Impacting investing: trends, issues and capabilities
Since 2007, compelling evidence has steadily emerged that not only are inequality and global climate change growing in intensity, but also these two phenomena are metastasizing into systemic threats to our well-being and that of our children and children’s children. However, there is little evidence that the majority of private donors (of all income levels), charities and advisors constituting the philanthropy community – whose publicly understood mission, after all, is to help society tackle its most pressing problems – as yet feel compelled to reorient their efforts and resources towards addressing what are probably the two most serious societal issues the world faces. In this commentary I explore select lines of thinking and action that could help the philanthropy community complement its well-intentioned but complacent pursuit of its preferred litany of social ills and take on the more pervasively disruptive challenges of inequality and climate change.
Be Worried, Be Very Worried. There has been a 60% increase in income inequality, as measured by the GINI co-efficient, between 1979 and 2012; average wage rates for low income families in 2012 were below those in 2000 (and have stagnated for almost all workers since 2005); and, the net property wealth of the bottom half of all UK wage earners has been reduced to near zero. While there are 470,000 Brits with annual pre-tax incomes above £100,000, there are 10 million earning a poverty wage of less than £15,000 per year – with the growth in future earnings of the former group expected to easily outpace the latter over the next decade. [i]
Global data and scientific consensus suggest that the threat climate change poses to the well-being of the entire planet, is growing unabated.[ii] We appear irrevocably headed towards causing a global temperature rise more than 2° Celsius above 1995 levels (the rise so far is about 0.8° Celsius) and towards cumulatively pumping more than 565 Gigatons of CO2 into the atmosphere (we are now past the 50% mark) within the next few decades. There is global political and scientific consensus that, if we exceed them, irreversible and massively disruptive immediate and longer-term environment related damage to our physical, economic and social infrastructure will inevitably be triggered. The bad news is that the environmental damage our current patterns of consumption have already caused, well before reaching the no turning back point, is way beyond what was expected.[iii] It is this accelerated intensification of the impacts of climate change that is now leading climate authorities, such as NASA scientist James Hansen, the planet's most prominent climatologist, to emphatically argue that the accepted global limits on temperature rise and CO2 emissions are “actually a prescription for long-term disaster.” Though the negative human impacts of climate change in both rich and poor countries will be felt by people of all income levels, they are invariably borne more intensively by the poorer, more vulnerable, segments of the population – whether it is nomadic farmers in the Sahel, or the lower income enclaves that are growing rapidly in tidal and coastal cities and communities in Europe and North America.[iv]
Climate change is now a genuine, systemic threat to the long-term well-being of the entire population. We cannot marshal the same empirical case that inequality will inevitably move from being a warning of the potential for social and political turmoil to become a cause of genuine havoc to the established order. Yet it is clearly a driver in the recent political and social tumult in Italy, Spain, Ireland and Greece. Do we really need to wait for a popular uprising to brand current levels and trends in inequality a systemic, long term threat to well-being in the UK? This threat is already real for many. For example, 30% of children born to low income families in the last five years are expected to be poor all their lives and four out five wage earners in low income families will experience sustained unemployment sometime in their working lives; youth and long term unemployment are at record levels and expected to stay there. Even the “squeezed middle class” has suffered deep erosion in living standards (lower now than in 1995), with their household earnings forecast not to return to pre-recession levels for 15 years. As these depressing prospects about the future sink in and take root, average workers/households could well increasingly abandon hopes of achieving even the basic accoutrements of decent living standards in the future such as home ownership, reasonable levels of disposable income and expectations their children will be better off than they. The destabilizing potential (let alone the human and economic cost) of this situation should not be underestimated. Awareness of this future dimension of current inequality in the UK explains why concerns about “fairness” will increasingly permeate public debate about the future direction and management of our economy and society – a debate that cannot but at some point turn to the tax treatment and overall patterns of performance and effectiveness of Britain’s philanthropists and charities.[v]
So why don’t we care? In contrast to the sharply edged, degenerative changes in our economic and environmental context over the last five to eight years, the UK giving public (at all income levels) and most of our institutional philanthropies have hardly altered their charitable inclinations. According to the National Centre for Voluntary Organisastions (NCVO) in its most recent survey of giving trends in the UK, since 2004/05 the distribution of overall donations across causes has remained relatively stable: inequality/poverty and climate change consistently attract well below 10% of all giving over that entire period. We have resolutely shown no inclination to substantively reallocate our charitable giving and social action away from the plethora of diverse good causes we typically support towards tackling the systemic threats to our well-being posed by rising inequality and intensifying climate change.
Yet as a community that has voluntarily donned the mantle of champion of the most vulnerable, righter of wrongs and protector of what’s good, the Philanthropy (Impact) community, whatever else we care about, should have a keen personal and professional interest in figuring out what more can be done to get all those concerned about public welfare to work together, and at scale, to solve the present and future threat posed to us all by the intensification of inequality and climate change. The strategic question is how to bring about this sea change in attitude and action.
