New Frontiers of Philanthropy

With the resources of both governments and traditional philanthropy barely growing or in decline, yet the problems of poverty, ill-health and environmental degradation ballooning daily, it is increasingly clear that new models for financing and promoting social and environmental objectives have become urgently needed. Fortunately, however, a significant revolution appears to be underway in the way in which social and environmental purposes are being financed. The heart of this revolution is a massive explosion in the instruments and institutions being deployed to mobilize private resources in support of social and environmental objectives. Where earlier such support was limited to charitable gifts, now a bewildering array of new instruments and institutions has surfaced-loans, loan guarantees, private equity, barter arrangements, social stock exchanges, bonds, secondary markets, investment funds, and many more-all of them designed to leverage not just the tens of billions of dollars of philanthropic grants but the hundreds of billions, indeed trillions, of dollars of private investment capital. While the changes under way are inspiring and by no means trivial, however, they remain largely uncharted in any systematic fashion. This monograph, and of the companion volume for which it also serves as the introductory chapter, is designed to overcome this problem, to provide the first comprehensible and accessible roadmap to the full range of important new developments taking place on the frontiers of philanthropy and social investment. In the process, it seeks to broaden awareness of these developments, increase their credence and traction, and make it possible to maximize the benefits they can generate while acknowledging the limitations and challenges they also face. "Lester Salamon's insightful identification and scholarly analysis of a hitherto invisible revolution underway on the frontiers of philanthropy and social investing is possibly the most exciting and fresh lens we have had to date with which to look at an important set of new developments in the social-purpose arena that up to this point have largely been neglected. Salamon's work should help usher in a new era of social-purpose finance, the end result of which may be new alliances among foundations, governments, and the managers of private investment capital to leverage substantial new resources into efforts to solve problems of poverty, ill-health, and environmental degradation the world over. New Frontiers of Philanthropy is truly cutting edge research that should be read and disseminated widely." --Gerry Salole, Chief Executive, European Foundation Centre "The past 25 years have seen dramatic changes in the field, and practice, of charitable giving. The next 25 years promise even further change-and at a more rapid pace. New Frontiers of Philanthropy is the book that will best help practitioners and observers in the public, private, and nonprofit sectors understand, in detail, how the current dramatic changes in the financing of social-purpose activities will fully play out." --Doug Bauer, Executive Director, The Clark Foundation, and former Senior Vice President, Rockefeller Philanthropy Advisers "Philanthropy today is changing radically. A new breed of donors is emerging that wants to leverage its resources to change the status quo. They think of themselves as social investors and operate like entrepreneurs, tapping new financial resources and assembling complex financing packages. With New Frontiers of Philanthropy, Lester Salamon has given us the resource we need to understand this changing face of philanthropy and social investment. It is a superbly articulated effort drawing on Salamon's experience as a researcher and visionary andTABLE OF CONTENTS ; List of Illustrations ; Acknowledgements ; Foreword ; William Dietel ; Preface ; Mario Morino ; Directory of Participants ; PART 1: INTRODUCTION ; 1. The Revolution on the Frontiers of Philanthropy: An Introduction ; Lester M. Salamon ; PART 2: NEW ACTORS ; 2. Capital Aggregators ; Lisa Richter ; 3. Secondary Markets ; David J. Erickson ; 4. Social and Environmental Exchanges ; Durreen Shahnaz, Robert Kraybill, and Lester M. Salamon ; 5. Foundations as <"Philanthropic Banks>" ; Lester M. Salamon and William Burckart ; 6. Enterprise Brokers ; Lisa Hagerman and David Wood ; 7. Capacity Builders and Venture Philanthropy ; Melinda T. Tuan ; 8. Online Portals and Exchanges ; Vince Stehle ; 9. Corporate-Originated Charitable Funds ; Rick Cohen ; 10. Funding Collaboratives ; Angela M. Eikenberry and Jessica Bearman ; PART 3: NEW TOOLS ; 11. Overview: The New Tools of <"Philanthropy>" ; Luther Ragin ; 12. Loans, Loan Guarantees, and Credit Enhancements ; Norah McVeigh and Julia Sass Rubin ; 13. Fixed-Income Securities ; Shari Berenbach and Elise Balboni ; 14. Securitization ; Mary Tingerthal ; 15. Private Equity Investments ; Monica Brand and John Kohler ; 16. Social Impact Bonds/Pay-for-Success ; Drew von Glahn and Caroline Whistler ; 17. Insurance ; Craig Churchill and Lauren Peterson ; 18. Socially Responsible Investing and Purchasing ; Steve Lydenberg and Katie Grace ; 19. Grants ; Peter Frumkin ; PART 4: CROSS-CUTTING ISSUES ; 20. Who Gains, Who Loses? Distributional Impacts of the New Philanthropic Marketplace ; Part A: Mike Edwards ; Part B: Matthew Bishop and Michael Green ; 21. The Demand Side of the Philanthropic Marketplace ; Alex Nicholls and Rodney Schwartz ; 22. The Elusive Quest for Impact: The Evolving Practice of Social Impact Measurement ; Brian Trelstad ; 23. The New Frontiers of Philanthropy in Global Perspective ; Maximilian Martin ; 24. Creating a More Enabling Environment: A Policy Agenda for the New Frontiers of Philanthropy ; Shirley Sagawa ; Glossary of Terms ; Bibliography ; Index