Philanthropists urged to look at the bigger picture

Experts say funding systems change could be the big shift the philanthropic sector needs 

Philanthropists having a better understanding of the systems they are pumping money into will see a “giant leap” in the social impact the sector can have, new research finds.  

A new report from The Australian Centre for Social Innovation, supported by Perpetual, the Paul Ramsay Foundation and Dusseldorp Forum, found that philanthropists needed to examine why they were funding certain projects and what impact it would actually have.  

Cat Fay, the general manager of community and social investment at Perpetual, told Pro Bono News that a lot of philanthropists and foundations probably weren’t aware they were effecting systems change. 

“Every time they put money into an organisation, they’re funding a system, and so it’s really important to have some sort of understanding of the impact of your approach to philanthropy and what that does to the system you’re attempting to influence or shift,” Fay said. 

“Understanding that the approach you take to your philanthropy can influence the system that you’re trying to engage with in a positive way, but also a negative way is really important.”  

“Systems” are defined in the report as organisations organised for a common purpose, such as education, local economic development or substance use, and systems change involves shifting the conditions that hold problems in place. 

The report said this could include changing policy, practices, resource flows, relationships, power dynamics, and mental models.

The report criticised the more traditional forms of philanthropy, such as short-term, discrete investments that sustained existing systems rather than transforming them into something different. 

Fay said those short-term approaches didn’t always work in addressing “wicked problems”.  

“That tied funding isn’t necessarily the best way for them to go about shifting the system that they are trying to influence,” she said.  

“If we look at our practice and whether or not the way we go about philanthropy is actually impacting how those organisations are having an impact within their communities, we might see the beginnings of some really significant shifts in change.” 

She noted an important learning from the report was that philanthropists needed to redefine who the experts were when it came to how vulnerable communities and individuals were funded. 

“The experts are the communities themselves, so how do we create a space in philanthropy that enables the voices of the communities that we’re attempting to support to be heard,” she said 

While the authors state it is not a “how-to”, the report does contain tools to encourage conversations with people’s teams, boards and grantees on how their organisations could align with their ambitions to create major change. 

Fay said it was important the philanthropic community took on board what was said in the report, as it had the potential to push the sector forward in a monumental way. 

“If we think about our practice of philanthropy and how that influences systems, we’re taking potentially one of the giant leaps forward that is required as a sector to actually start having the kind of impact that we’ve been aiming to have,” she said. 

Download a full copy of the report here.