We define philanthropy as the giving of resources in an engaged and strategic way for maximum impact and in a tax efficient manner. It can include the giving of money, assets, time, talent, voice and one’s social capital. We believe in the power of philanthropy as a great social connector and the source of many great opportunities.

City Philanthropy

A Wealth of Opportunity

Understanding Philanthropy: Its Meaning and Mission

Aug 6th 2014
Dr Michael Moody

What is philanthropy and why should we study it? Cheryl Chapman put these deceptively simple questions to Dr Michael Moody,  co-author of Understanding Philanthropy: Its Meaning and Mission.*

CC: Philanthropy is a term that is understood differently by different groups of people and used to explain a wide range of activities – how do you define philanthropy?

MM: Firstly the pluralism of philanthropy that we see today is a very positive thing. It’s positive because there is a lot of energy and innovation in philanthropy. People are pushing the boundaries. If we did the same things over the last 100 years we would have a whole lot more people who would do it for a short time and leave – they wouldn’t have staying power.  Though we have no research to prove it, we know anecdotally new people are attracted to this field once they see the interesting things going on and that does encourage more giving. People are engaged as avidly as they are because of the innovation and change that exists.

Where it gets us with the definition is it makes it all the more difficult to find a term that encompasses an incredibly diverse field of activity that varies widely from the informal, such as helping kids, to the very formal , such as large institutions engaged in building libraries, medical research or preserving historical buildings. You need a concept that encompasses the diverse field without arbitrarily lopping off pieces that don’t fit with your definition.

Having a concept is a way of marking what we believe to be philanthropic so we can have conversations about what happens on the margins. It doesn’t mean we need to say these concepts are rigid and the boundaries are steel. You have the concepts so you can observe the interesting cross boundary activity going on.

 In thinking about to what extent we need to include informal giving, such as carrying out an act like helping a person across the road, into that concept, it is useful to think about business. Philanthropy is an umbrella term to stand alongside business and government.  When we think about business we sometimes include very informal actions under that – there is an underground economy for example. Business is not only carried out by registered corporations involved in publicly regulated transactions. Similarly, informal acts of philanthropy should be included within the concept. In fact, some actions that started out informally, such as groups coming together in mutual aid or for friendship or other purposes, have developed to become formal philanthropic non-profit institutions such as the Lion’s Club in the US, or mutual insurance organisations. Where it starts to get confusing is when we are helping a neighbour or helping someone to whom we have a familial obligation.

But the point of having these terms is so we can understand where things exist in the margins. Having concepts, however fuzzy they are at the edges, helps us get a handle on this diversity.

In the book, we use Robert Payton’s definition of philanthropy which is ‘voluntary action for the public good’. We would identify three key aspects of that definition: it is affirmative –defined by what is positive about it, not what is negative as in the term ‘non-profit’ ; it is voluntary; and it is a moral act. By voluntary we mean done without coercion.  A philanthropic organisation cannot put you in jail or force you to pay taxes.  But that is not to say philanthropy is not without obligation, either from peers  - peer-pressure is the genius of fundraising - or because of holding an elite position – noblesse oblige.   

Talking about philanthropy as a moral act is tricky and can be open to misunderstanding.  People can think of being moral as having a sense of piety, correctness and being part of particular or rigid value system. But by moral we mean voluntarily intervening in someone’s life to create positive consequences for people. We mean it is done in service of some vision of what we believe to be the public good. Certainly government operates for the public good but not voluntarily or morally in the same way.

 CC: Do you make a distinction between charity and philanthropy?

MM: Over time charity has come to mean the side of the philanthropic universe that is about relieving suffering. Charity is a good broad term but it has a lot of historical baggage. It carries this notion of paternalism and judgmental friendly visiting by Victorian ladies. It has a strong negative connotation of people not wanting charity; there’s an implication that the receiver is supplicant and can’t take care of themselves and suggests the giver has power over them. I don’t know that it deserves all those connotations, and charity is still something we want to encourage in people. But as a term it has enough of that baggage to be less useful than philanthropy as a broad term.  In the book we talk about the common distinction between two general purposes: charity as alleviating suffering and philanthropy as improving the quality of life by developing systems.  You can generally fit everything we do into those two boxes, but ideally we would want philanthropy to encompass both.

CC: Is philanthropy always altruistic?

MM:I don’t think we need to identify an altruistic urge as a condition of saying philanthropy exists – in fact there is always a mix of motives. Philanthropy is done through a balance between altruism and egoism. We know we like the good feeling we get when we give and some people like to be publicly recognized for their giving. To say philanthropy is purely altruistic limits the field and denies what we know to be the reality of why people give. Because people are not totally altruistic, it does not make them not philanthropic. In fact, if we only recognised altruism the world of philanthropy would collapse. For me philanthropy is less about an in-built urge but about being a tradition built into each culture. The ways of being philanthropic are culture specific – they are learned and expressed in particular ways depending on the societies in which we grow up and is passed down through generations to become a philanthropic tradition.

