It's coming, and the question is not when but how much. Over the next fifty years, an estimated $41trillionwill changes hands in the largest intergenerational transfer of wealth this country has ever seen. Of that amount, an estimated $6 trillion to $7 trillion will be funneled into charitable bequests, with the rest going to heirs ($24.6 trillion), estate taxes ($8.5 trillion), and estate fees ($1.6 trillion).
When combined with ongoing demographic changes and the unrelenting advance of digital communications technologies, it's inevitable that the philanthropic landscape in the U.S. will change in dramatic and even profound ways. Just what those changes will be, however, has yet to be determined.
In October, Philanthropy News Digest spoke with Anne Heald, director of New Ventures in Philanthropy, a national initiative of the Forum of Regional Associations of Grantmakers, about the changing face of philanthropy, the implications of ethnic and gender differences in charitable giving, and the second five-year phase of the initiative.
Heald became the national director of the New Ventures in Philanthropy initiative in September 2003, bringing with her a diverse background in research, evaluation, extracting lessons and best practices from innovative projects, and building capacity through knowledge sharing. Prior to serving as a consultant to such clients as the Economic Policy Institute and the Education Quality Institute, she was president of the Convenience Store Foundation for Education and Research, founder and executive director of the Center for Learning and Competitiveness within the Graduate School of Public Affairs at the University of Maryland, and a former program officer with the German Marshall Fund of the United States. She also served as co-chair of the Funders Group on School-to-Work Transition Issues, and co-chaired both the Salzburg Seminar and US-European Summit working group on Education and Workforce Development.
A graduate of the John F .Kennedy School of Government at Harvard University, Heald lives in Virginia with her son and border collie
Philanthropy News Digest: Tell us a little about yourself. How did you get interested in nonprofit work and what did you do before you joined New Ventures?
Anne Heald: I've been interested in nonprofit work since I was a teenager and couldn't imagine doing anything else. In fact, my entire career has been spent in the nonprofit community. New Ventures gives me an opportunity to use all my knowledge and skill sets.
PND: What's the animating vision behind the project?
|"...New Ventures came out of the observation that a staggering transfer of wealth involving between $40 trillion and $100 trillion was going to take place over the next fifty years...."|
AH: The ultimate vision is to have more communities with their own endowments and more people engaged in giving for important community needs. The vision came out of the observation in the mid-90s that a staggering intergenerational transfer of wealth involving between $40 trillion and $100 trillion was going to take place over the next fifty years. Around the same time, a number of national funders began to see grant requests for projects that were about reaching out and connecting new individual donors with existing philanthropic and community needs, and that's how New Ventures came about.
PND: Who launched and funded it?
AH: Atlantic Philanthropies, the Ford Foundation, the Lilly Endowment, the Kellogg Foundation, the Packard Foundation, the Kauffman Foundation, the Rockefeller Brothers Fund, the Fidelity Charitable Gift Fund, the Mott Foundation, the Doll Family Foundation, the Committee to Encourage Corporate Philanthropy, the Jessie B. Cox Charitable Trust, the St. Paul Companies, and Bruce Flessner, among others.
PND: Is it an open-ended project?
AH: No, it will be a ten-year project. We've completed the first five-year phase of the project and are transitioning into the second five-year phase. In phase one, $14 million was invested in New Ventures, most of which was used to fund and support experimental coalitions around the country that were developing innovative ways to reach new donors to create endowed funds.
PND: How is the project funded?
AH: We're funded by Kellogg, Ford, Packard, Lilly, Mott, RBF, the Doll Family Foundation, and a few others. We're a national initiative embedded within the Forum of Regional Associations of Grantmakers, and while regional associations of grantmakers work primarily with existing grantmakers, they increasingly are interested in reaching out to new philanthropists and in encouraging new forms of philanthropy. In fact, many have had very successful New Ventures' funded projects — learning labs, as they're called — of their own.
PND: Learning labs?
AH: In phase one, New Ventures funded forty-one regional coalitions of organizations across the country to find out what works in increasing philanthropy in different audiences that historically have been under-represented in organized philanthropy. In many cases, our grantees did experimental and groundbreaking work. The structure of New Ventures and the Forum at large encourages a learning community, and all information, products, and resources that come out of New Ventures coalitions is open-source. Also, because we generally supported our community through multi-year grants and tried to keep past grantees in the family, a community was formed where less-experienced grantees could learn from more seasoned grantees and all could learn from each other.
