can we tackle these problems with relatively small resources? There is sometimes a tendency to approach philanthropy like being a good housekeeper. But being conservative or overly cautious is arguably not the best approach for a philanthropist. Had David acted like a 'kind family man' against Goliath, it would have become his downfall. Instead, as a shrewd strategist, he used the resources at his disposal - a small stone - and succeeded in bringing down Goliath. The philanthropist, even if he has very modest resources, can succeed by aiming correctly. This is the very principle of strategic philanthropy.

Risk is inherent in philanthropy, because it is used to fund visionaries, innovations and failures in the system that are deemed too risky or not financially or electorally profitable enough. Chances are that the projects won't work. And if they do, that's where the philanthropist belongs. There is no such thing as short-term philanthropic success. It is this difficulty that also makes philanthropy so privileged: the ability to look beyond the delusion of the day and see what is really important to move forward.

Thinking ahead

Western tradition first introduced the figure of the philanthropist in the person of Prometheus, the titan who stole fire from Olympus to give it to mankind, which he wanted to save from the cruelty of the gods. It was a visionary act that, while it led to him being portrayed as a fool and tortured, also made him immortal.

Conclusion? Daring and trust are essential to philanthropy. From that point of view, Prometheus is an important role model as he perfectly defines what a philanthropist is and should be: "he who thinks ahead".

¹ Aristotle, The Ethica Nicomachea, Book 2, Chapter 9.

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The Degroof Petercam Foundation is keen to share its knowledge and experience of philanthropy gained in the field. Read more.

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