By Greg Doepke
We continue to face many social and environmental problems in our local communities. These problems may, in varying degrees, include challenges of housing, jobs, poverty, healthcare, pollution, land management, waste disposal, and many others. In recent decades, multiple strategies were tried to solve these problems, but the problems persist. An increasing number of nonprofit 501c(3)s have struggled to address and eradicate these problems. We have infused massive amounts of financial capital and other resources and have collaborated through private-public partnerships. The challenges remain.
If we are to become more effective in solving these issues, we need to think differently. New philanthropic approaches and solutions to bettering our communities are gradually emerging that provide a glimmer of hope. The best practices of the nonprofit sector and the business sector are being integrated and applied as new philanthropic tools and techniques. They are beginning to make a difference within our local communities.
In surveying the current and emerging philanthropic landscape, three critical, integrated concepts will advance community development philanthropy. These three concepts are “grassroots,” “place-based” and “inverted philanthrocapitalism.”
Grassroots: Our passions and energies are grassroots. They are at the core of our being. What we do daily and why we do it are centered on ourselves, our families, our friends and those closest to us. We love our children and our families, care for and look out for our neighbors, and seek ways to help the less fortunate in our communities.
We are each a stakeholder and caregiver within our local community — our “hometown.” We go about our daily lives within the villages, towns, and cities where we all live, work, and play. “We the people” (excerpted from – and in the context of – the preamble to the Constitution of the United States of America) are the grassroots, the driving force, and the foundation for transforming our local communities.
Place-based: Place-based refers to our geographic location in which we live and raise our families. Many of us love our local community our “hometown.” After all, it is where our lives unfold, our children grow up, and we pass the years. Each hometown is different and has varying social, economic, and environmental problems. In many instances, the demographics of each community is different as well. For example, a small town in rural Mississippi or Kansas has a much different set of challenges and demographics than a large city like Los Angeles or Atlanta. Diverse communities have various problems, resources, and demographics.
It follows that those living in each local community – the grassroots, caring, individual stakeholders – are in the best position to address local challenges. The diversity of community stakeholders include servant leaders, caring citizens, dedicated nonprofits, community-minded businesses, the faith community, educators, government, and the disadvantaged.
The diversity and collaborative inclusion and engagement of all these stakeholders are essential. Each stakeholder serves a vital role that aligns with his mission, passions, skills, and resources.
Philanthrocapitalism: Philanthrocapitalism is the integration of philanthropy and capitalism. Matthew Bishop and Michael Green coined the term in their book Philanthrocapitalism: How the Rich Can Save The World. Philanthrocapitalism blends the best practices of the philanthropic and business sectors. It embraces a businesslike approach to solving social or environmental challenges as reflected in the modern philanthropy of Bill Gates, Warren Buffett, Mark Zuckerberg, and many other mega-rich.
In its original context philanthrocapitalism imparts a top-down, businesslike, humanitarian approach. Funding originates from personal financial success, and the missions arise from the passions and pursuits of the super wealthy. Typically, the impassioned purpose is to solve major humanitarian or environmental issues such as disease eradication, global warming, or other worldwide social or environmental challenges.
In surveying the emerging trends of philanthropy, we can take these three concepts – grassroots, place-based, and philanthrocapitalism and think differently. Instead of the “topdown” approach of philanthrocapitalism, let’s invert it! Instead of the mega-rich top-down approach, we use local community, caring stakeholders and take an approach that reflects our core values, passions, and culture. Instead of solving our problems “top-down” we advance a grassroots, bottom-up approach to transforming our communities with a businesslike approach.
Grassroots, Place-based Philanthrocapitalism (GPP) is the “bottom-up” collaborative engagement of caring, grassroots, community stakeholders to provide innovative, financially self-sustaining solutions to solve local community social and environmental problems. It embraces problem-solving through entrepreneurship, the leveraging of technology, systematic approaches, collaborative community engagement, and the disciplined use of metrics such as a financial return on investment (ROI) and social return on investment (SROI). If GPP reflects a “think different” approach to bettering our communities, how do we implement: i.e., what are the GPP “tools” in our toolkit?
Also, what is the role of government in this transformative approach? The three (3) key tools for GPP are social entrepreneurship (Refer to the Social Enterprise Alliance (www.socialenterprise.us) to learn more. ), place-based impact investments (Place-based Impact investing for community development refers to those segments of impact investing that impart a greater place-based social return as a tradeoff for a lower financial return.), and public benefit entities (Public Benefit Entities include Low-Profit Limited Liability Company (“L3C”), B Corporations, Benefit Corporations, and Public Benefit Corporations. Currently, 34 states have passed legislation for Benefit Corporations.).
Social entrepreneurship brings the creativity and innovation needed to generate sustainable revenues and both a social return on investment (SROI) and financial return on investment (ROI). Impact investing provides individual and institutional financial funding targeted to address specific challenges. From a place-based perspective, community impact investing is the investment of capital in local communities to transform and build them into vibrant, prosperous communities. Within the framework of community development philanthropy, impact investing also entails the unleashing of both foundations and private wealth endowed capital. Public benefit entities are state-legislated entities created with a stated social or environmental mission in their charter; as well as to generate sustainable revenues. They have a double bottom-line mission to make money AND do social good.
What should be the role of government in GPP? Each level of government – local, state, and national – should endorse and advocate for the three core components – social entrepreneurship, local impact investing, and double bottomline businesses. Government at all levels can advance GPP through legislation, financial and tax incentives, and facilitating local community collaborative engagement.
GPP facilitates and promotes community economic development through community development philanthropy and enhances the effectiveness of local nonprofits. Above all, GPP improves the lives of all citizens, especially the disadvantaged while solving local community social problems.
So let’s change our thinking and tackle our local community challenges; one hometown at a time. We should supplement traditional philanthropy with the innovation of social entrepreneurship, fund the problem-solvers with local impact investing, and advocate for public benefit entities to solve local community challenges. It is time to embrace grassroots, place based, inverted philanthrocapitalism.
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Greg Doepke, CAP® serves on the board of the International Association for Advisors in Philanthropy and on the Executive Committee of the Women’s Philanthropy Board, the flagship division of the The Cary Center for the Advancement of Philanthropy and Nonprofit Studies at Auburn University. Greg promotes donor-focused, place-based community philanthropy through smart financial giving, impact investing, and social enterprise. You may reach Greg at Greg@aspiretogive.com.
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