PND: What other types of philanthropic activity is New Ventures interested in?
AH: There isn't a single type. As I said, we fund coalitions of organizations, and they tend to work on varied approaches. For example, the Southern Philanthropy Consortium, a partnership between the Southern Rural Development Initiative, the Southeastern Council of Foundations, and the Foundation for the Mid South, worked to develop a Philanthropy Index for poor rural communities, which actually do a lot of giving per capita, as a way of gauging the philanthropic assets of and opportunities for endowment in those communities. Others have worked with farm bureaus and regional planning associations to assess the needs of rural communities and to identify potential new donors in those communities. Still others have focused on next-generation donors or on developing a better understanding of philanthropy in different ethnic and racial communities. We've supported work to encourage businesses and corporations to become more involved in philanthropy and think more civic-mindedly. We've funded projects and organizations to work with professional advisors, a crucial gatekeeper to reaching high net-wealth individuals. And we've also supported work on philanthropy among youth and women, as well as on how to reach the very biggest donors in new and individualistic ways. It's a very complex and textured landscape.
PND: Do your efforts extend to things like giving circles, donor-advised funds, and venture philanthropy?
AH: All of those. We're interested in a whole range of things, from looking at media strategies for communicating the value of philanthropy to ways of collecting and using data to identify the role of philanthropy in American society, the number of philanthropists out there, and the categories of potential donors who might be attracted to some of these new activities and forms of giving. Giving circles are a wonderful example. We've learned through our work that giving circles work particularly well with women donors, and as a result we think women will be a major emerging philanthropic audience. Women already receive a much more substantial amount of personal wealth than they did in the past, they tend to live longer than men, and they tend to be the ones to make the final decisions about a family's accumulated wealth. They're also highly disposed to contribute to their communities, but they like to do it in a people-to-people kind of way, so giving circles work well for them. Also, we've seen that young people of different racial and ethnic groups find giving circles a wonderful vehicle for becoming involved in philanthropy.
PND: What does the emergence of these new philanthropic forms and audiences say about the field?
|"...There is an enormous amount of new data that suggests that individuals are either choosing to donate directly to a cause or an activity, or would like to but don't exactly know where to start...."|
AH: Well, I think the starkest difference is that for most of us, the wordphilanthropyconnotes large foundations. However, there is an enormous amount of new data that suggests that individuals are either choosing to donate directly to a cause or an activity, or would like to but don't exactly know where to start. Which is why the approach of the coalitions we work with has been to get more people involved in philanthropic activity, regardless of the form it takes. We don't espouse a particular form or cause; instead, we try to educate people — those of modest means as well as the wealthy — that there are ways they can use their assets to make a difference in their communities.
PND: Are people in less affluent communities surprised when they hear that?
AH: Yes and no. I think of the donors who have worked with the Coalition for New Philanthropy in New York, a project that works with African Americans, Asian Americans, and Latinos in New York City, and those donors are happy they're being noticed. Previously, they had felt that people weren't aware of or knowledgeable about the philanthropic work being done in their communities. So acknowledging the philanthropic and volunteer activities people are engaged in is an important first step in encouraging more philanthropy and more strategic ways of doing philanthropy.
We see a similar phenomenon in rural communities, which tend to think of themselves as receivers of assets, even though, as I mentioned, individual giving per capita in rural communities is quite high. What we've found is that people in those communities are often unaware of their philanthropic assets. For instance, land is an important asset in rural communities, and in many cases it can be donated to the community and logged or mined or otherwise worked on a sustainable basis so as to provide the equivalent of a permanent endowment for the community. But people in those communities tend not to view land in that way. So again, some of what we do involves acknowledging philanthropic work that's going on but isn't transparent to the larger community, while another part involves pointing out opportunities for even greater philanthropic activity to people who aren't aware of those possibilities.
PND: You mentioned that New Ventures has embarked on phase two of the project. How will it be different from phase one?
AH: Well, the first phase was really about seed grants and experimentation and watching to see what would turn up. And as a result, we've developed a substantial body of experience and have identified people with different skill sets and know-how in a whole range of communities. We've also developed dozens of tools and strategies that can be used by those people to encourage new forms of philanthropy. In phase two, we want to help those people identify and share lessons and best practices so that the field really begins to understand what works and doesn't work.
