Gates, pictured on the cover with Warren Buffett and Oprah Winfrey as one of the “titans of philanthropy,” calls his approach “catalytic philanthropy”:
[W]hen you come to the end of the innovations that business and government are willing to invest in, you still find a vast, unexplored space of innovation where the returns can be fantastic. This space is a fertile area for what I call catalytic philanthropy.
By jumping into spaces that business and government aren’t ready to touch, Gates says, philanthropy can shift market forces and incentivize others into taking opportunities that they wouldn’t have considered before:
Philanthropy’s role is to get things started. We used foundation funds to set up a system to make market forces work in favor of the poor, guaranteeing purchases so drug companies could make a little bit of money or at least not lose their shirts.
Catalyzing change is what BRAC is all about.
When BRAC found that microcredit wasn’t encouraging clients to take on new, more productive enterprises, it stepped back to see the bigger picture and invested upstream to create social enterprises in areas like chicken feed production and downstream into other areas such as dairy storage and distribution, giving the poor assurance that they could make the necessary investment in higher-yielding chickens or cows.
When BRAC found that the poorest of the poor weren’t benefiting from microcredit because they had no means to produce even the tiniest regular income stream, it designed, tested, and scaled up the a program called Targeting the Ultra-Poor to create pathways out of poverty for families that even microcredit couldn’t reach. Today, 95 percent of former ultra-poor grantees have come out of extreme poverty and stayed out, four years after leaving the program.Through the Bill & Melinda Gates Foundation, Gates is one of BRAC’s big supporters. But as he notes, one neat aspect of catalytic philanthropy is that you don’t have to be the chair of a large foundation to do it. The key is to find ways to give back that create new opportunities and incentivize others to take advantage of them, be they multi-million dollar drug companies or millions of families living in poverty around the world.By Oscar Abello (@oabello)
Marketing and Communications Associate at BRAC USA