Increasing professionalism: the role of trustee companies in philanthropy

It has been expressed to me on more than one occasion that philanthropy is becoming too professional. I work in the sector, so I try not to take it personally but I think it is time to pick apart the debate a little. We’ve previously tackled on this blog the delicate balance that good philanthropic grantmaking must attempt to strike: a warm heart and a cold eye. There have been a number of good posts and speeches about the nature of philanthropy and the belief that altruism is unique and embedded within human nature. There are also the economists of this world and other theorists who believe altruism, like all other human behaviours, is incentivised and can be moulded into form.

It appears the nonprofit sector, with the exception of a couple of amateur sporting codes (Gaelic football comes to mind), is the final domain of debate around whether increased professionalism diminishes rather than increases the value of a sector. Does increased professionalism, and the development and employment costs it carries, remove much needed funding from the service coal face, or ultimately help to deliver more while building efficiencies?

With relation to professionalism within philanthropy I hear two main complaints:

  1. There are a lot of people making a lot of money out of spruiking the value of professional organised philanthropy and/or;
  2. Philanthropy has lost its benevolent heart and is no longer organic or enjoyable.  In short, it’s become work rather than play.

The question of philanthropy profiteering is more often than not pointed in one direction – trustee companies. With the enormous growth in private ancillary funds and the governance arrangements they carry there is suddenly money to be made in giving away money. Of the 5,000 or so estimated trusts and foundations in Australia more than half are thought to be held within trustee companies.  These pots of funding are held outside of the public view and are managed and coupled with investment and other financial services. To the cynical, trustee company philanthropy is perceived as tax-break grantmaking and the philanthropic services they offer is viewed as being muddled up with, and merely ancillary to, the bigger bucks of the financial services game.

Equally, those who lament the loss of the benevolent heart of philanthropy are genuinely fearful that philanthropy is the latest victim of fads and bureaucracies that add little value and ultimately deter people from giving. In the world of strategic grantmaking, venture philanthropy, philanhrocapitalism and engaged philanthropy, the concern is that the joy of giving has been lost and with it, potential philanthropists.

It would surprise some detractors perhaps to learn that despite concerns around profiteering and the loss of the joy of philanthropy, it appears that financial advisers and trustee companies might actually be playing an important role in both attracting people to and educating people about philanthropy.  A report from the Queensland University of Technology, Foundations for Giving: why and how Australians structure their philanthropy, documents responses from 40 people involved in structured, formalised philanthropy.  Virtually all respondents indicated that advisers and other intermediaries played some role in their philanthropy and the views expressed were generally positive.  In fact, the negative views expressed by respondents around advisers seems to suggest a greater level of expertise in philanthropy and skills in grantmaking would be preferable.

Philanthropy is and always will be a ‘people’s’ game.  Its about people being inspired by other people.  Its about people trusting and believing in other people.  Most of all it is about people wanting to create better lives and communities for others. It is hard to imagine that the heart of philanthropy will be lost simply through increased professionalism. In fact there is mounting evidence to suggest that the opposite may actually be true. Some of Australia’s trustee companies are driving not only increased professionalism within philanthropy, but also a greater diversity in practices and approaches to grantmaking. Some of our most vocal proponents for greater levels of giving among Australia’s wealthy, increased investment in organizational capacity support and improved engagement and evaluation of grantmaking approaches, are coming from within the trustee company sector. The gags many individual philanthropists are compelled to wear when talking about their philanthropy are less evident within adviser circles.

Good trustee companies will be passionate about their philanthropy and the approaches available to their clients.  Poor trustee companies will see philanthropic services as ancillary, and more than likely will charge a hefty price for the pleasure. As is the case with all services, donors should shop around, the cream of the crop will quickly become evident.

The professionalism that trustee companies bring to client services is beginning to have an impact on philanthropy as it is delivered in Australia.  It’s a diversity that the sector absolutely needs.  More choice for donors and potential philanthropists is important as is greater debate on grantmaking approaches and philosophies.

You can follow the musings of Caitriona Fay via @cat_fay on twitter and the eggs via @3eggphil


6 Comments on “Increasing professionalism: the role of trustee companies in philanthropy”

  1. Wendy Scaife says:

    Agree with your points, Catriona. The nonprofit sector has also been challenged for becoming too slick and businesslike. The key seem to be that caring and professional are not polar opposites – in the nonprofit and philanthropic sectors we have to operate with both qualities. We also have to grow what we do sensibly and if that means more professionalism and more professionals – all the better for the hefty outcomes our organisations are working to achieve.

    • Caitriona Fay says:

      Thanks Wendy, couldn’t agree more. Congrats on the Foundations for Giving Report, it provides some wonderful insights.

  2. Wendy Scaife says:

    Thanks Catriona – will pass that onto the team and hope some of the terrific interviewees who contributed these insights will also read your comment :).

  3. How Matters says:

    From my perspective within the international aid and philanthropy sectors, we certainly need the “cold eye” (although more often I feel it should be turned toward ourselves rather than the partners). I agree that too much can be lost in the abstraction and over-technicalization of this work. When the needs of institutions, donors, and shareholders overshadow needs of grassroots initiatives, local groups and visionary leaders, we have gone too far. And that is for every actor on the stage to consider, regardless of their role or position.

    Let’s make sure we are not intellectualizing real people’s lives and work to uphold and unleash the “horizontal philanthropy” already at work within communities. You can read more here:
    Wilkinson-Maposa, S. & Fowler, A. (2009). The poor philanthropist I-IV: How and why the poor help each other. Cape Town: Southern Africa-United States Center for Leadership and Public Values. http://www.impactalliance.org/ev_en.php?ID=14913_201&ID2=DO_TOPIC

    • Caitriona Fay says:

      Great point re: where that cold eye needs to be directed. It’s particularly pertinent when we consider issues of reporting or evaluation, sometimes the why and to what end is lost within ‘compliance’. Funders who understand the strengths they bring to the table while also knowing when to step back are, in my opinion, the most impressive.

      Thanks for sharing the poor philanthropist research.

  4. oliviadjones says:

    Interesting take on this issue from the BRW last month on the need for charities to be more businesslike in our approach (see ‘Charities Mean Business’ 12th April 2012 http://www.brw.com.au/p/sections/fyi/charities_mean_business_c4BsrP70dWzMPCUNW3SxkK?hl)

    It is definitely a balance between the two arguments. Surely we can only grow philanthropy in Australia as an alternative funding source if we are more professional about our approach, but without letting that replace relationships with our donors that are at the core of what we do. It’s exciting that we can draw from experiences around the world in this area, as well as our own, to take the sector culturally to an ideal.


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