“The rallying cry for philanthropy to change has been resounding and gaining momentum over the past few years. It comes from non-profit leaders, academics, the general public, and… from those engaged in the philanthropic sector itself.” (Alberg-Seberich & Ganji, 2023)
The Viewpoint Foundation has been supporting causes in Calgary and across Canada since 2002. Since then, philanthropy has undergone significant transformations. This has been especially true in recent years and has been driven by a growing desire for tangible change and a focus on creating lasting impact. This overview explores some of these major changes, highlighting key trends and shifts that are reshaping the sector.
Every year, the Dorothy A. Johnson Center for Philanthropy at Grand Valley State University publishes a report on philanthropic trends. 10 of this year's 11 trends are outlined in this article, with the 11th being left out due to it only being relevant to non-profit organizations and foundations in the U.S. (Dorothy A. Johnson Center, 2023)
1. Collaborative Funding: While collaborative funding is not new, it has increased recently, particularly due to community foundations' initiatives during the pandemic. Philanthropy is no longer the sole domain of individual donors or foundations. Today, many philanthropic efforts are the result of collaborations and partnerships among individuals, foundations, and even governments. An example of such collaboration is Catalyst 2030, which is “a community of over 2,000 members, including social entrepreneurs and funders in 114 countries…(They) make the case that in order to put a dent in the major problems we face globally, collaboration is necessary.” (Dorothy A. Johnson Center, 2023) This collaborative approach recognizes the importance of working together to address complex global challenges effectively.
2. Rethinking Capacity Building: The report suggests that funders and grantees should co-create solutions in capacity building, considering general operating support and multi-year funding to enhance non-profit effectiveness.
3. Disaster Philanthropy: In the wake of major disasters like Hurricane Katrina and the 9/11 attacks, there has been a shift from short-term emergency response to long-term recovery and preparedness. Organizations like the Center for Disaster Philanthropy have played a crucial role in driving this change. However, funding for preparedness and resilience-building still lags behind initial humanitarian response efforts.
4. Non-Profit Models in For-Profit News Outlets: To address the decline in local news reporting, numerous non-profit news outlets have emerged since 2012. Some for-profit outlets have transitioned into independent non-profits, while others seek philanthropic support for special projects. Funding restrictions and the potential influence of private funding on news content raise concerns regarding sustaining news outlets' operations and the integrity of journalistic decision-making.
5. Evolving Organizational Structures: Non-profits are adopting non-traditional structures, such as co-leadership, multi-executive directorship, worker self-direction, and fiscal sponsorship, to create more sustainable and mission-driven programs. While this trend can alleviate the burden on executive directors and appeal to younger generations, questions about accountability and impact remain.
6. Policy Attention on Philanthropic Speed: Over the past decade, attention has grown around foundation payout rates, declining individual donors, and the rise of donor-advised funds (DAFs).
7. ESG and Impact Investing Backlash: Younger donor-investors continue to use both their giving and their investing as integrated tools for social change. This impact investing — when doners/investors use their capital to invest in organizations focused on environmental, social, and governance (ESG) criteria — has faced criticism from both the Left and the Right. As impact investing by philanthropic institutions continues to grow, the intensifying backlash against ESG considerations may impact philanthropy's future. There is a robust debate over ESG’s definition, measurement, and proper use. ESG is an increasingly relevant issue in philanthropy because any foundation that has an endowment must make choices about how that endowment is invested. Early critics of ESG were often from the political Left, arguing that companies were engaging in “greenwashing” — providing misleading or incomplete (or sometimes false) information about their sustainability practices — in order to get higher ESG scores and to attract eco-conscious consumers and investors. The critics are now coming from the Right as well, an example being Florida Gov. Ron DeSantis pushing through legislation forbidding ESG considerations when investing any state funds, such as pension funds. Other states such as Texas and Louisiana have made similar moves, including pulling funds from BlackRock explicitly because of their ESG investment strategies. While there are several types of criticisms leveled against ESG in this current backlash, the most common are:
8. Non-Profit Unionization on the Rise: Non-profit employees are increasingly interested in unionization, driven by factors like increased workload, stress, burnout, and a desire to achieve social goals like diversity, equity, and inclusion. Unions have actively courted non-profit workers, resulting in membership growth.
