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Philanthropy’s New Role in Social Change

With 44 of the 50 states facing looming budget deficits this year (1), state spending and priority discussions are reaching fever-pitch. In Missouri, legislators may trim state spending by 15% – 25%, and the social programs they’re eying are enough to tug at heartstrings. Advocates in areas like higher education or disability services may find much to criticize about the Hobson’s choices the legislature contends with this year.

State budget cuts, however, are only an insurmountable problem if we are shortsighted enough to think that only government can fix our problems. State-run services are only one way that Missourians meet the needs of our communities. Philanthropy and charitable giving levels increased substantially in 2006 (3), and charitable giving levels in the last decade have tended not to decline nearly as sharply as household incomes during economic downturns (4). Most importantly, perhaps, U.S. charitable giving as a percentage of GDP is more than two times as high as its closest competitor, the United Kingdom (5).

One significant aspect of philanthropy is its ability to adapt to a changing ecology of needs, influences, political and social factors, and even to shortcomings within the philanthropic community. One new trend and buzzword in the world of charity is Venture philanthropy, or philanthrocapitalism, a model that takes practices and principles of venture capitalism and applies them to philanthropy as a way to increase effectiveness (6).

Venture philanthropy is characterized by experimentation, a deeper level of interaction between donor and recipient, and a stringent focus on measuring progress. Many examples of Venture philanthropy also target structural changes, targeting the roots of harmful trends to ideally create a ripple that will multiply the effect of a gift.

As Missouri tackles a constrained budget, legislators would be wise to take stock of existing philanthropic endeavors in the state not just to get an idea of the levels of service that exist outside of government institutions, but also to observe “best practices” and how philanthropy has been able to itself adjust to the economic downturn and social or cultural changes.

For example:

LiveFeed is a St. Louis grassroots organization that uses the local music scene as a forum for raising funds for two local food pantries, Operation Food Search and Food Outreach. Through events with a built-in following and the support of local bands, LiveFeed educates audiences about hunger issues in St. Louis and raises dough while rocking out.

The Monsanto Fund and The Donald Danforth Plant Science Center are two examples of how the Missouri biotech industry has changed the face of philanthropy in Missouri to pair the advances in biotechnology to target nutritional, environmental and global hunger and development needs. In addition to helping to make Missouri an attractive destination for new biotechnology business, it targets the causes of hunger and malnutrition instead of the symptoms.

The Today and Tomorrow Educational Foundation has given over $20 million in scholarship assistance to low-income families who want to attend St. Louis area Catholic schools but lack the means. The St. Louis Public Schools’ loss of accreditation has made these scholarships even more helpful for St. Louis city families who traditionally have not had educational choices. Missouri’s charter schools have also taken on the conundrum of meeting the vast array of learning needs without the cost. Many Charters focus on students who are not well-served by their local public schools: some target students who have dropped out, students with disabilities and students who would like to focus on a particular career path.

Microfinancing Partners in Africa serves as a conduit between the St. Louis community and existing microfinancing programs that offer small loans that allow impoverished Africans to build self-sustaining businesses. Microfinancing’s innovative and effective method of combating poverty has made it a buzzword with the socially conscious. Rather than re-create a microfinancing organization, MPA helps connect donations with micro-lenders that provide a certain level of involvement such as insurance, business training and health service, as well as helping communities get connected with microfinancing organizations.

Most, if not all state or federal government programs have their counterpart in the charitable sphere. The flexibility that philanthropic work provides to measure success, provide research and respond with agility to changes is something that state governments typically can’t accomplish. Perhaps Missouri’s biggest challenge in this economy is not how to meet all the needs of every Missourian, but how to foster the community of giving and innovation that is also working toward that goal.