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Rockefeller Philanthropy Advisors: not making a profit out of philanthropy

Date: 06 Oct 2006

Citywealth

Melissa Berman is a well known figure in New York philanthropy. Not only is she a shrewd business woman she is an inspirational leader, believing strongly in what she is doing and how she, her current clients, recipients of grants and perhaps you or your clients, can change the world for the better. As most of us haven’t had a calling into philanthropy until it got deeply 5th Avenue, I wonder what interested her in this career. “I was very lucky.” Says Melissa. “I was at a not for profit organisation involved in business research called The Conference Board, looking at the role of business in society. I became more and more aware of the powerful force that philanthropy was about to become.” Surprisingly she studied, folk law, mythology and English literature at Harvard and Stanford. Melissa explains it’s relevance. “Heritage and legacy are an important area in charitable giving. The stories many clients learned from their families even in childhood influence the way they think and behave. It’s something that I can help philanthropists understand. As well as this, part of any legacy plan is to create a story to tell future generations where they have come from and what they believe in.”

Despite the media frenzy around philanthropy, Melissa explains that there are still only twelve organisations in the world of the Rockefeller pedigree able to provide counselling, research and project management. And despite the large tax breaks available in the USA, to stimulate philanthropic efforts, this ‘reward’ rarely provides the motivation to devote resources. “Studies show, that philanthropy is not directly motivated by tax considerations.” Confirms Melissa and explains further. “There is a strong cultural tradition of helping the community in the US and people want to make an impact with their life. They want to be actively engaged in a meaningful way and transmit their values to children. We’ve historically had a great number of community organisations t helping neighbourhoods with projects like building houses. I think we have a keen belieft that individual action rather than public can really make a difference.”
Faith is a big issue in the USA with a large proportion of money being donated to churches. I ask how this matches up with global philanthropy where radically different religious beliefs might conflict with good human intentions. Melissa puts the topic into context. “$300bn goes to religious and educational groups in the USA but this is generally at a local level. Even people of modest means will donate a lot this way, although there is an awakening to global health issues and climate change.” Conversely the ultra rich will be involved with major international issues like micro credit. Melissa adds a thought: “Philanthropists really feel that there are solutions to problems rather than seeing insurmountable challenges, these days.”
In many articles on philanthropy there is talk of ‘impact’ and ‘feel good factor’ so I ask how important it is for clients to know that their projects are successful. “There is a strong moral and ethical drive in taking a philanthropic route, most will understand that they’ve been very fortunate.” Says Melissa. “But helping create value, encourages people to keep giving once they start to enjoy the journey.”
‘Second careerists’ and ‘young’ tech and hedge fund entrepreneurs are also being captured in the philanthropic flashbulb. “They have some interesting perspectives.” Confirms Melissa. “They want to merge philanthropy and market forces and are interested in social enterprise, investment vehicles and mission related investments using the full force of their resources. They are much younger than many others in the past, who were nearer sixty before considering philanthropy. Warren Buffet, although in the latter age group, helped raise the profile of philanthropy and the idea of ‘giving while living. Many of the younger generation have great financial success much earlier in their lives, and want to accomplish a lot. They tend to want to be more hands on.” Her message to this generation is one of encouragement. “It’s another opportunity to apply creativity, talent and drive in a completely new area. We find there is more satisfaction associated with philanthropy projects than many business ventures.”
Melissa says interest in philanthropy is only going to continue to grow. “There is an increasing sense among the wealthy globally, that participating in philanthropy is about having a full life. I think there is also belief that we as individuals can make a difference with the problems in the world. With the current generational transfer of assets from baby boomers, its all going to scale up. I would love to say that we will see the end to the world’s problems, it won’t be the case but, we see a good amount of reason for optimism in solution orientated philanthropy.” South American philanthropy is also alive and kicking. “We hear quite a bit about philanthropic efforts in Mexico, Brazil and Columbia, but it tends to be pursued in a much quieter manner, largely because there are security concerns.”
So are new entrants like New Philanthropy Capital in London competitors? “We know them very well, they do terrific research studies.” Says Melissa. “There is some overlap with work in that we also undertake research for grant makers and private donors but offer strategic planning for operations, management, reporting and assessment services across the US and Asia as well. We’ve always had a very high standard of due diligence with origins in the Rockefeller family office which takes us back through a century of analytical business thinking.”
