Charities Aid Foundation’s Davies: "Championing the role of philanthropies to defend civil society"

Here is the transcript:

Rhodri: – very much for having me here.  I’m delighted to be here at this Wealth and Society event. And just to set the scene for what I’m here to do, I’ve mentioned I wrote a book on the history of philanthropy, and I spend my time on my day job looking at policy issues around philanthropy, and also immediately one of the things I’ve been working on for the last five years is the impact of disruptive technology on philanthropy and what the future might hold. So, what I want to do is look both backwards and forwards, trying to get some idea of where philanthropy has come from, where I think is it known to where I think it might be going.

And to do that, I highlighted some of the key factors that have shaped philanthropy, how they relate to trends you see today, and what the challenges and opportunities the future could bring. And hopefully, that will get everybody thinking to set you up for the rest of the day. So, first, I want to start by taking you back 500 years, which is an odd thing to do, I know. Just sit with me. This is when in the UK philanthropy really in its modern sense began, so the crucial point is the reformation during the 16^th century.

So, when Henry the VIII made the decision to split from the Catholic church and establish England as a Protestant nation, it had a massive impact on the history of western Europe and beyond for the next few hundred years. But it also had a pretty determinant impact on philanthropy as well. The key point was that in medieval Catholic doctrine, it was taught that the purpose of charity was about cleansing the donor’s immortal soul, so the focus was on the act of giving and what it gives to the donor. And there wasn’t really much thought given to what was achieved with the giving during the donor’s lifetime.

And then Protestant teaching, however, shifted the focus to what was achieved from donations during the donor’s lifetime. And that change was fundamental because what it meant was that it paved, eventually, the way for a secular conception of philanthropy that’s still today, but it’s distinct from religion, and it also established a key principle that philanthropy’s not just about the act of giving, but it’s about the purpose about giving and what’s achieved through it. Now, as modern philanthropy developed, a number of other clear key things emerged that remain important today that I want to just try and tease out a little bit.

So, one It relates to some of the stuff’s that already been said. It’s about the relationship between philanthropy and the state, which is vastly complex. And obviously, this diagram… doesn’t beginning to capture it but assume that it’s a kind of good… history of the situation... But over the last 400 years, there’s been an ongoing debate in this country about where the balance lies between the state and philanthropy when it comes to meeting the welfare needs of citizens. And the same debate is obviously happening at different time scales and in different ways in other countries around the world, and it continues today.

Now, during some of that time, philanthropy was very much notably during the Victorian era here in the UK, and there’s other times certainly into the mid- to late-20^th century. But I think the important point is ever since the early 1600s, it’s not really been about philanthropy or state; it’s always been about philanthropy and state, so it isn’t a zero sum game. I think that puts a real emphasis on understanding what the role of philanthropy is within society and what unique value it can bring. So, what is that value?

Now, interestingly, I think a really good starting point for answering that question is to look at the words of William Beveridge. So, Beveridge is best known as the chief architect of the welfare state here in the UK. But what’s less well-known is he wrote an entire book outlining his view about the continued importance of philanthropy and voluntary action in that context. And some of the things he said are voluntary action’s needed to do things which the state should not do. It’s needed to unlikely to do. It’s needed to pioneer ahead of the state to make experiments. And I think lots of that still rings very true today.

So, building on Beveridge’s words, I think the key strength with philanthropy compared to the states is often argued to be its ability to take risks and therefore drive innovation. Now, the risk in question can take many different forms, and the reason that philanthropy can risk factor varies is sometimes that you can spread it over a long time scale, sometimes short-term political and economic cycles. Sometimes it’s because it’s not accountable to voters in the same ways as shareholders or it’s not constrained by the budgetary side of it, which you might get in the public sector. But whatever the reason, if philanthropy can take those sorts of risks, it can drive innovation.

And again, that innovation can come in all sorts of different forms, so it can be in terms of finding new ways to address problems. It can be about system innovation, driving improvements of systems and infrastructure. It can be sporting the adoption of new technology or it can be bringing entirely new courses and issues to mainstream attention. Now, I think this last one is particularly interesting, and I just want to focus on it for a moment because it highlights one of the other core truths about philanthropy, certainly from a historical perspective, which is that it’s just as much about campaign for social change and influencing others as it is about direct service delivery.

And there are many great examples from history of the impact that philanthropic campaigns had in terms of things like the abolition of slavery, universal suffrage, and even child labor, the eventual introduction…, all of which to a greater or lesser extent have been underpinned by voluntary action and philanthropic effort. And I think the importance of campaigning is the historic impact of philanthropy. It highlights something that’s very important right here and now and that we should be concerned about, and this is the world-wide phenomenon space of civil society.

