Generosity and philanthropy can lessen SA’s economic pain

As the South African economy is expected to shrink this year by no less than 4 percent due to the Covid-19 pandemic, aggravated by its initial precarious pre-virus economic position, there has been suggestions that capital from generosity or giving by those with money could play a vital role to fill the big gap.

Nobody doubts that the country would be crawling down economically by the end of the year unless new sources of funding were found. That’s exactly what United Kingdom-based Cambridge University’s new Centre for Strategic Philanthropy is contemplating as it will examine the role of philanthropy in fighting Covid-19 in South Africa, and helping to bridge the annual funding gap of $2.5 trillion to meet the SDGs by 2030.

According to Gerrit Schmidt III of Schmidt Family Office Stellenbosch, and co-founder of Philanthropy Indaba, available data supports that an estimated $30 trillion will shift globally to millennials in the great wealth transfer over the next few decades. Following the shift in business purpose as a global trend, Schmidt said that we are now entering “the business of caring”, which he describes as a new era where businesses and business families will be expected to increase their engagement with philanthropy.

Schmidt believes that this will drive an increase in philanthropy capital being injected into South Africa by citizens and foreigners with an interest in the upliftment of the South African economy, favouring areas of systemic impact such as education, infrastructure and energy. He seeks to provide practical knowledge for businesses and individuals to convert their philanthropic intent.

Philanthropy Indaba, in collaboration with the Institute of Futures Research at Stellenbosch University, has created a practical guide for philanthropy and CSR called “III Method”. This method was specifically designed for the developing third world and is now being supported by local charitable trusts and oversees foundations to fund projects in South Africa. This method is also being used to explore impact investment opportunities with leading asset managers to effectively drive economic upliftment fuelled by the shift in business purpose.

The Centre for Strategic Philanthropy, established at the Cambridge Judge Business School, is dedicated to examining strategic philanthropy in South Africa. It maintained that philanthropic capital can play an important role in addressing this need, both on its own and in combination with other sources of funding.

Its first research projects, expected to be completed in Autumn 2020, was examining responses to the Covid-19 pandemic by philanthropists and foundations in South Africa and other high-growth markets. Specifically, the study would consider whether there has been a measurable shift in focus and investment towards specific geographies (e.g. low-income countries) and towards specific sectors (e.g. healthcare) in response to the pandemic.

Professor Christoph Loch, director of the Cambridge Judge Business School, said: “We are seeing an explosion of wealth generation that is creating philanthropists who can, and will, reject the norms of the past. Through the work of the Centre for Strategic Philanthropy at Cambridge Judge Business School, we will be examining how we capture this diversity while also engaging with philanthropists from the target regions to support them in maximising their impact.”

The centre would undertake rigorous research and executive education, and then convene a diverse group of stakeholders that would serve as catalysts to unveil the impact of philanthropy in South Africa. Through doing this, the centre aims to become the leading hub of actionable knowledge to catalyse and measure the impact of philanthropy in South Africa.

The centre will also work with relevant institutions and practitioners in SA and the region in order to encourage collaboration and the sharing of knowledge and insights.

The initiators of the process consider the fact that the country has an existing culture of giving borne out of the famous African ubuntu or humanity, an old tradition that moved from generation to generation. Individual and business citizens often make giving a way of life to share their wealth created as family inheritance, investment or business profit.

This not surprising because Nedbank Private Wealth’s Giving Report showed that 83% of South Africa’s high-net-worth individuals donated time, money or goods in 2018.

This came at an opportune time when all predictions, including that by National Treasury, indicate that the country’s economy would be under severe strin, with the highest debt levels for many years as a result of Covid-19. Just prior to the virus breaking out, it was in an ongoing recession that some believed could turn into a depression within no time. Even the mere hope of recovering from the recession were dashed when South Africa was forced to borrow from the IMF and the World Bank to fund the battle against Covid-19 and keep public service running.

Data from the centre quoted an S&P Global Ratings forecast which indicated that South Africa’s economy will shrink by 4.5% this year, while the World Bank warns coronavirus will push more than one million South Africans into extreme poverty. The UN’s trade and development agency, UNCTAD, predicts that a $2.5 trillion rescue package is needed for the world’s emerging economies as a result of the pandemic.

The centre’s advocates of philanthropic capital power are optimistic about what this effort could achieve on its own but says with a combination of other funding sources, it is something that South Africa needs if it is not to further drown in debt.

Badr Jafar, founding patron of the Centre for Strategic Philanthropy, believes that the resources are there but just needed to be tapped into.

“Today, well over a trillion dollars of private philanthropic capital, more than triple the annual global development and humanitarian aid budgets combined, is deployed every single year. The evidence is also overwhelming that South Africa and the world’s other emerging economies are becoming an increasingly powerful source of philanthropic capital and social innovation,” Jafar said.

With the impending generational transition taking place around the world, it is crucial to properly understand the diverse approaches to philanthropy that exist in these markets, and the local and regional factors that have shaped them.

“Transparency, technology and evolving attitudes toward wealth are reshaping donors’ approaches to giving worldwide. We will likely fail to address the myriad of challenges on the global agenda over the next decade without making a much greater effort to connect, exchange ideas and partner with strategic philanthropists from South Africa and the world’s fastest growing regions,” he said.

Vice-chancellor of the University of Cambridge, Professor Stephen J. Toope, said: “Our planet faces growing challenges. Climate change – threats to water and food supplies, threats to our ecology and biodiversity – growing political division, war and infectious disease.

“Global philanthropic capital must be used effectively and for maximum impact to improve our society, and the Centre for Strategic Philanthropy is very well-positioned to champion these efforts.”

In its research, the centre would look at historical trends and the output of philanthropic investments, and also assess the nature of interventions that bring about systemic sustainable change. It would offer executive education to current and aspiring philanthropists and practitioners, with a focus on the importance of local social, economic and cultural dynamics.

They also plan to offer bespoke experiential workshops and explore the creation of a philanthropy accelerator to scale the impact of new philanthropic projects and organisations within high-growth markets.

A diverse array of voices would be roped into the project such as academics, philanthropists, civil society, business and government leaders to discuss optimal models and practices in philanthropy. The centre will also convene an annual Philanthropy Summit to showcase new approaches in philanthropy, and host International Policy Roundtables in cities across high-growth markets.

Dr Kamal Munir, the centre’s academic director, said: “The centre will aim to bridge the gap between academics and practitioners in philanthropy. We hope to be able to offset the significant dearth of research in this field and help improve the transformational impact that philanthropy can achieve, when at its most creative.”

The centre’s other research projects that are under way include a comprehensive analysis of existing research related to philanthropy in the world’s high-growth markets to understand what is already known on the subject, and a practical needs assessment being conducted in direct consultation with philanthropic practitioners, academics and other stakeholders on the ground in the world’s fastest growing regions.

ericn@citizen.co.za

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