Philanthropic capital is risk capital – an attribute often overlooked amidst the race to secure measurable positive outcomes to report back to donors and boards. Philanthropy has always accepted investing for zero financial return and with the advent of Venture Philanthropy that mimics the principles of Venture Capital, can readily embrace and learn from failure. Indeed, perhaps the most powerful proposition of philanthropy is this ability to focus primarily on social impact rather than financial gain. In theory, this could drive innovation, radically new ways of thinking and experimental ways of finding new solutions to old problems. Unfortunately, this is rarely the case.
In a blog post on the OECD’s Development Matters blog, Clare Woodcraft, the CSP Executive Director, argues that COVID-19 has brought a timely reminder that risk and philanthropy should go hand in hand. Some have already risen to the challenge. The Bill and Melinda Gates Foundation, along with Wellcome and Mastercard, have set up a $125 million seed fund for the accelerated identification and development of treatments for coronavirus.
Beyond COVID-19, the UN’s 2030 Sustainable Development Goals could also potentially be accelerated if the trillions of dollars of philanthropic capital available were systematically pooled for innovation. The more pressing climate crisis could easily absorb large unrestricted philanthropic cash injections to test, prove and scale new green technology and turbo boost existing R&D. Calling on philanthropists to help create, iterate and accelerate solutions to the coronavirus crisis may not seem like an obvious policy strategy. But given the wealth of capital in the sector – growing rapidly due to the significant intergenerational wealth transfer in emerging markets – it could provide a metaphoric if not literal shot in the arm for fast tracking the beginning of the end of the crisis. It might also set new precedents for how future philanthropic capital can be deployed for real long-term system change.