Civic Prospects are Worsening — Can Social Investment Be Part of the Deal?

The world and Hungary are facing many challenges. Sometimes, it is social processes or the climate; sometimes, it is power itself, but there are always issues. And so far, there have always been people who have taken up these causes. They are in a more challenging position than ever — perhaps they have less than before. How to give? Veronika Pistyur’s intentionally thought-provoking essay.

What does civil maths look like?

The budget of an NGO is just like that of any business, especially a small one. It has to pay its own salaries and infrastructure costs. An average organization with 6–10 employees has an annual budget of at least HUF 100–120 million. The income of organizations is as diverse as in the business world. It includes micro-donations, corporate grants, revenue from product and service development (donation shops, training courses, sales of knowledge materials, etc.), tenders, and large private donors.

Not everyone can anticipate all possibilities and develop capacity for everything, but the majority, however small the organization is, try to do it all at once. They spin plates. Think about it! Maintaining five or six revenue streams while the organization is doing its core business, its professional work: serving its cause and its beneficiaries and, of course, at the same time, constantly improving its organization and its communication so that the nonprofit does not have a “non-professional feeling.” Organisational expansion? It’s often difficult to manage with only micro-donations.

In such a setup, providing 10% of the operating costs, i.e., around HUF 10 million of support from a major donor, is already an increase in capacity, which is a huge opportunity.

Today, only a few lucky organizations — founded on the initiative of a large private donator — can get to the point where they can think about actual development thanks to their founder’s network.

The organization will be here tomorrow, there is operational security, and it can also create some reserve; for many organizations that carry social causes, it should be the minimum of existence. Otherwise, what it has started will only be amortized, and its impact often unfolds over 10–20 years.

Micro-private donations — between 3,000 and 50,000 per month — are intended to support the operational security of social organizations. Mainly. Those who raise such funds mostly use them to cover their running costs. Most of them are unable to develop and increase their impact. Every year, getting to zero — or, to put it more plainly, surviving — is at stake so that the undertaken mission can be fulfilled.

Large private donations and considerable tender resources could help organizations set themselves on a more predictable growth path and scale their impact. Most social organizations cannot survive and develop from loans.

Concerning larger tender resources, one could turn directly to the EU; the capacity deficit of organizations rarely allows anyone to navigate successfully through a bureaucratic application maze.

In this country, transparent private foundations that provide large donations are, unfortunately, in the category of those that can be counted on one hand. In the past, Weknowwhose Foundation provided a funding base in specific segments. We are well aware of what this means for several organizations. Hungary has no family or friend private foundation where many can turn for more significant sums.

Some good examples

The Fund’s initiative is commendable. According to their website, two organizations already receive significant funding from it, with 50 people contributing nearly €30 million a year.

With Bridge Budapest, we have been trying for years to involve large private donors with whom we could scale up 240 children’s development social initiatives related to our EdisonPlatform by ensuring at least a quarter of their budget.

For now, we are grateful to a wealthy family for their commitment. Through us, they consistently stand by three causes in the long term. Having it in a portfolio-like way and retaining its miraculous resources can bring fundamental changes. (We also thank them while respecting their anonymity at their request.)

Thanks to this grant, a nearly 10-year-old organization, often awarded professionally, dared to hire an employee who can now work on scaling their impact. They wouldn’t have dared to undertake such a commitment before. Now, they are getting a larger amount for 3 years, and the sense of security and predictability has allowed them to start the project with significant results in the first year.

Donating 1% of the budget of the supported organization is already a significant amount in this country. Such a donor is considered a major donor, but many organizations have yet to encounter this magnitude of support.

The current operational and funding context leads many NGOs to become micro-donation specialists due to a lack of other sources, sharpening their skills for communication hacks and stunts, further fragmenting their already limited capacities. It leads to burnout, jeopardizes service, and preserves social gaps.

Giving consciously equals giving twice

Although the number of individuals who donate to social, cultural, or scientific organizations with a good feeling has increased, the list of “big donors” does not seem to be growing. Not that they have a register. Year after year, the same names arise when the question arises: can we finally have a proper list of philanthropists? It makes one wonder why we can’t fill a magazine where each page showcases the societal missions of wealthy individuals, not in business but in social causes. One page, one person, and their causes. Across 100 pages, with 100 individuals. However, international examples exist.