PND: Can you give us a couple of examples of lessons or best practices you've already learned?
AH: One of the major lessons we've learned — and it cuts across the field — is that the key to working with donors, new or old, is developing relationships, and we've developed concrete information about how to do that in different communities. Let me give you an example. From donor interviews done by the Coalition for New Philanthropy in New York, it appears that young African-American, Asian-American, and Latino professionals express similar motivations and interests in their philanthropy. In contrast, the history of older African-American donors is rooted in the church and the civil rights movement, while giving by older Latinos and Asians is motivated by relationships with their home countries, which has implications for national giving. We also know that donors have to travel a continuum of engagement, from an initial understanding of their choices to actual engagement with a philanthropic activity, whether it's a giving circle or endowing a fund or something else.
In addition, we've learned that there's a lot of opportunity in populations that are currently under-represented in the field. One of the ways to connect with those populations is to reach out to the professional advisors — lawyers, financial advisors, wealth advisors in major banks, and so on — who interact directly with potential donors as they begin to plan their estates. Again, those are the people who have already developed relationships with potential donors.
Rural philanthropy, as I mentioned earlier, is another great opportunity. I mean, right now the existing philanthropic infrastructure is very weak in rural areas and the needs are tremendous. The situation is compounded by the fact that it's difficult for larger agencies, whether publicly or privately supported, to do "retail" philanthropy over large, sparsely populated areas. As a result, much of our work in rural areas has been about building philanthropic infrastructure and/or building on existing structures such as farm bureaus, extension agencies, schools, or local government agencies to encourage philanthropy, and our grantees have developed some tools to help with that. I mentioned the Philanthropy Index, which essentially is a tool to help communities assess their philanthropic assets, and we've also supported the development of a landowner's/farmer's guide to giving.
I could go on. The point is, we've begun to develop a rich body of knowledge, and now we hope to leverage it. For example, we want to convene groups of people that are doing cutting-edge work on, say, a topic like donor education. That could mean all types of organizations, from regional associations of grantmakers, to community foundations, to New Venture grantees, to issue-based or advocacy organizations. The idea would be to bring fifteen or twenty of the best people in the country together to synthesize best practice in working with donors in different contexts. Then we would take that knowledge and test it in communities where it applies, solicit feedback, and share the revised practices more broadly.
In all of this, data has emerged as a compelling tool. We don't have a lot of it, and it can be relatively expensive to gather and analyze. But it's very strategic, and one of the ways we want to share is through what I call benchmarking. The idea is to develop data that measures the effectiveness of efforts to reach donors and professional advisors, as well as the effectiveness of their communications and marketing strategies.
PND: Why is that important?
|"...You have a much better chance of succeeding at something if you know what it is you want to do, can measure your progress toward that goal, and can adjust your strategy as the work unfolds...."|
AH: Well, I think you have a much better chance of succeeding at something if you know what it is you want to do, can measure your progress toward that goal, and can adjust your strategy, if need be, as the work unfolds.
PND: How do you and your colleagues plan to measure the success of your efforts in phase two?
AH: That's an interesting question. First, I'd say we have a clear objective in mind, and that is to increase the number of communities in the U.S. that have permanent endowments. That's one of our measures. We also want to increase the number of organizations nationwide that have the skills, knowledge, and motivation to work with new philanthropists, as well as the number of tools available to help them do that. Finally, we want to increase the number of organizations that incorporate the promotion and facilitation of new philanthropic ventures and activities as part of their overall mission. Those are the four outcomes that we plan to measure as part of our evaluation process.
PND: Do you work with your local partners to leverage the funds they receive from you?
AH: All of our work is accomplished through collaboration, and some of our local grantees have been very effective in leveraging additional dollars. Phase two will follow the same model. To date, there's been about $14 million invested in New Ventures nationally, matched by another $6 million or $7 million locally. That doesn't include non-cash contributions.
