The Strength of the Collective

Business leaders and philanthropists are working in a more coordinated way and joining forces for specific causes, such as combating hunger and unemployment and assisting underprivileged children

BY ADRIANA CARDILLO GAZ

Philanthropy is experiencing a new phase. While it was once centered on individuals donating large sums to humanitarian causes, today it operates in a much more strategic way, both for individuals and companies. According to the 2020 Brazil Donation survey, conducted by the Institute for the Development of Social Investment (Idis), the causes that resonate most with people today are, in order, combating hunger and poverty, assisting underprivileged children and adolescents, guaranteeing healthcare, and combating unemployment and lack of income. The study also shows that the perception that donating benefits the donor has grown significantly, from 81% to 91% of the population.

“Previously, there was a greater focus on sectoral causes, such as education, health, and the environment. Now, social investors are beginning to look at more specific and structural issues, such as racial equity, democracy, combating climate change (instead of the environment), and issues related to refugees, which have been gaining increasing attention around the world,” says Paula Fabiani, CEO of Idis.

A collaborative and long-term perspective is another facet that has stood out in the world of philanthropy and private social investment. The perception that joining forces to help solve problems and find solutions is an efficient path is widespread. “I see groups of businesspeople and philanthropists acting in a more coordinated way, with investments that are at least minimally parallel to public policies or trying to innovate models to inspire and engage governments. Resources must be shared, because there is no amount of philanthropic or private social investment money in the world that will solve problems on its own,” says Carola Matarazzo, executive director of the Bem Maior Movement, an organization founded by Elie Horn, CEO of Cyrela, Rubens Menin, CEO of MRV, and Eugênio Mattar, CEO of Localiza.

In four years of operation, MBM has already directed R$ 99.6 million in philanthropic investments, supporting a total of 152 social organizations throughout the country. Following this collaboration, there's also Estímulo 2020. Created two years ago by prominent Brazilian leaders, this low-interest financial support project emerged to prevent the closure of small businesses affected by the pandemic. “We raised over R$ 60 million in donations and have already offered approximately R$ 125 million in financial support and training to small entrepreneurs, impacting 24,000 jobs and families,” says Fabio Lesbaupin, CEO of Estímulo 2020. Among the donors are Abilio Diniz, Eugênio Mattar, Eduardo Sattamini, Luciano Huck, Roberto Marinho Neto, Romeu Domingues, and other prominent figures in the business world. In total, more than 100 leaders contributed at least R$ 50,000 to make the project viable.

To date, one of the largest donors to Estímulo 2020 has been Santander. According to Lesbaupin, the bank contributed R$ 10 million. “We believe this is an important private social investment model because it doesn't focus on welfare, but rather on the positive impact on a significant segment of the population: small entrepreneurs. In addition to boosting the economy, the investor receives a return on investment,” says the CEO. The success of the operation allowed Estímulo 2020 to grow beyond emergency support during the pandemic. With the arrival of new donors and fundraising models, they intend to offer a total capital of R$ 300 million by 2024.

ESG IN THE SPOTLIGHT:
While some time ago it was a good idea for large companies to invest in their own foundations or institutes as a way to generate positive social impact, the scenario is now more mature. Corporations have realized that seeking out and investing in innovative projects beyond their immediate surroundings can bring benefits in all spheres. “Business leaders are more aware of the needs and relevance of their role, not only in financial terms, but also in positioning themselves as organized civil society that can create movement and show ways to help solve problems. Capitalism needs to find a balance, and I see a global movement towards responsible social investment. Everyone has very clear goals of what needs to be done,” assesses Carola Matarazzo, from MBM.

Among the major brands seeking innovative projects to solve problems such as the perpetuation of poverty are Ambev and Bayer. Both already invest, for example, in social technology, a long-term model capable of offering solutions to social problems built in a participatory manner with local communities, combining scientific and technological knowledge with the wisdom of the people who experience the issue firsthand. Key differentiators of this model include effectiveness, scalability, sustainability, and the full empowerment of the communities.

“An important trend is the emergence of projects that seek to reconcile traditional philanthropy – which promotes significant social impacts but does not generate financial returns and may not be economically sustainable – with more traditional investment models, which can positively impact society and the environment while still generating financial returns that contribute to the economic sustainability of the projects,” says Jaime Oliveira, director of public affairs, science and sustainability at Bayer in Brazil.

Over the past three years, the company has allocated approximately R$ 25 million annually to social investments in general. One of the most innovative projects supported by Bayer is the Institute for Research in Technology and Innovation (IPTI), located in Santa Luzia do Itanhy, in the interior of Sergipe, one of the cities with one of the worst Human Development Index (HDI) scores in Brazil.

