Through an agreement with UK-based Alliance magazine, PND is pleased to be able to offer a series of articles about global philanthropy.
Discussions about trends in philanthropy generally promote the “next best thing” or the next great threat. In reality, most trends carry both positive and negative implications, raising exciting and troubling questions that the thoughtful philanthropist and NGO leader must address in a changing landscape. My hope is that when American philanthropic trends are considered, a balanced reflection can lead to more thoughtful, effective, and powerful giving globally. While any one of these trends could fill a full issue of Alliance magazine, I offer six, with brief consideration of their implications, in hopes of sparking conversation.
Blurring Boundaries Between Philanthropy and Business
Social entrepreneurship, impact investing, venture philanthropy, social financing, and other practices blur the once-clear divide between NGO and corporate activities, which raises a host of questions. What is the possible impact of a smaller grant budget on grantees and the field if more grant funds are allocated to social investments? How will this trend influence the dynamics of an investor-donor relationship? What are the beneficial and challenging dynamics of increased nonprofit/corporate competition? What are the limits to investment when social enterprises offer a limited financial upside to balance the losses typical in a traditional high-risk equity investment portfolio? What are the limits of social enterprise as an approach to address underlying systemic issues of power, marginalization, and inequality?
Expanding Access to Data
The proliferation of online giving data continues to grow, yet even as increasing amounts of data are available — including, soon, digital tax returns for nonprofits — how data should be used remains an open question. In 2010, Hope Consulting found that while “donors say that how well a nonprofit performs is important, few actively try to fund the highest-performing nonprofits.” Although 90 percent say nonprofit performance is important, only 3 percent conduct research to find the most effective ones. So how do we turn data into actionable knowledge?
Crowdfunding Offers a New Way of Raising Funds
Crowdfunding’s rapid growth has the potential to shift traditional funding patterns in a fundamental way. Platforms have evolved from first-generation structures with giving levels based on examples such as Heifer International’s Gift Catalog, to giving to specific vetted projects, and finally to third-generation giving to non-vetted projects on platforms like Kickstarter. Through this evolution, the volume of giving has increased as oversight has declined. Today, millions of donors make small (often non-tax-deductible) gifts to projects they discover through extended social networks without due diligence. Given this dramatic rise, should we re-evaluate the relative impact of tax deductibility to motivate donors? How important will funding intermediaries remain?
Generational Transitions in Giving
“Next gen” has been a regular topic in philanthropy, and the influence of younger donors continues to grow. Changing social and economic dynamics, including faster wealth accumulation from tech-based business ventures and a massive intergenerational transfer of money, are expanding the pool of young major donors. As young people are giving bigger and stepping into foundation leadership roles, giving is changing. Among other things, increased mobility is weakening local attachments and globalization is expanding philanthropic interests.
Giving While Living
Highlighted by Atlantic Philanthropies’ planned 2016 spend-out, there is growing scrutiny of the “perpetuity” model. Donors and foundation trustees who decide to “give it all now” are largely driven by concerns about pressing problems today and worries that the priorities of future generations may change. Some face financial declines that raise doubts about long-term sustainability. While still a small minority, their funding decisions raise questions about the importance of legacy and future family engagement, and about the time needed to achieve impact.
Growing Movement Toward ‘Giving Big’
With the increasing concentration of wealth and outreach by groups like the Giving Pledge and my organization, Bolder Giving, we are witnessing a new age of mega-donors. For individual donors, these public commitments invite reflection on why, as well as how much, to give. Questions about new major donors’ influence in a field and how other funders will respond should keep funders and NGO leaders on the edge of their seats. We must also ask how the growing number of mega-donors and -donations will affect elite influence on social and political development, and how these donors will influence our culture of giving.