• Systemic-level action can either facilitate or hinder change.

• The realities of systemic change often alienate philanthropists and investors.

• A new funding structure has to come into being to support systemic change.

Systemic change is on everyone’s lips in 2020. The pandemic is laying bare the flaws of our politicians, institutions and healthcare systems. Pushed to the background, progress on climate action remains woefully slow. Wealth inequality continues to rise. Gender parity appears unlikely to happen for a hundred years. Black people keep dying in police custody.

Browse the blog of your favourite organization, private or public, and there’s probably an article there urging that something should be done about these systemic problems; these texts are often heavy on outrage and light on logistics.

So, let’s go a step further here and discuss in practical terms what exactly should be done, how, and why it hasn’t been done so far in the first place. The Altruist League recently published a research piece, based on a 23-country study of global grassroots activist sentiment, trying to answer those questions, with a particular focus on what philanthropy can do to help along real change. Below is a summary of our analysis.

Systemic change happens every day

First, let us demystify the term we are dealing with.

The many ingredients of systemic action are not a secret: social movements, visionary leaders, political pressure, good storytelling, advances in science and technology, evolution of public consciousness, money.

These come together regularly for progressive and conservative causes alike, facilitating or preventing change. This is the reason why today women can vote and gay people marry. This is also the reason why gun legislation in the US, fiercely opposed by a National Rifle Association well versed in systemic action, stalls despite overwhelming support for it in the polls.

It is messy and political; many of us ultimately don’t want it

Philanthropy has supported systemic change successfully in the past. The Ford Foundation’s backing of the civil rights movement from the 1950s onwards is an oft-quoted example.

However, a problem for many aspiring change-makers has always been the fact that true change is complex and long term. Few cookie-cutter solutions to apply, few easy photo ops, or predictable numbers for the annual report. Many ups and downs along the way.

A bigger problem is that meaningful change must be political, resulting in a shifting power balance in a society. A striking example: Our sample shows that 71% of respondents feel that impact investing and similar activities can create local win-win solutions, but only 22% see those bringing about real social change.

A society, unfortunately, doesn’t advance through win-win transactions alone: In the near term, some groups need to lose a bit of power and control for others to gain some. This worldview is unpalatable to many philanthropists and investors, for understandable reasons.

It takes a new kind of leader who adds value the right way

This is why a change-maker’s motivation in 2020 must be fiercely intrinsic, the result of strong core beliefs, a lived experience of a problem, the ambition to solve a seemingly intractable challenge and/or a desire to leave a legacy for the coming generations.

These leaders need to be alliance builders. A painful stat for many funders is that only a third of activists surveyed think that their donors add non-financial value, whereas three-quarters of funders feel that they do. An interpretation is that some donors equate added value with unsolicited advice, oversight and burdensome reporting requirements. The activists equate it with opening doors and providing connections.

If change-makers want to be hands-on, then they need to be the kind of people who can connect climate action groups with well-inclined legislators in Russia, or bring anti-femicide organizations from northern Mexico together for coordination and exposure to funders from Denmark, and then step out of the channel to let the relationship develop. This is a high bar to clear, but clear it we must in order to begin claiming that we are “adding value”.

Contributing to systemic change means considering what value you bring
Contributing to systemic change means considering what value you bring

It takes a new investment model

Reforming the education system goes hand in hand with improving local governance, reducing corruption and building alliances with diverse social groups in the area; otherwise it fails. More cars on the streets means both less clean air and more urban childhood obesity. How does one begin to act in a world where everything is interconnected?

The smart financial investor responds to market complexity by diversifying. She rightly mistrusts her own ability to predict and control by picking individual stocks. Philanthropy should take a hint and support as many of the aforementioned ingredients of change as possible. The table below is an example of portfolio allocation, loosely analogous to how a typical for-profit pension fund might be structured. The percentages will vary greatly depending on one’s risk appetite and other factors.

How a hypothetical financial portfolio for a philanthropist could look
How a hypothetical financial portfolio for a philanthropist could look

It takes trust in grassroots movements

Social movements have helped change the world more than any other form of organizing, from the International Red Cross to grassroots drunk-driving awareness campaigns. Data on how much of the overall giving goes to these groups is scant and unreliable. Most estimates peg it at no more than 1 or 2% globally.

This must change. With it, the funding relationship must change, so as to give activists the space to do what they do best. Most of the work of the average foundation is in handling grant proposals, various reports and oversight mechanisms that mediate the donor-recipient relationship. Most of the work of the systemic investor is in actively sourcing the investment and in evaluating its effects in the real world afterward. In the meantime, the partner organization is left alone to do the work.

Here is how a systemic, trust-based partnership between a funder and a social movement should look:

Funding to achieve short-term and systemic change differs greatly
Funding to achieve short-term and systemic change differs greatly

Real change is a fascinating, uplifting phenomenon that philanthropy can accelerate significantly. But it is at the same time a very difficult sell. It takes away our power and perks while obliging us to self-educate continuously and exercise patience and humility. It urges us to be out there and do research, rather than sit and wait for proposals to come. It challenges us to add real value, adopt new portfolio-building approaches and develop trust-based partnerships. And even then, our initiatives may fail miserably. All that we have in return is the feeling of doing something profoundly meaningful – that and those special moments when you can watch a society advance in seemingly real time. What “should be done” about the problems of our day is therefore not a mystery; we merely need enough funders out there willing and able to do it.