Co-founded in 2003 by Saulo Barretto, one of the leading experts in social technology in Brazil, IPTI is a non-profit art, science, and technology institution that generates innovations capable of promoting human development through the creation of social technologies in the areas of education, entrepreneurship, and basic health. “In today's world, it no longer makes sense for companies not to join forces, even if they are competitors in the same sector, to solve a global problem like poverty. Everyone benefits from a better, fairer, and more equitable society,” says Barretto.

As a way to enhance the "S" of the ESG agenda in a modern way that allows for consistent, long-term results, Ambev also focuses on social technology to leverage efficient strategies for investing in
positive social impact. "IPTI is an example of how investing in technology and innovation is an important path. We can only grow if Brazil grows, which is why we share our social investments throughout the country, not just in our immediate surroundings," explains Carlos Pignatari, Ambev's director of social impact. According to the executive, the company has already invested approximately R$ 1 million in the institute since 2018. Ambev does not disclose general data on investments in social impact initiatives, but today it is one of the largest supporters of projects related to productive inclusion, diversity, water, plastics, and carbon.

According to the Group of Institutes and Foundations of Companies (Gife), which maps private social investment in the country, the pandemic boosted donations from private institutions by 71%, reaching R$ 5.3 billion in 2020. Organizations make varying individual contributions: while 39% invested up to R$ 6 million, 20% allocated more than R$ 20 million. “Investing in these organizations is investing in the social development of the territories. There is no need to be so surgical in private social investment; a good network of trust, with other partners, listening to the territory and innovating in the way of donating is enough to generate impact,” believes Cássio França, secretary-general of Gife.

Finally, focusing on social impact is also an interesting way to attract the attention of stakeholders, generate authority, and enhance brand reputation. The Brazil Giving Report 2019, which presents a snapshot of giving in the country, indicated that 74% of Brazilians believe that companies should develop causes and support the society in which they operate. “The ESG agenda has brought about greater awareness and perception among investors that it is indeed necessary to find solutions that have an impact and are more effective. Greenwashing and socialwashing have forced companies to change their mindset and become more attentive and careful regarding the projects they develop and how they report them,” exemplifies Barretto.

The Effectiveness of Venture Philanthropy:
Venture philanthropy, often translated as strategic philanthropy, is one of the current approaches to donations and investments that prioritize social and environmental impact over financial return. “Strategic philanthropy is more than just a type of social investment. It's a structured, long-term support approach that, in addition to providing financial support, includes pillars of non-financial support and indicator monitoring. We believe that the adoption of this concept by companies strengthens and empowers the third sector, increasing the potential for social impact,” analyzes Elizabeth Mac Nicol, superintendent of B3 Social, the non-profit association responsible for B3's private social investment and volunteer initiatives.

The projects supported by the association are evidence-based, operate systemically within education networks, and aim for social impact and the reduction of inequalities, according to the executive. In 2022, the support is divided among 28 education projects that impact approximately 6 million people.

“Over the past three years, we have focused our efforts and investments on public education, allocating approximately R$ 50 million annually through direct donations and incentivized funding. In addition to private social investment, we have a volunteer program that also contributes to the supported organizations. Annually, we engage over a thousand employees in social mobilization initiatives,” says Elizabeth.

BILLIONAIRES VS. SOCIAL INEQUALITY
According to data from Oxfam – a global organization that aims to combat poverty, inequality, and injustice worldwide – a new billionaire has emerged every 26 hours since the beginning of the pandemic. The ten richest men in the world have doubled their fortunes, while more than 160 million people have been pushed into poverty. Worldwide, the wealth of billionaires increased by an impressive US$3.9 trillion between March 18 and December 31, 2020. The ten richest billionaires in the world saw their wealth collectively increase by US$540 billion during this period. In Brazil alone, ten new billionaires have emerged since March 2020.

Aware that it is no longer possible to ignore the negative impacts of global social problems, more and more people are using their influence, knowledge, and focus on relevant causes to contribute to contemporary philanthropy, whether through large donations, private social investment, the creation of movements and organizations, or even influencing governments. One of the most widely reported examples recently came from Bill Gates, one of the world's richest men. In July of this year, he announced one of the most significant donations in the history of philanthropy: US$20 billion will be allocated to the foundation he founded with his ex-wife, Melinda French Gates.

“It is very clear, given the socioeconomic crisis we are experiencing, that the solution lies in the hands of civil society, businesses, and us as individuals, since the government alone is not capable of tackling all of society's problems. Collaboration is a more complex path, but it is certainly the most promising,” concludes Paula Fabiani, from Idis.

Text originally published in Forbes

Image Credit: Reproduction