As there is some criticism in the overall philanthropic sector about ethical investing, I ask whether the business reputation of John D Rockefeller, thought to be ‘the richest man in history,’ rebounds on the organisation despite his philanthropic efforts also ranking as astounding. His past monopolistic business practices caused some controversy eventually leading to government intervention and a break up of his oil company although he retained small investments in all of what have become the major oil companies today. Melissa makes a fair point. “The era that the original Rockefeller wealth was created in is so far in the past, it was a different time and world. I’m sure if we looked at many of the fortunes now we would not be comfortable about how business was practised back then. Fundamentally you would have to question the whole idea of enterprise. Past practices in many organisations weren’t what they are now and by and large philanthropy coverage is positive. When it isn’t it helps people realise they need to be more accountable for what they do. It also helps build the case for taking sound philanthropic advice rather than just doing it themselves.”
Client referrals tend to come from private bank, legal and accountancy intermediaries in the main. Organisations like Rockefeller Philanthropy Advisers rely on the banking community to do due diligence and money laundering checks before referring clients. “We don’t have the resources to under take this ourselves.” Says Melissa, before adding. “We really compliment work with wealthy families, by helping clients achieve goals. Bankers should realise they can strengthen their relationships with clients by introducing the feel good factor of philanthropy. We think it’s a fruitful partnership.” Inspirational institutions that Melissa comes across include UBS and Goldman Sachs. “They are really helping clients think through philanthropy.”
The process of philanthropy starts by building a ‘road map’. “We sit down with the family to help them articulate their motivation, strategy and plans for involvement, then look for opportunities to build a portfolio that may interest the client. There are a couple of reasons to pick opportunities that make an impact. It helps focus attention, show progress and we want to make a difference. Our motto is ‘don’t fund a problem fund a solution.'” I ask what she means by funding a problem, surely all donations, ultimately do good? She explains. “It’s really about being thoughtful with philanthropic efforts. There are two routes a client can take. They could care about global poverty, find a charity, look over their financials and just give them some money, in our view, that’s funding the problem. Instead you could fund micro credit or education to take people out of poverty. You need to understand cause and effect to make important changes.” Technology is also playing its part. “It’s made everything so much easier on a world wide scale. We can develop relationships and get information from remote places and funding goes into new technologies to find water or increase cell phone and wireless access so that people can trade their goods more effectively. It’s the exciting part of philanthropy. People are using a broad range of approaches and resources to tackle problems. It ranges from straight funding to new technology and projects that are part social and part business and using these principals to invest.”
And the dull side of philanthropy? I hear an audible sigh. “To be an ephemeral (short term) funder. Some people use it as a form of personal entertainment: ‘ I’ll do environment this year, then next year global disease.’ “It doesn’t create any impact and even worse rev’s up an organisation to later have the rug pulled out from under them.” She warms to her theme. “There are also funders who don’t have any respect for the non profit sector, they just think everyone is stupid and that intelligent people don’t go into public or charitable work. Going in with an attitude, like that is disruptive.”
Some of the projects Melissa is most proud of include the ‘Afghan women leaders connect’ project and The Bridge Fund, helping Tibetan communities be self sustaining. “We are fiscal sponsors in Afghanistan supporting the role of women in a difficult environment. We are also proud of a project that brings significant funding and health and education to Tibetan communities and our human rights efforts. Part of the challenge is matching up opportunities with sources of funding. There often isn’t as much information about leverage as one might hope.” Melissa says changes in tax law around the world would encourage philanthropy , particularly if combined with clearer standards for how philanthropy ought to be conducted.
And even the sticky topic of fees, isn’t so sticky. “We do it on a break even basis, we aren’t making profits from the work we are doing. We charge either based on an hourly fee for advice or if managing a project we often assess fees as a percentage of the grant making. Using us is less costly than having additional dedicated employees. Our mission is to help donors create helpful, thoughtful philanthropy, with programmes in twenty countries and to make a real difference. If your readers are interested, they should go ahead and call us.”

Contact
Melissa Berman

T: 001 212-812-4257
http://rockpa.org/
http://www.conference-board.org/

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