While the responsibility for solving complex social problems ultimately falls on governments, organisations across civil society and industry also play important roles.
This includes philanthropic foundations, which often act as a conduit between private capital and a variety of community organisations, including those attempting to address some of the biggest challenges we face.
Scrutiny of Australian philanthropic organisations is important for two key reasons.
First, governments are increasingly addicted to fiscal conservatism when it comes to social spending, both in terms of funding amounts and the conditions under which funding is provided.
This means that Australian civil society organisations are increasingly reliant on philanthropic foundations to fund various activities, including systemic advocacy, capacity building and service delivery innovation.
The second reason relates to accountability. Australian philanthropic foundations receive favourable taxation benefits, including Deductible Gift Recipient (DGR) through registration as a Public Ancillary Fund (PAF) or charity with the Australian Charities and Not-for-profits Commission (ACNC).
Reporting requirements for PAFs and charities from the ACNC are variable. Unlike in the US, we don’t require strict evidence money placed taxed free into PAFs is distributed towards public-benefitted activities.
This raises questions about to whom philanthropic foundations are accountable – their donors or their intended beneficiaries – with the suggestion that some foundations are simply income generation and tax avoidance schemes for the already rich.
“Although public foundations exist for public benefit, there are no restrictions or guidance regarding how broad or narrow that benefit might be,” note Alex Williamson and Belinda Luke from Queensland University of Technology in a new research paper.
In their examination of close to a thousand foundations registered as charities with the ACNC, Williamson and Luke create a taxonomy of seven different types of foundation. This included “wealth advisor foundations” which “serve people wishing to structure their individual giving over a longer period of time”.
In terms of accountability, the paper also creates a typology that considers how intertwined a foundation might be with other organisations, whether the “dominant strategic focus” of the organisation was the relationship with its donors or its beneficiaries, and whether the focus of the foundation’s activity or giving had a broad or a narrow focus.
However, because the reporting requirements on PAFs are quite lax, there is a lot of variability in who the organisations feel accountable to, which Williamson and Luke refer to as “felt accountability”.
Do philanthropic foundations feel accountable (and thus act in the primary interests of) the wealthy people whose donations keep paying their salaries? Is it to a particular cause or community that are the intended beneficiaries of the funding? Is it the broader public ecosystem within which philanthropic foundations play an increasingly important role?
As a scholar of the democratic importance of civil society organisations, my interest in these questions resolves in particular around the power relationships between philanthropic foundations and their beneficiaries.
For me, the power imbalance from the funding transaction carries great risk. Philanthropic funds (like government funds) can come with strict conditions for exactly what they are spent on, conditions which can undermine the effectiveness of the funds.
In my Loci of Power and Connection Framework, the route to better outcomes is through working towards decentralised decision-making and relational connections between organisations and the communities they aim to support.
One way this can work, in the philanthropic foundation context, is through what has been termed embedded philanthropy, which University of Sheffield scholar Madeleine Pill notes has the “ambition to diminish the power differential with their ‘community partners’ that philanthropic relationships inevitably entail”.
In Pill’s study of place-oriented philanthropy in Baltimore and Cleveland, this comes through foundations making long term commitments to their intended beneficiaries, focussing on community engagement and leadership, and even extending from “voluntarism to activism” by using their institutional power to support communities’ efforts at shifting systemic barriers through advocacy.
For Pill, the practice of embedded philanthropy is how philanthropic foundations can help shift the blockages that hold problems in place. This kind of philanthropy and giving has the potential to be transformative rather than simply charity.
We don’t need to look overseas for examples of embedded philanthropy in Australia. Dusseldorp Forum, an organisation I have done work and research with previously, take an approach to their philanthropy that more resembles developing meaningful relationships than it does the kind of self-aggrandising largesse we might expect from some of the more well-known philanthropic organisations.
“We provide long-term funding, build connections, support learning and advocate alongside those working towards a better society,” they note on their website. One of their strategic pillars of action is reimagining governance to “shift power in decision-making about policies resources and systems design.”
Dusseldorp Forum’s long-term commitments include supporting the Maranguka Initiative of the Bourke Tribal Council since 2013, the Our Place community hub at Doveton College since 2016, and supporting the bi-lingual bi-cultural Nawarddeken Academy in the Northern Territory since 2016.
