Reflecting on responsible leadership today

When the financial industry sector represents 12.5% of your GDP, changes will necessarily have implications on all other economic sectors. In early October I took part in a very stimulating conference with the inspiring title of ‘Responsible Leadership in Times of Change’. In this letter I would like to reflect on some of the learnings from this collaboration with its organisers, the Banque de Luxembourg, and look at three different initiatives to explore leadership today:

A new independent platform for sustainable finance

The responsibility of trusted advisors is very important to enhance philanthropy within existing foundations or for encouraging new donors. At wise Partnership, alongside Bertelsman Stiftung and New Philanthropy Capital, we have been promoting better understanding of the needs and the challenges that face trusted advisors, be it bankers or lawyers, in order to develop philanthropy. Geneva is a hub for the private banking sector, for international as well as grassroots organisations. Raising the profile of philanthropy and sustainable finance is a sound initiative and an opportunity in changing times.

We have been part of a movement of 15 founders, including SRI experts, philanthropy advisors and market leaders in microfinance such as Blueorchard and Symbiotics. In October 2008 a new platform called Sustainable Finance Geneva (SFG) was launched with the purpose of promoting sustainability and responsibility within Geneva’s financial community. SFG targets professionals who are looking to invest responsibly and are determined to structure and focus their action.

I often remind myself of a quote by Jean Monnet, widely regarded as one of the chief architects of the European Union, “Nothing changes without people but nothing remains without institutions”. To date, dialogue with the financial community has been very constructive. Geneva has a strong legitimacy to take the lead on this agenda and develop an institution on this platform. Geneva’s capacity to create a platform that brings together independent expertise, including SRI, impact investing and philanthropy, gives an important signal to the market of the extent to which those different “know-hows” are relevant to clients.

Learning from best practice

Switzerland has a very stable law for foundations; there have been no significant changes over the last 100 years.

‘SwissFoundations’, a leading umbrella association for large grant-making foundations in Switzerland, has taken the lead in developing a Swiss Foundation Code. This code is the first European Good Governance Code for grant-making institutions, thereby the first to define basic action-oriented rules for the good governance of classic forms of foundations (including management, furtherance,and finances). This self-regulation ensures an exchange of best practice in the sector and gives deeper roots to the legitimacy of foundations in society. And, wisely, it complements governmental regulations.

Exploring innovation in funding

In our field we see numerous very good organisations and individuals coming with entrepreneurial approaches to solve social and environmental challenges. However, we also too often see the tendency to differentiate ‘for-profit’ and ‘non-profit’ approaches when it comes to funding those organisations. There is a recurrent tendency to consider the approach of grant-making in opposition to a social venture approach (i.e. equity or loans). Our view is that both grants and investments are necessary elements for the sustainable development of organisations and should be brought together.

An increasing number of initiatives to raise awareness and promote investment in social enterprise have emerged. Dynamic organisations such as Bamboo Finance, Responsability or Alphamundi are devoted to helping other social entrepreneurs. The aim is to increase the social impact of investment and to find new vehicles to do so. With this objective in mind, we are launching, in early 2010 and in association with Swiss Philanthropy Foundation, a new open fund with an initial endowment of 1m Swiss Francs (CHF) for one of our clients, which explore structured donations in close coordination with social investments. Developing new collaborations between investors and donors will help to recognise that emerging new solutions to local and global problems needs possibly to combine both sources of funding: grants and social investment.

On a final note, I would like to share an experience I had many years ago with a Swiss entrepreneur and philanthropist in Southern Chile as I was starting my career. We were in a front of one of his tree plantations and he shared with me a spontaneous thought, “In 15 years or so, my son will be the one processing the wood we see growing here”. I felt privileged to work for an inspiring man dedicated to social entrepreneurship. I often think back to his words and consider the perspective of time we face. If we want to see strategic philanthropy grow in hand with sustainable investment, we have to develop a new platform, learn from best practice and try new approaches, in order to be ready when the market reaches maturity.

Etienne Eichenberger is co-founder of wise Partnership. www.wise.net

You can contact Etienne at etienne@wise.net