Wealthy millennials explore venture philanthropy
Emily Brooke, a 30-year-old designer based in east London, had her first taste of success with the Laserlight, an energy-efficient cycle light that is being fitted to Santander Cycles — the so-called Boris Bikes — that tourists and casual riders hire to get round London.
Flushed with success, Brooke now wants to give back. She has signed up with the Founders Pledge, an organisation that enables budding tycoons to donate a percentage of their future earnings to good causes, once they sell or list their businesses.
Brooke has set strict conditions about how her money will be used if or when she cashes in on Blaze, the business she founded. Philanthropy, for her, is far from the stereotype of charity auctions or sponsoring the arts to gain social status. “My priority is seeing where my money goes and how it is spent,” she says. “My money needs to go to causes I choose, and I need to monitor its impact. I expect the sort of accountability I have shown my own investors.”
Brooke is not alone in expecting to see results from her donation. Many young people of her generation are not satisfied with giving for its own sake — nor even interested in gaining tax breaks — but are asking for more accountability in terms of the impact of their philanthropy.
For wealthy millennials, this “venture philanthropy”, as it has become known, has gained rapidly in appeal. By focusing on the impact of the donation, this form of giving involves the donor acting more like a venture capitalist, taking a seat on the board and seeking to cut costs and force organisations to run themselves more efficiently.
In 2013, the most recent year for which data are available, £166m of venture philanthropy grants, loans and investments were made in the UK, according to a report by Factary, a consultancy. This might have only represented 1 per cent of charitable giving in the country but was double the previous year’s total.
Yet while the “vast majority of philanthropy” still revolves around charity auctions and gala dinners, according to Tris Lumley, director of development at think-tank New Philanthropy Capital, “this trend of wanting to give to small projects where your money truly makes a difference and where its impact can be measured is growing fast”.
Among donors who earn £150,000 a year or more, according to NPC’s research, those aged 18-34 give the highest absolute amounts each year. But the notion of what it means to give has itself changed.
Wealthy millennial philanthropists “see previous generations as more motivated by a desire for recognition or social requirements, while they see themselves as focused on impact, first and foremost”, noted a 2013 report from the US-based Dorothy A Johnson Center for Philanthropy, an academic research unit. “They want impact they can see, and they want to know that their own involvement has contributed to that impact.”
Grégoire Imfeld advises wealthy families at Pictet, the Swiss bank. He has also seen how younger members of the dynasties he works with are more motivated by the impact of their giving than by any sense of social cachet.
“The trend of giving back has always been there, but it is how you give back which has evolved recently,” he says. “The next generation [of family leaders] is becoming a key driver of the ‘how’, and they are pushing us to really explore strategies that assist these clients with measuring the impact of their giving.”
Alex Depledge, who co-founded and has just sold Hassle, an online marketplace that matches householders with cleaners in their area, is an example of a budding philanthropist. She has supported various charities, including the Founders Pledge, since exiting her business but says she is working on a philanthropic project that she will run herself.
“I am trying to start an initiative to get children from underprivileged backgrounds into coding,” the 35-year-old says.
“We have a great dearth of digital literacy in this country; start-ups desperately need engineering talent, and at the same time there are talented kids from challenging backgrounds who don’t have prospects.”
Depledge, along with Blaze’s Brooke, also displays another characteristic of millennial givers in that she does not view philanthropy as a route to tax breaks. “It is just not an issue,” adds Brooke. “I would never be the sort of person who has an offshore account.”