So, this is where governments around the world increasingly, and this is something people are tracking, are seeking to clamp down many of those hard-won rights of free association, the ability to speak freely. So, I think one of the key challenges for philanthropy in coming decades is to defend that right of civil society to campaign, and advocate, and to speak truth of power because I think that’s a vital part of any healthy democracy and certainly when you back at the history, it’s clear the importance of that role of philanthropy.

Now, the other thing that I think looking at the campaigning role of philanthropy makes clear is that, going back to that question of the value of philanthropy as opposed to the state, it’s not purely about the outcomes that it produced. It’s also about the way in which we go about pursuing those outcomes. So, the point here is that philanthropic approaches bring added value above and beyond just delivering the same outcomes through safe mechanisms.

So, I think terms the way in which it can give people a sense of agency over solving problems, which taxation and distribution arguably doesn’t, or they can build social capital across communities and between people by engaging them through voluntary action, or they can just bolster a wider sense of civic engagement. Now, this is again a value of philanthropy that’s been noted by governments over the years so that the Nathan report, a very interesting, far-reaching report in the 1950s said that voluntary service is a nursery school of democracy.

And for me sitting here, it’s interesting the Charity Commission for England and Wales, the regulator here in this part of the UK, once again returned to this idea. So, I think there’s obvious value in philanthropy as activity, not just concerns with the outcomes it delivers. We shouldn’t tender those outcomes aren’t important. Even if there is benefit to the way in which you go back to achieving goals, you need to actually have demonstrable success in delivering them.

So, this raises the question of how the governments of philanthropy are determined and have success against those measures, and this brings us back to something that’s sort of been said this morning is if you should… to the heart of philanthropy for hundreds of years now, so is it something that’s primarily about heart, beliefs? Is it about emotional factors and so on that influence individual donor’s choices about where to give, and so the focus is entirely on their freedom to make those choices, or should it be more about head?

Do we need to look at the objective measures of which problems need to be solved and how best to do it, and thereby try to make the allocation of philanthropic resources more rational on a macro level? Now, lots of people have tried to reconcile this difference and to make philanthropy more rational in one way or another. Governments have long tried to do it through the way they shape philanthropy through laws and regulation. But interestingly, there have been lots of efforts from within the world of philanthropy itself historically and today.

So, the charity organization society movement of the Victorian and scientific charity movement of the early 20th century in America both sought to use scientific methods to address what they saw as prominent indiscriminate giving to make funds be more rational. If you’re wondering why there’s a picture of Charles Dickens there, one of the lesser known facts about Dickens is he was actually a philanthropy advisor. So, as well as his work as a journalist and novelist, he had a long-standing relationship with the philanthropist Angela Burdett-Coutts, and she sought Charles’ advice on how best to allocate the philanthropy to solve problems in London.

And then in the modern context, you have lots of different efforts trying to make philanthropy rational in different ways. So, there are efforts to make philanthropic decisions more informed by providing information on organizations, so GiveWell or Charity Navigator do this, initiatives which aims to provide entire frameworks for setting shared goals and metrics, so the UN Sustainable Development roles are a clear example there. And there were even philosophical movements like Effective Altruism which tries to reshape the very nature of philanthropy to make it entirely rational.

And one particular way in which people have tried to compose greater rationale of its own philanthropy, which I think it’s even relevant today, which we’ll focus on in a minute, is the adoption of business principle to market principle, or blended approaches. So, we have a whole ecosystem now of social investment or impact investment where people seek to use models that combine the pursuit of social and financial goals so that they can benefit from the rationality of market forces. But again, and you’ll tire of me saying this, this idea isn’t actually new.

In many ways, the distinction between philanthropy on one hand and business is something we’ve only relatively recently learned… So, when you look at a lot of the major donors of the past, people like the Quaker George Cadbury, for instance, he didn’t really see a distinction between his business interests and philanthropy and the political activity. For him, they were all just a set of tools for achieving the same fundamental set of goals.

Similarly, Julius Rosenwald, a very interesting philanthropist who was CEO of Sears and Roebuck in the early 20^th century, and he leveraged his position at the company to make a very ambitious program to build community schools in the deep south during the Jim Crow era. Or as an example, philanthropy here in London where many major donors of the late 19^th and early 20^th century like George Peabody and Octavia Hill experimented with a form of social finance.

So, what they would do is build affordable housing in areas for instance is just down the road from here. Then they would charge residents, working class residents, at the low commercial rate of about four or five percent, and then effectively underwrite the difference between that and market rate as a form of philanthropy, which came out as four percent or five percent philanthropy. Now, the range of blended approaches available today is obviously far richer and more developed, I’m sure you’ll hear throughout today, and I think more than ever, they become part of a philanthropist’s toolbox if they want to achieve maximum impact, but I think it’s very interesting to know about some of these historical groups.