It’s clear that in Hungary, much less remains for philanthropic purposes. There aren’t huge families rolling historical fortunes in front of them; there isn’t enough reserve. Therefore, it would be good to consider how the limited resources are spent and on what. Consciousness would play a vital role in this.

Forbes stopped publishing its philanthropy list a few years ago. (They asked the wealthiest Hungarians and the most prominent companies, who responded based on self-disclosure, typically the same people and the same answers. — the editor). At that time, I suggested whether a Philanthropy Award, nominated by NGOs with a standard criteria system, systematically year after year, could help fill the void so that more names would emerge over time in Hungary. So that a 100-page magazine could be filled with new and authentic role models and stories.

In Hungary, significant role models who leave a legacy of great magnitude and significance for generations beyond their business activities don’t readily come to mind. We understand the differences in circumstances, and seeking Szechenyis of our era is undoubtedly unrealistic. But still, even to a lesser extent, who are his successors today?

We still often debate why it’s not enough for someone to focus only on their business. Today, few understand that wealth does not mean societal disintegration or division will not affect them. That they don’t need to be concerned about it.

It cannot be expected of the wealthiest to be the solvers of every crisis and systemic flaw. Social initiatives perform state tasks as well. It’s not a question of how many challenges there are; the burden is immense. Nevertheless, even ancient Greeks saw philanthropy as part of civic responsibility. Not vicariously, but in parallel. What is the reason that this is not self-evident in Hungary? Is it culturally determined? A sociocultural “error”?

It would be so lovely to think about these things together! To have a dialogue, even if we know and understand how sensitive and complex the topic is. No one likes to feel pressured to act when their determination has not yet matured. We may need time for this, too, as we need time to learn or relearn many things in recent years.

All this is not about accountability but an experiment of thought that can contribute to change. The differentiation is crucial. We do not intend to rummage through anyone’s wallet or burden those already giving. All our respect and gratitude are theirs. Moreover, we ask them to continue being ambassadors for what we often still call “donation” but is, in fact, a social investment — a force and opportunity in our responsibility for future generations. This is the future of our children.

At the end of 2021, with Forbes Hungary, we established the Philanthropy Award to put exemplary donors in the spotlight. Eventually, that alternative wealth list will be created, where the support activities of the participants are transparently visible, too.

Why do we need significant donors?

Philanthropy is not only about large private donations, as every minor contribution, even the smallest, also matters. However, we are focusing on the former because we are not doing well. We consider private donations to include support from one’s own company at the expense of its profit. Without major donors, the civil sector will almost be unable to increase its efficiency — and thus its impact — within the foreseeable future.

A study by the Nonprofit Information and Training Center (NIOK) in 2022 shows that the number of regular donors has increased due to the impact of COVID-19. 34% of the surveyed fundraisers observed a strengthening willingness of people to donate. Why is that? The communicative professionalism of fundraisers has improved significantly in recent years. The authorities have also worked to direct unexpected extra attention to civil organizations, while the conditions of independent media and cultural figures have deteriorated, and conflicts have increasingly surrounded education.

This year’s 1% campaign brought unprecedented success. Even though taxpayers still do not allocate nearly one-third of the amount that can be offered. However, the improvement is seemingly apparent. At least, it shades the picture, as the abolition of the small business tax (kata) has already allowed more people to allocate, and some of them have done so. In other words, outstanding success may not necessarily indicate a substantive advancement.

The transparent elite formation of domestic fundraisers, the Self-Regulatory Body of Fundraising Organisations, monitors Ethical Fundraising Organisations annually. Currently, there are a total of 54 such organizations. According to the Civil Information Portal, 53,539 registered civil organizations will be operating in Hungary in 2023.

We do not have representative data on major private donors. However, a rapid survey conducted among ethical fundraisers (32 organizations responded) revealed that:

- Less than 20% of them have the experience of receiving at least 10 million forints from a significant private donor annually.

- Even fewer can count on this long-term, potentially for at least three years.”

0 is not 1, 1 is not 10

Today, the wealthiest 8% of the world earns half of the Earth’s total revenue, while the wealthiest 1% owns half of the wealth. The poorest billion comprise only 1% of total consumption, while the richest billion represent 72%. The top 10% is responsible for 49% of the world’s carbon dioxide emissions, whereas the bottom 50% is responsible for just 7%. These are just a few statistics from Rutger Bregman, a Dutch historian, explaining the significance of whether the wealthiest contribute to reframing, invest in societal well-being, and understand that sustaining the fetishized growth won’t be easy without this.

