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Doing Better More Efficiently: Measuring and Enhancing Philanthropic Vitality

The philanthropic sector is currently facing a paradox. Countries and local communities around the world need more philanthropic engagement than ever. And yet, this engagement is also increasingly questioned. With increasing wealth gaps, perceptions grow that all institutions, including foundations (and their donors), knowingly or not, help maintain the systems that create inequitable outcomes by favoring the status quo. Thus, wealth and its power over influence and action are seen as both sources of and threats to social progress.

To help the sector become more effective, we at FSG’s Geneva office were invited to participate in a collaborative, cross-sector initiative focused on what we all decided to call “philanthropic vitality.” Fondation Lombard Odier as the incubator of this study, as well as the members of the project’s Steering Committee, asked ourselves if we could think of the philanthropic sector itself as a system that created the conditions for individual philanthropists or foundations to have more relevant and equitable impact. Inspired by countless “competitiveness” studies focused on economic activity, we were asked if we could identify which sector conditions most affected philanthropic effectiveness and whether such conditions could be measured as a basis for a collective effort to improve the philanthropic field’s impact overall.

Two major factors led the Steering Committee to choose the Geneva region, comprising the Swiss cantons of Geneva and Vaud, as the focus for the study. First, the region is home to 2,500 foundations, a global center of private wealth management, and a hub of global solidarity, hosting nearly 500 international development organizations and NGOs. Second, cross-system partners were excited to move forward on this scale, using their local environment as a way to pilot the new methodology. Led by Geneva-based Fondation Lombard Odier, the corporate foundation of financial group Lombard Odier, funders, local government and supervisory authorities, universities, foundation associations, and a variety of sector intermediaries from umbrella foundations (a philanthropic entity somewhat similar to a donor-advised fund) to law and philanthropic advisory firms joined hands to push the sector forward.

In collaboration with the Steering Committee, we combed through literature, weighed measurement options with experts, and identified 22 indicators of sector vitality that could be measured both quantitatively and qualitatively through perception and public opinion surveys. These indicators range from foundations’ online presences to policy incentives for new philanthropic giving. These indicators sit under six categories, which our research confirmed underpin philanthropic effectiveness: public trust; a supportive regulatory context; the level of philanthropic capital (human and financial); the maturity of accountability practices (including transparency on activities and stakeholder inclusion); the capacity of intermediaries (fabric of supportive services); and a dynamic field of collaboration.

So what did the project uncover? At a high level, we found a system of philanthropy in the region that has most of the necessary foundations for effective philanthropy (we called it the “hardware”), from strong public trust to a generally positive regulatory context and significant financial capital. However, the conditions that enable the translation of these assets into effectiveness and social impact are weaker. The sector’s human capital is low in skills and diversity, and more investment is needed in transparency and accountability.

Informed by over 180 recommendations sourced through a stakeholder perception survey, six major development pathways were prioritized by the cross-sector champions, each associated with expected timing and potential lead actors. These include boosting the field’s communication capacity, the online presence of foundations and their public reporting; accelerating the growth of umbrella and territorial foundations; growing the education capacity of university centers and foundation associations to help evolve the composition of boards and staff; and aligning regulatory practices across local states and institutions.

While the study was based on a specific philanthropic system in Switzerland, our collective experience working with foundations around the world tells us that the insights from this study have important lessons for foundations based elsewhere in Europe, Asia, and the U.S. You can view the full vitality assessment and future roadmap for change at www.philanthropic-vitality.ch.

Marc Pfitzer

Managing Director