And then the other thing that I want to note is that it’s not just about applying business principles to philanthropy. I think conversely, it’s also about making business approaches more socially responsible or purpose driven. So, one of the long-standing criticisms of philanthropy, and you can see this is only one from historical… 20^th century, is that donors assume there was a clear separation between where they actually made their money and how it was given away. And many of the famed philanthropists of the past took this kind of news as the centerpiece of finding these… of wealth.

But at the same time between philanthropy, they were lambasted for their business practices. So, Carnegie himself, Jay Rockefeller, Cornelius Vanderbilt all came in for furious criticism on these grounds. And this is the criticism that we’re once again seeing very clearly. So, there’s a book out at the moment called Winners Take All by Anand Giridharadas, and this has been making waves in the US for its criticism of market-driven approaches to philanthropy, again based on the argument that the way in which many philanthropists make their money undermines their ability to do good through their giving.

And more recently still, Jeff Bezos, the Amazon founder, has faced a big critical backlash after announcing his philanthropy plans from many people who criticize the working conditions and hours in the warehouses and the company’s approaches to taxation. So, I think questions of responsible business and philanthropic legitimacy are unavoidable linked together. I think purpose isn’t something you can just… for the weekend and through philanthropy. The same principles and values have to guide the way you encourage businesses too. But that’s by no means all I can say about the current state of finance being social finance.

But what I want to do at this point is to turn to the future in terms of continuing these trends and potentially bringing into light entirely new ones. Hopefully, they’ll be clear through and through. So, we’ve already noticed the blended models might not actually be a new phenomenon, but in the future, I think the interesting thing is technology is going to enable a far greater proliferation of approaches to doing good. So, some of which build on those historical ones, but they’re also being tied to new ways of organizing in order for achieving these goals.

But I think the crucial thing that’s for certain, the marketplace for doing good or for having a purpose is going to get much more crowded, and philanthropy certainly won’t have a… purpose driven in the future. So, one area in which we’re already seeing lots interesting work currently emerging is around the field of tech for good. So, this is where new or existing emergent technologies have been used to develop entirely new and innovative ways to addressing social and environmental problems.

So, artificial intelligence, for instance, there’s a fascinating project where Parkinson’s UK, a charity here in the UK, is working with a machine-learning company and applying machine learning to data taken from mobile phones kept on people’s person to detect and monitor the movements of the body and develop much better early warning behaviors of Parkinson’s. Block chain at the moment, but there are lots of organizations trying to use block chain technology to introduce greater transparency and traceability to money flows in philanthropy.

And then virtual or augmented reality is seeing something that can drive empathy amongst supporters and donors, but it also is being used in palliative care. So, there’s a hospice here in London that uses virtual reality to try and give end-of-life patients improved quality of life by giving them experiences. So, there are all sorts of fascinating work going on in this field. It’s incredibly exciting to dip into. But as well as opening up new ways of addressing problems, I think technology will also create new ways of resourcing work to address them. So, we’ve already seen a huge proliferation…, and this is having an impact on philanthropy already.

So, Fidelity Charitable in the US started taking donations into its donor-advised funds in late 2014, early 2015. And in 2017, it reported that it had taken $69 million in donations. It represented its fastest growing asset class. And intriguingly, it’s not just about… anymore. We’re starting to see the emergence of a whole new system of other types of digital assets, including for the first time, truly unique nonfungible digital assets so it can add scarcity value. At the moment, the best… with its work in the e-sports industry to apply this to the skins of people using computer games for which there’s already a booming trade.

A… like digital works of art could be developed in the future. So, this highlights the possibility for the range of assets for philanthropy. It’s gonna be vastly increased in the future. Now, the underlying block chain technology that makes these digital assets possible I think will also affect philanthropy in a whole range of other ways. So, one is that it opens up a possibility for large-scale business mediation and decentralization. So, we’ve already seen a trend away from traditional middlemen in lots of contexts, so platform-based practice in a commercial setting, it tries to put creators and consumers in direct contact.

Similarly, in social… platforms that try to put donors and beneficiaries in direct contact in order to build that relationship. And intriguingly, the emergence of network social movements that aren’t run by traditional nonprofits or centralized organizations. And it’s certainly possible, I think, the block chain will accelerate this trend by allowing markets, value chains, and even the governing structures of individual organizations to be decentralized and transformed.

Now, assuming that happens, network models need some way of replacing the trust that you would have traditionally relied on a third party intermediary to guarantee, and that’s often done through transparency. And I think this highlights another trend that we’re seeing already will continue to accelerate into the future which is around transparency in the philanthropic world. So, there’s already growing pressure on funders and others for greater transparency when it comes to their philanthropy, so here in the UK, there’s 360 Giving, which is an open data project for philanthropy. In the US, there are projects like Glasspockets.

