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The Importance of Philanthropy

Philanthropy is altruism in its broadest sense, a private initiative conducted for the public good, which attempts to address socioeconomic challenges through voluntary giving. It is distinct from charity as it not only aims to alleviate an immediate problem but seeks to address the underlying cause of the problem . It therefore tends to take a strategic approach, collaborating with various stakeholders to achieve a desired outcome. 

Philanthropy operates within both formal and informal frameworks, with giving practices varying widely and taking different forms (including volunteering and mutual support within communities in the form of stokvels, burial societies, and so on). There is no ‘one size fits all’ approach, and so-called Western paradigms may vary greatly to African paradigms, for example (‘Afrilanthropy’ is about helping people ‘right here’ rather than ‘over there’). The common denominator is giving for its own sake.

Although philanthropy is generally considered the domain of high-net-worth individuals, anyone can act with philanthropic intent, for the sake of the public good, and efforts to promote philanthropy can target the population at large. According to Nedbank Private Wealth’s Giving Report IV, the five top reasons for people to give are:

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Social and community development and religious institutions were the most commonly supported causes (supported by 66% and 41% of givers respectively) and received the greatest proportions of total funding (32% and 17% respectively). Non-profits remained the most commonly supported type of beneficiary (supported by 66% of givers). Advocacy groups and political parties continued to be the least popular (3% and 2% respectively). Read more on the state of philanthropy in South Africa. 

Most recently, we have seen philanthropy in action during the COVID-19 pandemic, with philanthropists all over the world donating to fight the virus in one form or another. NPO Candid estimates that $1.9bn has been spent on coronavirus relief by private entities all over the world (as at early April).  In South Africa, the Oppenheimer, Rupert and Motsepe families have made substantial donations of R1bn and more to fight the novel coronavirus, whether supporting small businesses, ensuring that essential medical equipment is available, or assisting the most vulnerable members of society. The Solidarity Fund – a national COVID-19 response fund to which businesses, organisations and individuals can contribute – raised R500m in its first week and attracted donations from all segments of society. [Read more about some philanthropic responses to the pandemic.]

Crucially, during the COVID-19 pandemic, we have seen philanthropists divert their regular project funding to general purposes funding to assist society at large during a time of unprecedented crisis.

Why take the philanthropic approach?

Philanthropy has a key role to play in strengthening civil society and addressing socioeconomic challenges, with philanthropists making significant contributions to the non-profit sector. The essential function of philanthropy is to develop risk capital that can be used to improve long-term outcomes in the country, providing solutions to socioeconomic ills that can be adapted and scaled by government.

Philanthropy can also be viewed as an investment tool, providing start-up and growth financing, funding crucial research and promote data-driven decision-making, and becoming involved in advocacy and policy work.

Philanthropists are agents of change that can make a meaningful difference in the fight against inequality and poverty. Corporate social investment (CSI) is essentially corporate philanthropy. Total CSI expenditure in 2019 amounted to R10.2bn – a 5% increase from the R9.7bn estimated spend in 2018.

Challenges in the philanthropy sector

Some of the challenges that beset philanthropy in other countries – legal and financial restrictions, lack of support, limited philanthropy infrastructure, low individual engagement, and inadequate civil society capacity – are only minimally applicable in South Africa. A strongly enabling environment encourages giving, with individuals and companies receiving tax incentives. An improved regulatory environment is under consideration, however.

As one of the most unequal societies in the world, South Africa needs its philanthropists – and philanthropy plays a prominent role in building citizenship and social cohesion. However, challenges include how to assert legitimacy, achieve a measurable impact, and address systemic problems like social inequality and climate change.

Giving behaviour

According to the Giving Report IV, high-net-worth individuals in South Africa have continued to prioritise social causes despite the tough economy – 83% of respondents gave money, goods and/or time in 2018, compared with 88% in 2015.

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Read more in the Giving Report IV. 


Recommended Resources

  • The Nedbank Private Wealth Giving Report IV

    In 2019, the Nedbank Private Wealth Philanthropy Office published the Giving Report IV, its fourth report on the philanthropic behaviour of high-net-worth individuals in South Africa. The report, which examined found that 83% of these individuals are still committed to giving money, time or goods despite economic challenges (down from 88% in 2015), there is a shift in terms of the diversity of donors, and 32% of total donations go towards educating the youth. Only 4% of givers executed their giving through a formalised structure like a trust or foundation. 

  • Guidelines for Effective Philanthropic Engagement

    These voluntary, non-binding guidelines have been developed by the OECD Global Network of Foundations Working for Development (netFWD) in collaboration with the European Foundation Centre (EFC), the Stars Foundation, UNDP, the Worldwide Initiatives for Grantmaker Support (WINGS) and the Rockefeller Foundation. They have been developed to help foundations improve development outcomes through collaboration with government and other stakeholders. 

  • Foundation Horizon Scan: Taking the Long View

    This 2019 paper published by innovation foundation Nesta asserts that foundations are well suited to working on the big challenges of our time, from climate change to inequality, ageing to unemployment. It surveys the changing landscape and explores how foundations can enhance their legitimacy and impact. It also highlights some of the challenges of philanthropy, including having power and moral purpose but little formal accountability. 

  • Philanthropy as an agent of transformation

     This 2013 article makes a clear distinction between philanthropy and charity, indicating that philanthropy needs to challenge the status quo and play a dynamic role in driving social justice forward.

  • How philanthropists should respond to coronavirus

    New Philanthropy Capital (NPC) recommends funding flexibility with regard to current grants, making new grants unrestricted, and lifting or loosening reporting requirements in order to respond to this emergency and continue to support organisations that need assistance at this time. 

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