No one expects individual players to solve global problems and connect to our reality and possibilities. (If there were more connections, it could even lead to solving global challenges.)

What do you think, how many lives you are impacting with your operations?

In our leadership training, business players are always surprised when we ask them this. The first number they mention is always at least a hundredth of what comes out after some thought and the real, tangible, everyday impact itself.

Warren Buffett has given a lot to the world’s business players with his sayings, but his approach of saving first and spending later may need to be reconsidered today. There is no time and not much to keep from anyway. If we don’t learn to incorporate a different redistributive mindset into the basic operations, there won’t be much left always. Today, achieving financial security and long-term economic stability is challenging merely through disciplined financial management and without any social perspective.

The majority are probably doing less than they could today. Indeed, not out of bad intentions, but because it doesn’t have a widely spread culture. Nor, for example, of how much is enough. We are not as fortunate as countries where it’s firmly ingrained in the culture that one or even 10% of all earned and taxed income serves additional community interests.

If donations were not an extra item but a constant and inseparable part of our operation, this question would not arise. We would consistently form prices, plan budgets, and measure success so that a portion of our income (not just profit) — under 1% — supports some cause. Even related to our business activities. We are far from that. The idea that societal investment could be part of the business — not a voluntary extra — can provoke many. Understandably, most people expect solutions from the state through our paid taxes, but it’s also foreseeable how much more challenging it is today. (Let’s leave aside for now whether taxes are adequately spent.)

How can there be more?

In Hungary, the top 50% owns 91% of the net wealth, while the bottom 50% has only 9%, according to the Wealth Survey of the Central Bank of Hungary. The wealth of the richest tenth in Hungary is 61 trillion forints. The wealthiest 10% holds 60% of the country’s wealth, and the richest 1% owns 25%. Perhaps it’s not daring to assume, even without quoting data, that few of this 1% have a conscious philanthropic strategy today.

No strictly defined international benchmark or criteria system determines what percentage of income or how much time a person should donate to be considered a philanthropist.

The concept of philanthropy is comprehensive and is not limited to the amount or frequency of financial donations. It varies individually — how much and in what form someone can donate, be it money, time, expertise, or other resources. The essence of philanthropy lies more in the intention and commitment to improving societal well-being rather than in specific amounts or percentages. Thus, someone can be considered a philanthropist if they actively and intentionally participate in supporting social causes, regardless of the magnitude or form. Companies can also be philanthropists, even though we haven’t discussed them.

We hope the Forbes-Bridge Philanthropy Award will lead to much deliberation among the jury members in a few years about whom to choose from among the worthy nominees. For those who have it in their heads (or rather hearts) that they want to be there, we have a few suggestions:

1. Our philanthropic role model is a private individual (or family) who is a regular, consistent, long-term committed donor. They consistently support at least one initiative. The size of the support matters, but rather its proportion to their capabilities. Thanks to their support, a more impactful project can be realized. They have acceptably built their wealth. This path can also lead to civic commitment when someone has been dedicated to societal, scientific, or cultural initiatives — not always directly related to their work — for years or even decades. Beyond financial support, they spend significant time supporting initiatives, using their knowledge and pro bono work, and taking on social roles and positions conscientiously. The goal is to make structural changes with proportionate use of their capabilities, deep commitment, and goodwill for the next generations.

2. A balanced philanthropist rarely asks, „Why is this good for me?” because they understand that it will be better for all of us, not necessarily in the foreseeable future, but eventually. When planting a walnut tree, we accept that it won’t be us who will sit in its shade, and the same attitude should be necessary for societal investments. A philanthropist supports an aspiration that can lead to a more dignified world, and that’s enough for them. They don’t seek how their company can profit from it. It’s painful that this has to be stated, but we still often encounter these questions among those willing to donate. Just as it is painful how many civil organizations feel that they have to give something in return for support beyond what they already provide through the conscientious fulfillment of their mission. I think that perhaps, in addition to what they already do, they need to give an object, a contemporary artwork, extra attention so that the extent of support can be priced because otherwise, it’s too intangible. It would be better to give without these to those whose existence and operation are inherently about giving in every moment.