And I think emergent tech, block chain technologies will open up the possibility of creating transparency. So, this is where you have 100 percent transparency about the money flowing through an organization and beyond, and then what the organization’s doing is doing there. So, BitGive Foundation in the US has a project called GiveTrack doing it. There’s also here in the UK... I think there’s positive potential here in terms of overcoming some of the challenges with declining levels of trust in organizations, but there are also big questions about potential downsides. What is made transparent on the block chain? If you can see it, what are they able to do with it?

So, I think these questions of data, who owns it, and how it’s used are going to be very core to philanthropy in the future. But I think the importance of data goes further than that, and this is where we’ve come to artificial intelligence and where I happened to do quite a lot of work from for the last few years. So, as the raw fuel that makes machine learning possible, the explosion of data is one of the crucial factors in the current level of interest… AI. So, we touched briefly before on the way in which it’s being directly used for social goods, and I think it’s also having a major impact on the ways in which we’re able to give.

So, we’re already seeing the use of conversational AI… Alexa and those sort of things, Siri, and Chatbots to enable people to make donations through voice activated platforms but also to provide advice and services to people in need, but I think this is only the beginning. And just thinking through the ways in which it might develop in the future, what we’ve already seen in the emergence of AI, how it… in the financial services industry, I think we’ll see the same thing in the philanthropy world so that advice on philanthropy, truly tailored advice, may become a mass-market product for the first time.

And which is where… myself are not very happy with, is the idea that you could ply artificial intelligence actually to identify in greatest areas of needs at one time and the most effective interventions, and it affects an entire rational matching of the two to allocate philanthropic resources… most strategically. And then combining AI with human cognitive capabilities, you have the idea of collective intelligence philanthropy where you can bring together both of those elements and create powerful new hybrids that can transform philanthropic decision making.

So, I think there’s an enormous amount of potential to use some of these emergent technologies directly for good but also to change the ways in which you give. But I also just want to highlight the flip side of that, which is I think it’s important to acknowledge that technology will bring new challenges as well. In particular, it’s going to change the nature of lots of the problems facing people in communities around the world so the focus of lots of philanthropic effort will also have to shift. And I just want to give you a few examples of things that are already happening to give you a sense of what I mean.

So, there’s a known problem already around machine bias, which is when you develop algorithms, machine-learning algorithms, they’re not themselves biased, but if you make them learn from datasets that contain historical statistical bias of things like race or gender, they get very biased very quickly, and they entrench that data with time. And I think the real-world problem here is that these are now being applied everywhere from setting bail conditions in the justice system in the US and determining eligibility for welfare in other countries.

And so, I think the challenge for all the philanthropic organizations is that it’s precisely the people in communities that they are seeking to help who will be most adversely affected by it, so they will need to adapt and respond to this sort of a challenge. Similarly, I think that’s one of the unintended consequences, the application of artificial intelligence. We’re already seeing that technology being used deliberately for nefarious purposes, and one of the best known is obviously to try and provide targeted misinformation and micro-propaganda to destabilize the democratic process.

We’ve already seen lots of concerns expressed about this, and I think it’s gonna get worse, so if you’re not aware of the phenomenon in the deep phase, these are video or audio content generated using artificial intelligence that is pretty much indistinguishable from the real thing. It’s very easy to see the corrosive effect that will have on the notion of objective truth, and that is a real challenge both for philanthropy but also for the democratic process. And then finally, just at a macro level, I think it’s unavoidable among the big issues of our day is their quality.

And the big question as we kind of address the acceleration of technology is is this going to reduce inequality or actually increase it or introduce entirely new dimensions? It certainly has the potential to decrease it by improving things like assets or financial services and these kinds of things, but also, the impact of automation on the workforce is likely going to create winners and losers. The question of who owns and controls the technology will also potentially introduce a new dimension of inequality. So, I think this is something that the world of philanthropy really needs now. So, I’ve given some examples there.

So, obviously, it’s very difficult to know how these trends can develop from which, if any, of the existing technologies, particular platforms or companies… distance, so it is very difficult to make further predictions. So, instead of leaving it sort of where it’s thinking about what some of the key prospective macro themes we’ve been covering since technology and the role of philanthropy… could be, and I think it’s worth bearing in mind the pieces of wisdom from the tech world known as the Amara’s Law which states that we tend to overestimate the impact of technology in the short term but then underestimate it in the long term.

And I think that one of the key challenges for philanthropy in the coming years it seems to me is to bring all of those attributes I talked about that make it unique, like its ability to innovate and to take a long-term view, and to cut through some of the immediate hypes around new technology and what’s going on so that we can ensure the opportunities to use tech to drive social goods and to improve the lives of people around the world, to maximize, and at the same time, the risks of harm communities in society are minimized. And with that, we’re finished. Thank you.