But it goes beyond dollars. Let me give you a couple of examples. We have a partner in Point Coupee Parish, a poor rural community in Louisiana, that used our Philanthropy Index tool to learn more about the philanthropic assets in that community. The project was spearheaded by an African-American woman who runs a nonprofit organization in the parish and a local philanthropist who has her own family foundation. The data they used became the cornerstone for building a real interest in the philanthropic spirit and possibilities available to the community. To do this, they brought together a diverse group of community leaders and used data provided by the Southern Philanthropy Consortium to better understand their parish's wealth. They also added their own deep knowledge of their community's assets. Ultimately, they decided to create a fund to benefit their community at the Baton Rouge Area Community Foundation. More important than the fund, though, was the community building that grew from the process, which, according to participants, went a long way toward addressing race and class divisions in the community.
In this area, a group called Giving New England partnered with a group called Resource Generation, an initiative of the Tides Foundation and the New Way Foundation, and began to test different messages and language tailored to a younger, hipper audience. Again, their work underscores the general lesson that, in speaking about philanthropy and in speaking about giving, you have to take into consideration the different frames of reference and expectations of different audiences; if you want to maximize your efforts, you have to meet your audience on its terms, not yours.
PND: Would you categorize what New Ventures does as strategic grantmaking?
AH: I would characterize what we do as enabling grantmaking.
PND: That's a good term. What does it mean?
AH: Well, what we try to do through our grantmaking is to enable local and regional associations and coalitions to experiment and develop a stronger understanding of and capability in working with the philanthropic assets in their communities and regions.
PND: To what extent will the intergenerational transfer of wealth you mentioned earlier shape and/or change the attitudes of the next generation of philanthropists?
|"...There's no question that we will continue to see large numbers of new philanthropists who want to work in a highly individualistic way and who generally want to connect with the philanthropic experience on a more personal level....."|
AH: There's no question that we will continue to see large numbers of new philanthropists who want to work in a highly individualistic way, who choose not to set up organized foundations, who want to make donations directly, and who generally want to connect with the philanthropic experience on a more personal level. Having said that, much of the nonprofit sector and existing grantmakers still have a lot of work to do to understand this new kind of donor.
PND: You seem to be describing a kind of philanthropy that will be more locally oriented.
AH: Yes, and that's why we're trying to support local and regional coalitions. They're critical to our efforts to connect with and help these new kinds of philanthropists succeed.
PND: Is there a danger that, by focusing locally, we'll ignore the national and international issues that increasingly affect all of us?
AH: I don't think they're mutually exclusive. In fact, one of things I hear from regional association of grantmakers is that there is a large and growing interest within their respective regions about international grantmaking. Remember, we're talking about the first Internet generation, and one of the startling things about the Internet is that it has made the world smaller for everyone who uses it. In our 2004 conference, which will be right here in D.C., we'll be bringing together those who serve existing grantmakers and organizations and individuals that are reaching out to new donors. Although the conference will look at national trends, it will really concentrate on how those trends play out locally.
PND: Is the New Ventures model something that can be replicated in other countries?
AH: Well, we're not so much a model as we are a vehicle for encouraging a broad range of experimentation in the field. We have found through our association with WINGS [Worldwide Initiatives for Grantmaker Support], which is a membership organization serving grantmakers working abroad, that grantmaking organizations and associations are not nearly as integral a part of civil society in most countries as they are in the United States. But when we have connected with them, they've been quite eager to receive and use our publications and tools, and I think that's because the lessons and experiences we've gathered over the first five years of our existence really resonate in countries where philanthropy is still in its infancy.
PND: What do you hope to be able to say about New Ventures when you bring the curtain down on it in five years?
AH: First and foremost, I hope we'll be able to say that, as a result of our efforts, many more endowments had been established for community needs. I also hope there will be more organizations that understand how much the philanthropic landscape in this country has changed and have embraced new strategies and tools to take advantage of those changes. And I hope that many more communities that had once been beyond the reach of traditional philanthropy will have figured out, with our help, how to connect with new donors who want to work with members of the community to make a difference.
We welcome engagement with other partners to advance these goals and to help new philanthropy respond to all the issues that are important to us. If your readers would like to learn more about the work we are doing, I invite them to contact me and to sign up for our Growing Giving newsletter at our Web site.
PND: And on that note, I think we'll have to leave it. Thanks so much for your time this afternoon, Ann.
AH: Thank you.
Mitch Nauffts, PND's editorial director, interviewed Ann Heald in October. For more information on the Newsmakers series, contact Mitch at firstname.lastname@example.org