3. They also understand that philanthropy is not (primarily) campaign support, so they don’t trivialize it — they examine what passion, what motivation they would commit to willingly, what aligns with their values — what cause or few causes they can stand by durably, in the long run. The long term is at least ten years. One-time support is also helpful because sometimes firefighting is needed. Still, they understand that continuous support can bring real impact: societal changes occur over a long period, not just through campaigns.

4. A thoughtful philanthropist does not necessarily start with opening their foundation because they know that operating costs can be an unnecessarily heavy burden. They don’t have to have the organization named after them — because they know their legacy will remain without it. They prefer to find a partner to donate either through them or directly.

5. They choose proven and credible organizations, and if they do so, they trust them.

6. They follow the work of those they support and expert reports, and if they perceive difficulties, they may even spend time using their knowledge and, if necessary, their connections to support the development of the cause and the organization. Of course, this is not mandatory, but it’s an opportunity. Just as understanding and learning about the differences and uniqueness of civil organization operations so that expectations can be realistic. Therefore, a realistically thinking philanthropist also understands that there are also failures and mistakes in civil operations. Regarding success, they don’t place greater expectations on the supported ones than in other business areas. Their donation will go to the right place, even if something sometimes fails. Not every planted walnut becomes a tree, but the more we grow, the greater the chance of change, and we can learn from failures together.

7. Today, many ask, and more and more are asking. Significantly more than those who can give. This is a problematic pressure, so it’s worth building a conscious strategy and portfolio from our social issues — our investments — just like our business investments. A consistent philanthropist also makes a social investment portfolio.

8. They evaluate what they spend and why and think differently about the question of “how much is enough for their well-being” than the majority does today. It’s clear to them that giving is possible not only after acquiring significant wealth. Giving is always possible if we start from the whole and don’t think of donation as something beyond the expected.

9. A conscious philanthropist also incorporates this mindset into their business decisions and understands that many of our expenses are made out of comfort, habit, and prestige. They don’t perceive it as a sacrifice; they prioritize differently, allocating more towards the community, both inward and outward, because, for instance, they may find contentment in a cheaper car that still provides every hard-earned and deserved sense of luxury. They contemplate whether a mega-event helps build their business or if the goal can be achieved more modestly. They approach success, prestige, and the pressure for visibility more nuancedly. They might have already realized that the vanity fair rarely yields pleased moments, understanding that prestige and position can also be built by giving more to social initiatives. What a beautiful new world it would be where business players „show off” their achievements at year-end gatherings about how many places they noticed in their operation that they spent on seemingly essential things, how much they managed to save with this, and how cool causes they instead directed it to. Oh, we would love to be tired of this topic, the basis of flashing rather than a comparison of levels and experiences of well-being.

10. If the decision has been made, but there is still much uncertainty, and assistance is needed for the long-term strategy, you can contact us at Bridge Budapest. With love and goodwill, we strive to help build portfolios from credible organizations and causes based on our best knowledge and over ten years of experience.

Resource management instead of resource reallocation

Many in the business world are mourning, mainly in the denial or anger phase. They feel like something is being taken away from them, stripped of the world of decades-old routines, embeddedness, and security. It’s a very challenging experience. We understand it; we live it. Breaking away from the illusion of growth, which many have achieved primarily through massive cost-cutting in recent years, is tricky. But it is also clear that, in reality, we have all the resources to find solutions to the challenges of our time. Whether change happens is a matter of intention. This is why, at Bridge, we delved into legacy leadership among the various leadership perspectives.

Will more leaders need to formulate their legacy at the moment of their disposition? Those who, as part of their daily operations, build workplace communities and create value for their stakeholders. What is suitable for people, our environment, our country, and our world can always be good business.

In the context of philanthropy, the same crisis in resource management is intensifying. If business is not going well, achieving expected numbers is challenging; many cut costs and trim down on the nice-to-have item of social responsibility. Only some people, but many, are doing this now.

At the same time, there are genuinely long-term committed and value-based philanthropists today who understand that retention might be the new growth in business. Or, they frame growth not only quantitatively but also qualitatively. In this regard, of course, owners need to evolve primarily. Among them, true philanthropists can lead the way, helping to reframe and shape the attitudes of many. They understand that numbers don’t come when you cut, but when you “run forward”. Into our shared future. Despite all circumstances, because those are given. We can’t change them collectively, but we can change our attitude.