CC: If philanthropy is as much about cultural environments as being an innate urge, can we promote philanthropy?

MM: Absolutely - both in terms of quantity and quality of philanthropy.  Because philanthropy is learned it can be encouraged in many, many ways. When Bill Gates and Warren Buffett decided to dedicate themselves to philanthropy after a certain point, that sent a strong signal to others that good fortune should be spread. It reinforced that value. Cultural modelling by public philanthropic projects such as the Giving Pledge is an important way to promote the quantity of giving. There is no way to know for sure if people at all levels of society are giving because they hear about the Giving Pledge signers. But Gates and Buffett recognised they had that role to spread philanthropy by showing the benefits of it working and the value it brought to them. In terms of promoting quality, current research is focussed on doing philanthropy better and more effectively. By sharing our success and failures we are learning together as a field how to increase our impact in a measurable way and how to spread that practice.

CC: We hear a lot about 21st century philanthropy; how would you define it?

MM: The key trend of philanthropy in the 21st century will be globalization, I think, and that is going to become an even stronger force, driven by philanthropists who are global citizens and who see the world beyond local need. Global communication is another major factor in extending the philanthropic reach and aims of the individual.

Looking into the crystal ball I see China as the philanthropic frontier for the next 100 years. There is significant wealth creation going on there. However, it is a country that does not have established institutions for philanthropy but it does have the cultural values. Giving or charitable activities are orientated to and through the family institution. I see family philanthropy on the vanguard and the primary piece of philanthropy over the next 100 years in China.

21st century philanthropy is also defined by the radical blurring of boundaries between philanthropy and business.  We have already seen that happening between government and philanthropy, working together through private public partnerships for example and ‘the middle way’ adopted by Clinton and Blair, that saw governments in the US and UK outsource delivery of services to the non-profit sector.

But we will see working between business and philanthropy and the adoption of business principles into philanthropy on a new level. Sustainability as a key part of philanthropic action is not new – we all know the well-worn adage about ‘teach a man to fish and you can feed him for a lifetime’.  Medieval Jewish philosopher and Rabbi Moses Maimonides describes the highest degree of the eight degrees of charity as one ‘who assists a poor person by providing him with a gift or a loan or by accepting him into a business partnership or by helping him find employment - in a word by putting him in a situation where he can dispense with other people's aid’.  The thinking is not new but the ways we do it through innovative philanthropy are developing.We have seen social enterprise and microfinance based on this principle of sustainability flourish in recent years. So instead of giving a hand-out you give a loan that pays for say a sewing machine and training that allows somebody to start a business and the money is repaid and recycled as new loans. That makes a lot of sense to a lot of people. We also know corporations are having to show their CSR credentials these days and many report on a double or triple bottom line measuring the social and environmental value they deliver.  I like the energy and the new blood that it brings into world of giving. But there is a real challenge. We do not know where it is going.  And we have already seen some business-based philanthropy develop in malevolent ways. Microfinance started as a better way to help the poor but has been used as a financial mechanism to make money out of the poor. We also have to be aware that philanthropy does not become a marketing ploy for unscrupulous players or become re-interpretated in a sloppy or ambiguous way.

That is why it is ever more important to continue to have critical, open conversations about the definition of philanthropy, how it differs from business and what the core reasons are for doing it.  We need to continually remind ourselves of the moral, ‘public-good’ nature of the concept.

Business and philanthropy working together to serve the public good and increase efficiency is a good thing, but it is open to misunderstanding and manipulation and we must be alive to that.

 CC: Should we then only pursue the most efficient philanthropy?

MM: No – of course there are times when helping someone who is down on their luck even if it isn’t the most efficient way is the morally right thing to do. I talk about these as ‘areas of moral clarity,’ a concept borrowed from Paul Farmer. There is a danger in defining philanthropy as only that which generates maximum measurable results.  But if you see someone drowning in a river you save them first and then ask questions about why so many people drown in the river. And it’s also through seeing others engaging in direct help that we experience philanthropy modelling. We might see our parents directly helping others and in that way the tradition of acting charitably is passed down.

CC: The study of philanthropy is a growing area. What value is there in studying philanthropy?

MM: Apart from studying ways to manage philanthropic organisations better  - the technical side – it is important to study and understand the conceptual side of philanthropy. It is only through thoughtful use of language that we can pass on what we know about philanthropy.  So if you ask somebody to justify why capitalism is a good or bad way to generate wealth, they can give you an understanding using language learned in school. Similarly they can explain different government systems – but we are not taught how to talk about philanthropy which is the third of the three important strands of public life. We understand cooking better than we understand philanthropy. Yet important traditions are only as good as the systems and learning process used to pass them on.

*This article first published in 2012.

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