More and better information does not seem to be the answer. As demonstrated by various public opinion polls such as the regular Guardian/ICM polls, a sizeable share of the UK public is well aware of the perils of climate change and the injustices associated with inequality and are supportive of doing much more, as a society, to address both of these challenges. We just seem to not want to act decisively on such instincts as individuals. More morality inspired exhortation and suasion are not likely to work either as proven by the decades-long failure of rich country based, “hair shirt” environmentalists pleading our children’s and the planet’s case for definitive personal action to halt climate change, and the disappointing experience of the last three or four years of largely government-funded arm twisting of the UK public to simply GIVE MORE (to any good cause) suggests.
Change the focus of the dialogue and the nature of the proposition To get movement of charitable resource and effort allocation on the scale demanded by the seriousness of our inequality and climate change nemeses, we need to change entirely the focus of the “investment” or social change proposition made to UK private donors whilst also reconfiguring the nature of the outcomes we are seeking. One step towards this goal is to make more real, immediate and positive the prospect that by working together we can make a difference to those of most immediate concern – our families, friends, colleagues and communities – by focusing on the fact that the impacts of these two large-scale, systemic threats in fact are usually most manifest within communities of which we are all a member. The efforts and experience of select civil society actors working with a community orientation/focus could point to a compelling alternative narrative that could secure significant new engagement by the UK philanthropy community in tackling inequality and climate change.
The two-pronged starting point for our discussion is first that the equitable effectiveness of community-led approaches to social change is very well proven but only a very small minority of UK philanthropists and charities operate within that framework. And second, the evolved form of community-based analysis and intervention being pioneered by those advancing an “adaptive” approach to achieving “community resilience” are now generating compelling evidence that community-led social change should be much more broadly embraced by UK philanthropists and their advisers and the charities they support.[vi] Critically, the notion of building resilient and adaptive communities emphasizes the need to collectively build, as a matter of course, self-sustaining economic, social, cultural and physical infrastructure and capacities. This means an adaptive community resilience framework is especially well suited to coping with the potentially transformative and disruptive challenges posed by inequality and climate change.
The path-breaking work on adaptive community resilience by some UK and US based actors[vii] is producing new constructs and new practice that massively broadens the applicability and social value of community resilience approaches beyond the narrow goal of how best to prepare for and survive sudden-onset physical and terrorist based disaster to tackling generic social policy and community development issues as well as the systemic challenges posed by inequality and climate change.
From this perspective, the most important insights and empirical evidence of positive outcomes/success emerging from the still evolving, but now internationally diverse, set of actors advancing adaptive community resilience fall under a number of related headings:
- Resilient communities actively contribute to the ability of individuals and households to grow out of vulnerability and overcome adversity. The evidence is growing from that when community resilience is present and individual members can engage, both the incidence and intensity of a whole panoply of individual and household-afflicting social problems is much lower than average AND a significant percentage of community members regularly graduate onto trajectories of sustainably improving living standards and well-being that take them permanently out of harm’s way.
- Adaptive community resilience can be created and continually strengthened – from any starting point. From those still relatively few situations where there have been planned (and subsequently documented) interventions to build a community’s adaptive resilience capacities, it is clear this can be accomplished and a process of sustainable, continuous improvement embedded in the way the community manages itself. It is not just a matter of donors and stakeholders coming together to try to collectively solve intransigent social problems on behalf of the vulnerable (or help them survive disasters) but that all external and internal stakeholders collectively engage in a continuous process of investment in and improvement of forward-looking, social value creating mechanisms that will help its members permanently escape vulnerability.[viii]
- The elements of community resilience and the ways in which individuals and households interact with these need to be understood and strengthened from a systemic and holistic viewpoint. The conceptual and analytical work being done under the umbrella of “adaptive community resilience” has impressively enhanced our understanding and the prospects for developing appropriate, effective and sustainable interventions. The work of the Young Foundation UK in developing its WARM (Well-Being and Resilience Measurement) tool for helping communities and supporters understand their underlying needs and capacities within an adaptive community resilience framework is particularly notable in this regard. This holistic map of key resilience elements shows resilience is made up of a number of durable and flexible cultural, educational, physical, financial and social resources whose strengthening needs to be the focus of collective investment by all stakeholders.[ix]
- Community “ownership” and leadership is the key to success. It is now widely understood that community “ownership” and leadership is absolutely critical to success for any interventions designed to help a given population. We know that:
- where local ownership of change processes exists, the appropriateness of interventions to real local needs is enhanced and thus their ultimate cost effectiveness is greatly improved;
- community members will invest their own resources in the change effort, to a much greater extent than when externally controlled and fully funded “solutions” are imposed and, more importantly, they will be prepared to do all they can to achieve sustainable long term success;
- this response often brings forth additional investment and support from local businesses (and local subsidiaries of national/international private sector actors) and better off households, which expands the social change resources available;
- the size and character of the local social change “market” is also significantly expanded so that scale economies kick-in and other avenues of leverage are unlocked, such as beyond-local, social media conveyed “crowdsourcing” and “sharing economy innovations” and the creation of viable local capacities and mechanisms for influencing local and national policy.
