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James Chen

Philanthropy ventures where Charity cannot

19 August 2019

Philanthropy and charity are often viewed as interchangeable terms. While both are firmly associated with the act of giving wealth in order to achieve a positive impact, the conflation between the two overlooks a key difference. It is vital to demarcate this difference clearly, in order to understand how, in many cases, philanthropy is capable of achieving more tangible and sustainable change and on a far greater scale, than charity can.

The analogy commonly employed in differentiating the two is that charity is donating money which will provide bottles of clean drinking water to a remote village in need. Philanthropy would be the process of engaging with the expertise and strategy needed to implement a permanent, sustainable water supply, and investing in an informed manner to enable progress towards this solution.

When it comes to charitable organisations, unfortunately they are beholden to legal regulations, red-tape and bureaucracy which works to constrain a lot of their well-intentioned actions. Private philanthropy doesn’t face this problem – quite the opposite in fact. Due to the amount of capital philanthropists have access to, they can often take risks with their investments, giving them a larger amount of freedom to experiment.

Philanthropists are also in a unique position where they are able to both privatise failure and socialise success. They are able to use their unique ability to absorb losses and the consequences of failure to invest in a way that de-risks speculative and disruptive concepts and give them an opportunity which could lead to the genuine breakthroughs in tackling global issues from poor vision to equal access to education. Another term for this is catalytic philanthropy.

The Bill and Melinda Gates Foundation is undoubtedly one of the most famous examples of a successful philanthropic foundation. In 2018, their foundation partnered with mosquito engineering company Oxitec, to enable them to develop a male mosquito that would kill off future generations of specimens carrying malaria – demonstrating the cutting-edge ideas private philanthropy can take a gamble on, and the long-term perspective these solutions often require.

Significant steps in development, from the creation of new technology to developments in healthcare, have relied on private philanthropists. Research carried out by Bridgespan (the non-profit affiliate of Bain Consulting) found that 15 of the most successful, world-changing social impact initiatives in the past century, including 911 emergency services, tobacco control, and polio eradication, were enabled by philanthropists.

As a keen proponent of catalytic philanthropy, I have dedicated the past twenty years to tackling the world’s largest unmet disability: poor vision. Where a charity would have been unable, I could take risks on new ventures in this area. This has ranged from co-founding an adjustable power lens technology company in Adlens to founding the charity Vision for a Nation, which partnered with the Rwandan Ministry of Health, resulting in over 2.5 million Rwandans receiving a vision screening and establishing its primary eye care system along with seeding promising initiatives in research, advocacy along with products and services towards solving the problem.

I do not intend to dismiss and rebuke charity in favour of philanthropy. With their concepts clearly defined, it is possible to see how a mutually beneficial relationship between the two processes to support government and civil society can emerge. Charitable donations can be used to provide the immediate relief often needed within communities while philanthropic capital seeds the solutions to societal and global challenges through loss-absorbing capital with a long-term perspective.

We must ensure that these two concepts and their implications to society and social development are clearly debated and understood. The proper role of regulatory oversight, tax relief and accountability are all legitimate, and overdue, public policy concerns. But the dynamic progress enabled by the risk taking capital of catalytic philanthropy, offered uniquely by the ultra high net worth community needs to be nurtured and encouraged within the current public policy debate lest the “baby gets thrown out with the bathwater”.