Across the Middle East and North Africa (MENA), philanthropy has often stepped in as a form of social protection for millions across the region. After decades of the same model being used, new approaches are being discussed and deployed to improve the impact and sustainability of philanthropy.
The MENA region suffers some of the world’s most challenging socio-economic issues, such as the world’s lowest levels of female labor force participation and highest levels of youth unemployment.
While literacy rates soared from 59 percent to 78 percent in two decades, the region’s average youth unemployment rates rose to almost 30 percent.
Philanthropy in the Arab world has suffered from several structural challenges. These include a lack of strategic long-term planning, hard data and evidence-based approaches. Additionally, philanthropic actors tend to work on their own and are unwilling to collaborate and share knowledge. The sector also suffers from a weak infrastructure on the government level and broader support networks.
However, in recent years, there has been a growing recognition in the philanthropic sector across the Arab World that the old model of simply fund raising is no longer enough. New methods have increasingly become more talked about and popular among local actors in tackling the region’s most pressing social challenges.
A recently published paper by the AUC School of Business John D. Gerhart Center for Philanthropy, Civic Engagement and Responsible Business details the current state of philanthropy in Arab countries, how it is changing and how it should move forward through the 21st century.
“The 21st century has seen the clear emergence of a more strategic form of philanthropy. This is partly due to an increasingly connected world thanks to the digital revolution driving greater transparency and partly due to investors becoming more demanding about how their gifted capital is deployed,” the paper’s opening paragraph says.
In recent years, there has been growing dissatisfaction with the traditional philanthropic approach of giving aid and grants. Change is moving in the direction of finding more sustainable solutions driven by data, impact assessment and utilizing social enterprises. Business communities and investors around the world are also increasingly recognizing how much businesses need to have a more social impact on communities.
Out of this new approach is the emerging term “Impact Investing Continuum”, where corporations, social enterprises, charities and actors from many other sectors are taking part in collaborative partnerships to address issues such as climate change and poverty alleviation. Instead of these actors working alone, they are now working together to deliver the United Nations’ Sustainable Development Goals (SDGs).
The Gerhart Center’s paper says this philanthropic model is expected to achieve measurable and sustainable social outcomes at scale and attract higher inflows of capital.
Another example is Venture Philanthropy (VP), where tackling social problems is done using an enterprising approach, where “adopting the same principles that the private sector uses for commercial value creation and applying them to social value creation”.
By adopting this approach, philanthropy switches from a model that addresses short-term concerns such as poverty alleviation, to long-term systemic and permanent change such as poverty eradication.
One of the most innovative aspects of VP is that it pursues projects and programs that are backed up by real-world evidence and data. Traditional philanthropy tends to follow presumptive programs with no hard evidence that they work. VP seeks solutions with a proven track record and can be scaled up to deliver meaningful and lasting change.
Emerging from this new way of measuring philanthropic success is the Social Return on Investment (SROI), an indicator that is measurable as opposed to the ‘feel good factor’. “Executives talk to Boards about learning from failure rather than obfuscating it […] and allow for a more scientific way of measuring their impact that is better aligned with bottom-line based entities”.
By developing the ‘Impact Investing Continuum’, local philanthropic actors can create a dynamic network that brings together grants, aid and investments to bring about meaningful and sustainable social change.
How can this philanthropic approach be incentivized and scaled up across the MENA region?
The paper suggests that by trying to ask questions related to the sector’s challenges, being policymaking and governance, institutional, financial and operational support and social and cultural awareness, solutions can be identified.
On the policymaking and governance side, the paper makes three recommendations: 1) developing a Social Enterprise Law; 2) reviewing current legal supervisions of philanthropic capital flows; and 3) encouraging the establishment of philanthropic organizations with special fiscal status.
As for institutional, financial and operational support, the paper makes another three recommendations. The first being providing bankruptcy support to encourage entrepreneurship and innovation. The second is for governments to help the development of technical and operational infrastructure and establish measuring indicators and funding. The third is to reform regulations to lessen risks for the establishment of startups and philanthropic endeavors.
When it comes to increasing social and cultural acceptance and embracing of this new philanthropic approach, much work needs to be done to help local practitioners and policymakers understand it. What is meant by impact? What is meant by input? What does it mean to measure output and outcomes? How can people be persuaded to make socially conscious investments which have positive impacts on communities?
The paper concludes that “such phenomena are little known or understood yet in the region and yet provide an excellent opportunity for MENA to leapfrog legacy systems and scale up proven global structures and vehicles to accelerate both convergence and a radical improvement in social impact”.