Morgan Stanley
  • Wealth Management
  • Aug 1, 2017

Breakthrough Philanthropy: Getting at the Roots of Change

Is “systems change” shifting how philanthropic organizations tackle society’s most complex and interconnected problems?

For anyone who doubts the breadth and depth of public generosity, here are a few numbers to consider: The U.S. has more than a million public charities1, funded by over 105,000 private foundations, along with millions of businesses and individuals, who together give more than $350 billion a year.2

Why then do so many social, economic and environmental challenges seem more intractable than ever? The answer may lie in how we look at society’s problems: As isolated issues to tackle, or as a complex, interconnected web of causes and effects.

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Enter the breakthrough notion of systems change, which is shifting how philanthropic organizations approach problem-solving. Systems change acknowledges that society’s ills are complex. To drive lasting progress, organizations should first analyze the systemic causes of a problem, then scale impact by partnering with complimentary organizations that each bring a specialized focus.

“The definition of insanity is to keep doing the same thing and expect a different result. If we continue as individual actors, we will continue to waste our precious assets and not achieve the results we seek,” said Melanie Schnoll Begun, Head of Morgan Stanley Philanthropy Management, at the recent 7th Annual Social Impact Exchange Conference.

The event, co-hosted by Morgan Stanley and the Social Impact Exchange, gathered leading philanthropists, foundation heads and nonprofit leaders to discuss how systems change, scaling impact and other progressive ideas are changing the conversation in philanthropy.

Using Data Strategically

An essential first step in systems change involves mapping a system to gather data on where the real problems lie. During one of the panel discussions, Kim Starkey Jonker, President and CEO of King Philanthropies—a grant making organization founded by Bob and Dottie King to alleviate extreme poverty—described the extensive in-house research and strategic planning conducted by the King Philanthropies team. “We try to start with a fact base, and to say, ‘Where is it that we can actually have the most impact in global poverty alleviation?’” she explained. 

This notion of systems change may be shifting how philanthropic organizations approach the world’s most difficult problems.

Jonker emphasized that establishing a fact base can be especially helpful in correcting assumptions. For example, her team initially assumed that malnutrition is an effect or symptom of poverty, but not a cause. “But then we discovered an entire body of research that shows that it is a cause. Economists show that by fighting malnutrition, especially in the first 1,000 days of life, we can actually fight poverty,” Jonker said. “Well-nourished children are 33% more likely to escape poverty as adults; their educational outcomes increase significantly, as do wages.”

After investigating a wide range of potential interventions to address extreme poverty, in January 2017 the King Philanthropies team launched its Food, Nutrition, and Rural Livelihoods Initiative, which is expected to improve the food security, nutritional status, and household incomes of seven million people in the Southeast Asian country of Myanmar, with additional expansion planned for India and various countries in Africa.

The learning here—and in many similar cases—is this: Many philanthropists discover that using data strategically is a first step in the process of achieving outsized impact. And along the way, some discover that designing an intervention that will best support progress requires them to go beyond simply following their passions.

Identifying Root Causes

Once data has been collected, systems change looks at structures and root causes. Serial entrepreneur Ronald Bruder found life-changing clarity as he traveled the Middle East and met youth with tremendous potential who faced seemingly insurmountable barriers to securing a first job.  Their stories stood in stark contrast to his own journey from a rough neighborhood to business success, and he realized that jobs promote optimism, stability and peace.  Determined to be an agent for change, he invested $10 million to create Education For Employment (EFE), a network of nonprofits that trains unemployed youth in the Middle East and North Africa and provides training and linkages to job opportunities.

“Talent is universal, but opportunity is not. In this region of the world, there are many educational institutions, but few local entities linking these students to work in decent jobs,” said Jasmine Nahhas di Florio, Vice President of Strategy and Partnerships at EFE. “Jobs anchor peace. We’re finding that when young people have a job, they become invested in their countries and their local communities.”

The organization now partners with nearly 3,000 companies in the region. To date, EFE has helped over 50,000 young people enter the world of work, providing them with stronger links to their society—and more optimistic prospects for their futures.

Building Communities of Effort

A key component of systems change is collaborating with other organizations to attack different aspects of a failing system. Jane Wurwand, founder of Dermalogica and its embedded initiative, Dermalogica FITE (Financial Independence Through Entrepreneurship), stressed that these partnerships are essential.

“To scale effectively, we look for active partners who can enable us to push both education and impact for small entrepreneurs. We base decisions on an alignment of our value systems and level of ambition. We need action makers! Most importantly, for a systems change, you need partners who bring something that you don't already have and that you need."

Wurwand’s initiative has provided 80,000 entrepreneurs around the world, mostly women, with the support and training they need to build businesses that will support their families and build their communities. 

Finding Points of Leverage

Once an understanding of the system and actors is in place, organizations can act on pain points where there is an opportunity to affect change. Lisa Sobrato Sonsini of Sobrato Philanthropies said that after years of supporting a broad variety of educational causes in Silicon Valley, the group decided to create their own operating program to focus 100% of their efforts on the needs of English Language Learners (ELLs) in California public schools.

They first isolated one element of a larger illiteracy issue, then identified collaborators in the space—both private and public. They now develop, disseminate, and advocate for programs and policies that help ELLs reach the same level of academic achievement as native-speaking peers by the third grade.

By honing in on one facet of childhood illiteracy and then scaling their efforts, positive outcomes ripple across the broader academic ecosystem thus helping create more motivated, confident learners throughout the state of California.

Partnering for Philanthropic Successes

The two-day Social Impact Exchange conference was itself a testament to the power of collaborating to solve problems. In his keynote address, James Gorman, Morgan Stanley Chairman & CEO, noted that, “The need for philanthropy is not diminishing. Philanthropy is integral to who we are and our responsibility is to identify causes where we can make a difference.”

Morgan Stanley is committed to fostering productive dialogues for clients in the philanthropic community. The firm’s Philanthropy Management team works with a diverse clientele to focus, scale and administer their philanthropic endeavors including multigenerational charitable legacies, charitable programs, impact investing and venture-oriented approaches.

Adds Schnoll Begun, “Events like these drive home the notion that philanthropy is never about any one single idea or person. It’s about working together to develop collective, forward-leaning solutions to problems. Morgan Stanley is proud to lead these conversations, and help our clients connect with leading experts and their fellow philanthropists.” 

Morgan Stanley Philanthropy Management offers advisory services to individuals, families, foundations and nonprofit organizations. For more information, talk with a Morgan Stanley Private Wealth Advisor or find one near you using the locator below.

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