Philanthropy in climate change

There are a lot of philanthropic efforts already involved in climate change. At least, it feels like that. Estimates have suggested otherwise, with many sources citing a figure of less than 3% of total philanthropic money going towards combating climate change. Needless to say, it is considered inadequate given the gravity of the threat we face.

In UK, a group of scientists wrote to the top 100 wealthiest charitable bodies and families, requesting funding for climate change research, adding that the efforts to tackle ecological crisis are desperately under-funded. These scientists themselves believe that less that 3% of philanthropic funding goes towards climate-related issues. This not only implies a state of urgency, but more importantly, a state of helplessness.

Naturally, one of the main question that arises is - why is it so low? There are several explanations for it (although even despite these plausible explanations it's hard to wrap your head around such a low figure). But we really do need to take a look and understand if there are any possibilities (whether at least a little realistic/feasible) to address these issues. For every year that climate change research funding is over-reliant on public money, it becomes increasingly probable to lose momentum, since public money is increasingly tied to, and focused on, running the economy. 

One of the biggest reasons for this low figure is that these family offices and philanthropic foundations, although made to bet on issues that require resources for research and development, do function like endowment funds where, at the end of the day, the main objective is to achieve a certain return on investment. To these foundations, the concept of solving climate change can often appear more "abstract" as compared to, say, working towards curing a rare disease.

Moreover, since most of such foundations operate on a grant basis, meaning that not only  are there comprehensive strategies prepared for long-term, but also that there is a high degree of compliance and organized effort to stay on course for deployment of funds to needed areas. This implies that they look for evidence that their philanthropic grant is actually going to create a difference - there is an analysis and reliance on data to maximize the impact of each cent. This evidence can especially be hard to demonstrate when often the goal of grant/donation is to advance climate-friendly policies. Hence climate change can easily tend to fall off the priority lists of these foundations since other issues are more tractable.

But over the years, as climate change has started posing a bigger problem, as symptoms of lack of resources have started showing, there has also been an evolution in the evaluation process within the foundations with regards to the projects, sectors and priority areas.

For instance, a well-known philanthropic foundation, Hewlett Foundation, details how their own evaluation and monitoring process has evolved in the last two decades. One key shift that happened in around 2004, it notes, is when the foundation involved a third party (Redstone Strategy Group) to advise them. Paul Brest, the foundation's President at the time, explained, "We are in a sector where people's choice of objectives is inevitably emotional and value-laden. But once you want to achieve objectives, you have to have a rational side."  

Redstone's managing director Ivan Barkhorn was briefed on the Foundation's goal of becoming more outcomes-focused, to which he had said that his approach was not to work in the abstract but to pick up something that is happening in real life and try to fix it. From there, certain initial projects were piloted. 

At the heart of Redstone's approach was "Expected Return", essentially a cost-benefit approach which incorporates risk assessment and aims to help funds document and process for choosing investments among a number of options, then plan long-term strategies. While nearly all institutions, governments and even people routinely weigh costs and benefits of their decisions, philanthropies routinely did not, according to Brest. In using this concept for philanthropy, the expected return is the predicted benefit per dollar invested.
"Expected return = (Benefit x Likelihood of Success)/Cost."

Even though this approach was eventually discontinued and the evaluation strategy evolved into more of an outcome-focused philanthropy reliant on benchmarks, the idea remained the same. Evaluation was ultimately a project-, area- and foundation-level, data-driven process, with the ultimate goal being 'informed and effective grantmaking'. Therefore, essentially, it works like an investment fund trying to make sure that their money, time and effort invested in any of the institution is actually making a difference.

But what does this all mean for climate change? Essentially, it means that there are areas and causes, the projects for which can not only be easier to evaluate and monitor, but can also offer better return on investment and real, tangible and quick benefits to the community.  

What Ivan Barkhorn said in the meeting about "picking up real life problems and trying to fix it" is the approach which certainly applies to climate change. As a whole, the fight against climate change has always seemed more abstract, and the emergence of innovation in technology being utilized to solve these real life problems has broken the larger, more blurred picture into little identifiable pixels which can then be focused on.
For instance, every breakthrough in clean technology is a win for this exact reason - it's helping make the bigger problem less abstract and provides the ability to tackle issues piece-by-piece.

Earlier, the idea of giving grants/charitable funding was, "Okay, we know that there is a problem, and it can be a bigger problem than it is at the moment, but right now there aren't many attractive projects where we can give our money. And we certainly can't just give it anywhere, we care about our funds enough not to make that mistake. Evaluation is necessary, monitoring is key." Which is certainly fair, and the ball was in nobody's court. But with technology coming in and making sure the idea is clear and the projects are focused, the scope for the philanthropic foundations to ramp up their grantmaking and investments in the area of climate environment protection has widened.