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Unlock investment capital & be digital asset ready, report advises


With the squeeze on giving coming from multiple directions, foundations and charities need to unlock investment capital and be digital asset ready, a new report suggests.

Citi’s Global Perspectives & Solutions (Citi GPS) report, Philanthropy and the Global Economy v2.0 – Reinventing Giving in Challenging Times looks at how philanthropy can innovate to unlock funds.

It suggests that strategically deploying catalytic capital (investment capital that is patient, risk-tolerant, concessionary, and flexible) to mobilise investment capital, and routing it towards the causes the nonprofit sector seeks to support, is key to unlocking maximum funding. It highlights that, according to some sources, less than 4% of foundations have employed loans, equity investments or impact investments in pursuit of their philanthropic goals in recent years.

Andrew Pitt, Head of Research for the Institutional Clients Group at Citi commented:

“Philanthropy has many more assets at its disposal than we realise – cash giving is around $550 billion globally each year, but we estimate that investable assets total more than four times this amount globally. Better aligning these investment assets with their mission stands to unlock many more funds that could deliver the positive social impacts that the sector seeks.”

Beyond unlocking investment assets for social purpose, the report also highlights the need to target digital asset givers. It says that donations in cryptocurrencies skyrocketed in 2021, with some data reporting between a six-fold and 12-fold increase in digital asset donations. The demographic profile of digital asset owners differs from the traditional donor it points out – typically younger and male. This, it says, presents an opportunity to grow the stock of philanthropy, and potentially to democratise it globally, if digital asset owners turn some of their funds to giving.

However, it also highlights that philanthropy practiced by digital asset owners looks different from traditional donors in terms of causes that are currently being supported, with a very heavy bias to environmental causes.

Ronit Ghose, Global Head, Future of Finance, Citi Global Insights said:

“There is a scope for innovation, beyond receiving crypto and converting to fiat, to use cryptocurrency and underlying technologies across the charitable value chain. This may increase the transparency of charitable operations.”

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