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Spring 2012: Why does philanthropy matter?

From the Editor

As guest editors of the Spring 2011 edition of Knowledge Connect on Philanthropy: Impact over Intentions, Paul Flatau and Elena Douglas at CSI (UWA) examined the emergence of a generation of philanthropists who value impact and effectiveness over intentions. They looked at the principal global forces guiding these changes and how that was impacting Australian philanthropy.

In the then Federal Government’s 2005 Giving Australia: Research on Philanthropy in Australia, it was estimated that a total of $11 billion of money, goods and services were donated to not-for-profit organisations. The $11 billion is made up of: $7.7 billion from individuals and $3.3 billion from businesses.

While the report did identify planned giving as a separate category (but with very little data) it was not considered significant enough for quantification.

Philanthropy, therefore, is a comparatively small slice of the total giving pie compared with individual giving. It is positively tiny compared to government funding of the non-profit sector.

Why then does philanthropy have such prominence? Why do we care?

For many it is because it is money not subject to shareholders or the ballot box. With it, organisations can be entrepreneurial and investors have a high tolerance for risk. It is money that can be directed to the new, the innovative, and in some cases, the unpopular.

For others, it is not just the ‘power of the purse’ but the various forms of influence that come with it. It gives the ability to connect people and organisations across silos, borders, geographies, cultures, sectors and spectrums to build powerful networks and coalitions to effect change.

As Marcos Kisil, Institute for Development and Social Investment in Brazil, cautions: “High Net Worth Individuals are not only economically powerful, they are also influential in the political and social life of the countries where they live and made their original fortunes. Their actions and attitudes and the use they make of their wealth are followed by the media. In some ways they can serve as a beacon for good, and unhappily for bad.”

As governments around the world face increasing financial stress, they withdraw funding from civil society organisations. Increasingly philanthropy, which crosses social, economic, and public policy sectors, that are having greater influence in addressing the most challenging of our social and environmental issues.

In this edition of Knowledge Connect we look at why philanthropy matters and review the different views on the issues of power, influence and accountability – the very issues that the philanthropy sector itself finds the most challenging.

Gina Anderson

Guest Editor, Knowledge Connect

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