3
Apr

Max Oliva, Associate Director of IE’s Social Impact Management
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The Economist has recently issued a survey of wealth and philanthropy which builds up on the idea of how this is increasingly being a concern to business men and how all sectors are getting involved, including business schools and in a very relevant way. From amateurism, the industry is moving towards business mindset and tools ranging from “social investing, social entrepreneurship and venture philanthropy to strategic market-conscious and knowledge -based content” in order to leverage the donors’ money. Here are synthesized some of the main ideas of the report. For a full view you must be a subscribed member of The Economist (Issued on February 25th, 2006) and can download it here
…Is the sector at a tipping point? Well, in America the number of charitable foundations has risen from 22,000 in the 80’s to more than 65,000 today, this according to The Center on Philanthropy at Indiana University. Moreover, charitable giving in the US rose by 5% in 2005 to a record high of $249 billion, which is more than 2% of their GDP. In Germany it has risen from 4,000 in 1997 to 13,000 now.
The business of giving certainly posts a great opportunity and responsibility for business schools, who can contribute and create value in a significant way.


First, it is important to note the difference between charity, which is about easing symptoms of distress and philanthropy, which is about investing in solutions to the underlying problems, as stated by Claire Gaudiani in “The Greater Good…”.
The article points out that the new enthusiasm in philanthropy is mainly consequence of the rapid wealth creation of recent years, going from 476 billionaires three years ago, to a record 793 this year according to Forbes Magazine.
“This is a historic moment in the evolution of philanthropy” says Katherine Fulton, co-author of the report “Looking out for the Future”. “If only 5-10% of the new billionaires are imaginative in their giving, they will transform philanthropy over the next 20 years.” However, philanthropy will have to diminish the amateurism which still is part of the industry and become a modern and efficient one.
Michael Porter states that “Billions are wasted on ineffective philanthropy” which is “decades behind business in applying rigorous thinking to the use of money” and continues to argue that the world of giving can be transformed by learning from the world of business. “there is a big opportunity over the next 20 years to figure out how to make philanthropy effective.”
Is the sector at a tipping point? Well, in America the number of charitable foundations has risen from 22,000 in the 80’s to more than 65,000 today, this according to The Center on Philanthropy at Indiana University. Moreover, charitable giving in the US rose by 5% in 2005 to a record high of $249 billion, which is more than 2% of their GDP. In Germany it has risen from 4,000 in 1997 to 13,000 now.
The business of giving certainly posts a great opportunity and responsibility for business schools, who can contribute and create value in a significant way.

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