Elaine Smith

An extra day making a longer February sounds especially good and prosperous in the Year of the Dragon. I’ve learned a lot during the 2012 Family Philanthropy Conference, organized by the Council of Foundations that took place on 13-15 February in Miami. As a first-timer at the event, my focus was directed to learn about ‘family philanthropy’ and where it could differ from ‘corporate philanthropy’.

My interest in those differences lies in the fact that in Brazil most family philanthropy derives from a corporation of family business. The reason for this is that Brazil is a relatively new country, with its private wealth being created in the latest 50 years; families only recently diversified their social investments and foundations from arts and culture to dedicate more resources to education, environment, community and the fight against poverty, among other important themes.

Having been created from a corporate philanthropy background, the local family philanthropy is extremely concerned with results. One of the tradeoffs of this approach is that the more we study how to measure social investment results, the more we get stuck in between the objectiveness of the metrics and the subjectiveness of what social result really means. Probably the main struggle is to define the timing for the return of the social investment.

As a simplified example, if the area of interest is education and the donor is investing in a specific project such as changing the curriculum of science and maths, or how to speed up the learning pace for students with special needs, given poor nutrition… what is the timeline to evaluate this social investment? Rule of thumb is 10 years. But if the chosen theme is infrastructure in slums or other remote areas (since Brazil has continental dimensions), should we take it that as soon as installations of water and sewage are in place, we have a result? I just loved this TEDx video of David Damberger’s testimony on his experience in just assuming that results (or success) are easy to quantify, as one should expect them to be just after installation of water to poor communities. This applies everywhere – it doesn’t matter if you are in Africa, Brazil or a G7 country in the northern hemisphere .

Professional advisors have an important role in helping donors to understand that social investment returns or results should be addressed in several different aspects. It is very inspiring to go to a conference in Miami where donors’ families have sometimes over a century of history. While in Brazil we are talking about the creation or further development of what it is locally called the third sector (first sector is the government and second sector is related to private corporations), social investors and professionals like me go to the US to learn best practices from their history of success and learning (ie failure) experiences. Local families are looking at this century of experience in trying to do better in their social organizations, despite the goal and mission differences between the countries.

The great part of this is that the collaboration possibilities between the developed and the underdeveloped (we are not talking about economy here, we are talking about philanthropy development) have a wide avenue to start their path. International social investors, together with the worldwide next generation of donors, philanthropists and social professionals, are willing to show their curiosity to create and innovate in this segment. And we are constantly reminded that philanthropy as we know it currently requires: 1) a revision of the stewardship principles; 2) engagement of the next generation; and 3) to map out next steps in starting the discussion about sustainability among family members or corporations and its clients.

On the investment side, 2012 is starting less bearish, despite concerns over inflation reemerging, geopolitical disruptions and possible bond disappointments. Technology continues its trend, emerging countries ascend and China is fine. So if the world is back in a less bumpy road, one should expect that social investments and continuity are also back on track. Dilemmas should now be over where to invest, not if we should decide on reducing or cutting those social investments.

New innovation themes such as impact investing and socially responsible investing are appearing more and more in discussions of portfolio constructions of not-only-socially related investments. Traditional money managers are looking for the heart of their clients, and clients are responding by being willing to take responsibility for their role hoping for a better world. Companies see social media as way to connect with future clients – the so-called Generation Y, or perhaps getting closer to the Generation Z already. These are the generations challenging the status quo.

Everyone is taking strategic positions to take action and the willing is in place. We should expect wonders from this positive movement.

Elaine Smith is development manager at Instituto Geração.