A new way to roll the dice….
This framework for advancing “adaptive community resilience” adds up to a new engagement platform and a new outlook proposition for encouraging the philanthropy community to step up significantly its commitment to tackling inequality and climate change. It is a framework that is focused on investing alongside local communities and committed stakeholders in taking practical steps to solve problems that matter to all of us.
It advances a positive, essentially business-based case for solving major social problems by collective risk-sharing, value-adding investments in communities with which the public as donors and philanthropists as (likely impact or social) investors have strong connections. There would be good prospects that such support could be channelled into the launch (and eventually diffusion) of a sustainable business model for moving vulnerable communities permanently out of harm’s way and improving the sustainability of the communities in which we reside.
What is on offer is not just a bundle of unconnected special pleadings by separate charities to donors to pour little bits of money into black holes of perennial social problems that seem never to be closed. An adaptive community resilience framework engages a proven, well-articulated win-win route for individual philanthropists and their advisors, the public and hard strapped charities to tackle the two biggest threats they and the wider UK society face to our well-being – inequality and climate change. We have only ourselves to save, or to blame if we don’t start to act decisively to make a real and lasting difference to all our futures.
[i] For sources see, for example, data provided at www.poverty.org.uk, various recent low pay reports by the ONS, and salient publications by the Resolution Foundation such as Squeezed Britain 2013 and of course scholarly and journalistic books on inequality by for example, Will Hutton, Stewart Lansley and Robert Reich.
[ii] There are many sources but the one used in this article is a landmark survey article by Bill McKibben in published in The Rolling Stone, 19 July 2012, “Global Warming's Terrifying New Maths”.
[iii] For example according to McKibben 2012, a third of summer sea ice in the Arctic is gone, the oceans are 30 percent more acidic, and since warm air holds more water vapor than cold, the atmosphere over the oceans is a shocking five percent wetter, loading the dice for devastating floods.
[iv] See for example “Future Proofing Cities” a presentation by Simon Ratcliffe, DFID to ICLEI, Resilient Cities 2013 conference, 31st May 2013; Michael Bloomberg (2013) “Reshaping New York City’s Future after Sandy” in Rebound: Building a More Resilient World, and reports on and by the “Asian Cities Climate Change Resilience Network” by the Rockefeller Foundation, 2013.
[v] Bernard Collier (Chief Executive of Voluntary Action Westminster) fired the starting pistol on this evolution in the “why should the wealthy get tax relief on their charitable donations debate” when he argued in June 2012 that the Give it Back George 2012 tactics created the impression that sector leaders were more concerned to protect rich donors and their preferential tax regimes than to be working in the interests of the least well off. It is a short step for the public and the media to create a more compelling anti-philanthropist narrative by linking this point with their concerns about unfair tax arrangements for big corporates and wealthy individuals and increasingly common sentiment that the growing inequality in the UK (and US) cited in the main text have arisen in part because, according to Joseph Stiglitz, the dominant economic and political system seems “to give disproportionate voice to those at the top.” See Joseph Stiglitz, Vanity Fair, May 2011, “Of the 1%, by the 1%, for the 1%”.
[vi] See for example the evidence presented in Rockefeller Foundation (2013) Rebound: Building a More Resilient World, New York, New York.
[vii] For example, the Young Foundation, the Barrow Cadbury Trust, and the Transition Network in the UK, the Rockefeller and Bloomberg Foundations, and The Community and Regional Resilience Institute in the US and a number of progressive international development actors such as the UK’s Practical Action, Farm Africa and the Humanitarian Futures Programme at King's College London.
[viii] A perspective well captured by this observation by the Young Foundation… “what we are interested in (as a catalyst of community resilience) is how does resilience play out in terms of attitudes, expectations and peer group pressures? How do local institutions influence the ability of communities to be resilient in the face of adversity? And what role do voluntary sector organisations play in building resilience in communities? These are important questions in times of public funding cuts, reduced services, high unemployment, rising inequality and increases in the cost of living….. What is clear is that community resilience will have an important part to play in protecting communities from the worst impacts of recession and helping them to overcome adversity and respond and adapt in such a way that brings about positive social change….We need to ensure that the resources that enable communities to be resilient are not withdrawn and the areas that are most in need are targeted and supported as they adapt to change. Unless we act now the recovery will be much harder and slower and many communities will suffer the consequences for many years to come.” See Young Foundation (2012) Adapting to Change: the role of community resilience, a study commissioned by the Barrow Cadbury Trust.
[ix] The WARM model and the Young Foundation’s innovative approach to understanding and strengthening the adaptive resilience of vulnerable communities is contained in Young Foundation (2012)