Since this is Philanthropy Week, hundreds of foundation executives and program officers will be descending upon senators and representatives on Capitol Hill to make their case. Their message will focus on topics ranging from concerns about limits on the charitable deduction to support for reducing the foundation excise tax to concerns about limitations on the value of deductions for real property. In addition, representatives from institutional philanthropy will relate their qualms about the increasing inequality in the U.S. and the important role government can play in meeting the needs of communities across the country.

How the Microfinance Revolution Emerged From a Simple Act

During Philanthropy Week, let’s take a look at implications in the charitable arena for Santa Barbara philanthropists. Since the number of nonprofits per capita in Santa Barbara County is second only to Marin County, philanthropy clearly plays a key role in our community’s life. Just last week over 700 enthusiastic attendees gathered to hear Dr. Muhammad Yunus at the Westmont President’s Breakfast. His compelling challenge to all of us to take personal responsibility for problems we see inspired many. He used his own life experiences to demonstrate how the microfinance revolution emerged from the simple act of distributing $27 from his own pocket to 42 would-be entrepreneurs. Today his banking model has led to more than 250 institutions in nearly 100 countries setting up similar micro-credit programs.

It all sounded so simple and so powerful, yet counter-cultural even radical. Bring the banks to the people instead of bringing the people to the banks? Give loans to the poor who have no collateral? His ideas seem counter-intuitive and several attendees thought they were unrealistic and yet Dr. Yunus stood there as a living example of the success of this revolutionary model successfully implemented from Bangladesh to Malaysia to the Philippines to New York to Los Angeles. Started in 1982, his thriving Grameen Bank based on his principle of people-worthy banks rather than bank-worthy people has made $8.5 million in loans to the unbankable. Dr. Yunus points out that dollars from typical donations go only one way and are never seen again; whereas his model makes endless use of the same money through business.

What Would Local Philanthropists Think of Dr. Yunus' Message?

I wondered what our local philanthropists might think of this perspective. So, after Dr. Yunus’ thought-provoking presentation, I asked three community leaders the same question: What would you say to a local philanthropist who asked if Dr. Yunus’ comments mean that s/he has been doing philanthropy all wrong by simply giving financial donations to nonprofits? Marsha Bailey, CEO/Founder of Women’s Economic Ventures; Steen Hudson, President of Hudson Consulting and former Executive Director of the Rescue Mission; and Steve Baker, Westmont’s Associate VP for Advancement all had different perspectives on this question.

All three leaders reminded me that the word philanthropy means love of people. As philanthropists, we want to use our resources to care for people in our community. Therefore, we take a broad view of our community needs and realize there are multiple ways of making a difference. Microfinance can be a potent method of empowering low income individuals to begin entrepreneurial businesses. Women’s Economic Ventures is a shining example of this model’s success in our own community. Yet this type of social investing is not the only way to encourage self-reliance or to enrich our community. To be most effective philanthropy, or loving people, takes many forms: donors investing financially in the work of nonprofits that are making a difference; companies encouraging their employees to volunteer for their favorite causes; businesses offering expert advice and counsel to nonprofits; community members serving on nonprofit boards of directors; and a plethora of in-kind contributions. In fact, members of the Corporate Philanthropy Roundtable meet quarterly to learn from each other best practices in philanthropy.

Increasing Our Happiness By Helping Others

In the days leading up to Philanthropy Week Dr. Yunus challenged all of us to look at our community with caring eyes wide open and, when we see a problem, to take personal responsibility for finding the seed of a solution. He reminds us to look deeply at how we can work together to solve our common challenges by asking probing questions and creating a shared vision. It turns out that Dr. Yunus’ most important message to us was not necessarily how to implement microfinance or how to revolutionize our banking system but to remind us that when we help others we increase our own happiness.