"Relative to the corporate environment, we are in the 1870s. But philanthropy will increasingly come to resemble the capitalist economy," predicts Uday Khemka, a young Indian philanthropist and a director of the SUN Group investment company owned by his family. Like many of the new generation of philanthropists, he has big but well-defined ambitions. "I want to help develop the infrastructure of philanthropy," he says.
The need for philanthropy to become more like the for-profit capital markets is a common theme among the new philanthropists, especially those who have made their fortune in finance. As they see it, three things are needed for such a philanthropic marketplace to work.
1. There must be something for philanthropists to "invest" in, something that, ideally, will be created by "social entrepreneurs", just as in the for-profit world entrepreneurs create companies that end up traded on the stock market.
2. The market requires an infrastructure, the philanthropic equivalent of stock markets, investment banks, research houses, management consultants and so on.
3. Philanthropists themselves need to behave more like investors. That means allocating their money to make the greatest possible difference to society's problems: in other words, to maximise their "social return". Some might operate as relatively hands-off, diversified "social investors" and some as hands-on, engaged "venture philanthropists", the counterparts of mainstream venture capitalists.
[Excerpted from The Economist]
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