Philanthropy’s Social Compact in a Changing World

Study

Trust in philanthropy is eroding. This has led to heightened scrutiny and critique of the philanthropic sector by the public, politicians and commentators. The question for philanthropies now is how to react and remedy these perceptions.

By Donzelina Barroso and Olga Tarasov, Rockefeller Philanthropy Advisors

Trust in philanthropy is eroding.

Widening inequality is contributing to public fears and anxiety about the roles various types of institutions play in public life – be they philanthropy, government, business or academia. For the philanthropic sector specifically, many people question the degree of influence individual and institutional philanthropists have over the public sphere, simply by virtue of having large endowments. In some quarters, there is a sense that wealthy individuals “game the system”, including through their charitable works, further contributing to a sense of mistrust.

This has led to heightened scrutiny and critique of the philanthropic sector by the public, politicians and commentators. The question for philanthropies now is how to react and remedy these perceptions. To date, few institutions have formulated their responses in a strategic way since many of the critiques are recent. Yet most philanthropies around the world recognise the need to demonstrate some degree of accountability and become more inclusive.

At the heart of this debate is the social compact: an organisation’s license to operate or its agreement with society about what public good or value it creates.

At the heart of this debate is the social compact: an organisation’s license to operate or its agreement with society about what public good or value it creates. The social compact encompasses concepts such as accountability, legitimacy, transparency and public trust. It also reflects shifting notions of how philanthropies view their role in society, demonstrate value, express accountability and interact with stakeholders.

In our recent report, “Social Compact in a Changing World. How Philanthropies are Grappling with Growing Scrutiny and Critique”, we explore: (i) the response of private philanthropy to the rising tide of scrutiny; (ii) how foundations have reviewed and revisited their social compact as a result; and (iii) strategies foundations have adopted over time to become more responsive and accountable in fulfilling social compact.

Some of the strategies foundations may follow include:

1. Align

Strive for internal clarity and a common understanding of the social compact, including the foundation’s role in society, targets of accountability, sources and arbiters of legitimacy and the public good the foundation serves.

2. Communicate

Develop a robust external communications strategy to relay to the public what the foundation does, why it does it and who and how is engaged in decision-making and how they are engaged. This can include demonstrating successes, lessons gleaned from failures, grantmaking transparency, peer learning and community outreach across a spectrum of platforms.

3. Listen

Build genuine feedback loops that enable input, participation and representation of communities served in decision-making and support a consultative method of programme design. Listening to communities makes it easier to identify needs, increase the effectiveness of programmes and enhance trust.

4. Demonstrate

Demonstrate how feedback loops and consultative engagement have helped to enhance and fine-tune the foundation’s focus areas, initiatives, grantmaking and strategies to show a genuine commitment to and positive effect of these approaches.

5. Research

Conduct regular landscape research to measure the temperature and public attitude toward the foundation’s work and philanthropy generally, in order to adjust strategies and act based on evidence.

6. Reflect and Assess

Assess internal operations and external work regularly against a set of indicators that measure effectiveness, impact or progress. It is important to openly share and discuss the results internally among staff and externally with grantees, partners and other stakeholders to devise effective next steps.

7. Broaden Representation

Broaden board representation, as well as that of stakeholders who provide inputs into programme strategy and design, in order to reflect interests and viewpoints of different sectors, including private, public, nonprofit, grantees and issues area experts.

As the examples and insights we have gathered show, donors have numerous opportunities to become more proactive in responding to those that seek to delegitimise philanthropy’s role in society. Building on some of the best practices outlined in this report, private philanthropy can take specific actions to better demonstrate legitimacy, show how it benefits the public good and inspire deeper levels of trust. This will ultimately lead to a better use of society’s precious philanthropic dollars for the greater public good.

Donzelina Barroso, Director, Global Philanthropy, Rockefeller Philanthropy Advisors

Donzie launched Rockefeller Philanthropy Advisors’ London office in early 2017 and leads Rockefeller Philanthropy Advisors’ European advisory work. She has more than a decade of experience in international grantmaking and project management at Rockefeller Philanthropy Advisors.

Olga Tarasov, Director, Knowledge Development, Rockefeller Philanthropy Advisors

Olga leads Rockefeller Philanthropy Advisors’ knowledge development efforts, overseeing and advancing research, publications, and both internal and external programs to advance Rockefeller Philanthropy Advisors’ role as a thought leader in the philanthropic space. She also leads major thought leadership programmes.