9. The Public is Holding Non-Profits Accountable to Living Their Mission: Recently, there have been increased demands for non-profits to live up to their missions and stated values. “As more non-profits and foundations open up their operations to all their stakeholders — embracing greater inclusion, strategies like participatory grant making, or changing how they monitor and evaluate their programs — more people will come to expect and wield opportunities for accountability.” (Dorothy A. Johnson Centre, 2023)
10. Greater Emphasis on Diversity and Inclusion: There is a growing recognition of the need for diversity and inclusion in philanthropic endeavors. Philanthropists are actively seeking out organizations led by women, people of colour, and other underrepresented groups. The aim is to ensure that philanthropy reflects the diverse communities it serves and addresses the unique challenges faced by different populations.
Changes in philanthropy have been noticed in other channels other than the Dorothy A. Johnson Center. Below are an additional five trends that were common throughout the literature:
1. Increased Focus on Impact: Contemporary philanthropists are increasingly interested in measuring the effectiveness of their donations and ensuring they make a real difference. There is a shift toward tracking and evaluating the impact of philanthropic efforts, emphasizing the need for transparency and accountability, and giving more boldly. (Reid & Salehi, 2022)
2. Technology and Innovation: Technological advancements have opened new avenues for philanthropists to engage with a broader audience and leverage their resources. Crowdfunding platforms, for instance, have facilitated easier donation solicitation and enabled organizations to share their impact more effectively. Technology continues to drive innovation and enable philanthropists to find creative solutions to social problems. (Billimoria, 2023)
3. Long-Term Planning: Philanthropists are increasingly focused on sustainable, long-term solutions to social issues rather than providing short-term relief. This shift involves investing in education, infrastructure, and other initiatives that address the root causes of problems. By addressing underlying issues, philanthropists aim to create lasting change and improve the overall well-being of communities. (Alberg-Seberich & Ganju, 2023)
4. Next-Generation Givers: Comprised of Gen Zers and Millennials, these givers are bringing a fresh approach to philanthropy by integrating their social values into all aspects of their lives. Related to point seven above on impact investment, this next generation of givers view their investments, purchases, and workplace choices as opportunities to create a positive social impact and are willing to utilize their financial assets to drive change. Rather than focusing solely on individual causes, next-gen givers understand the significance of tackling systemic issues. Problems like poverty, racial injustice, and climate change require holistic solutions involving multiple sectors, including non-profit organizations, government programs, schools, and businesses. The conventional role of philanthropists as experts who solve problems for others is also challenged. Instead, the input, knowledge, and perspective of the communities they aim to assist is valued, and those affected collaborate in the decision-making process. By doing so, they promote accountability, transparency, and elevate the voices of underrepresented communities, particularly people of colour. These values and perspectives on philanthropy lead us to the final point, trust-based philanthropy. (Foster, 2023)
5. Trust-Based Philanthropy: There is growing recognition in philanthropy of the importance of a trust-based framework that emphasizes collaboration, accountability, and long-term impact, with a focus on building relationships and shared learning between funders and grantees. This approach recognizes the complexity of social issues and adopts a long-term impact perspective that shifts the focus from one-off grants to sustained impact. This involves including grantees and affected communities in defining success indicators and creating a theory of change informed by the community. (Reid C., & Salehi S. 2022)
Based on these commonly noted trends, philanthropy is experiencing a significant shift, with a greater emphasis on impact, collaboration, diversity, inclusion, and long-term planning. The next generation of philanthropists brings fresh perspectives and approaches that integrate social values into various aspects of their lives. Overall, philanthropy is becoming more strategic, collaborative, and impact-focused than ever before, challenging traditional practices and driven by a desire to create lasting change and improve the lives of people around the world.
Bibliography
Alberg-Seberich, M., & Ganju, E. (2023, March). Transforming Philanthropy from Within. Alliance, 34-39.
Billimoria, J., (2023, March). Transforming Philanthropy from Within. Alliance, 40-47.
Cookman, A., & Young Whyte, G. K. (2020). Integrating individual and organizational well-being (SSIR). Retrieved from https://ssir.org/articles/entry/integrating_individual_and_organizational_well_being?utm_source=Enews&utm_medium=Email&utm_campaign=SSIR_Now
Dorothy A. Johnson Center. (2023) 11 Trends in Philanthropy for 2023.
Foster, C. C. (2023). In philanthropy, Gen Z and millennials do it their way. Retrieved from https://www.kiplinger.com/personal-finance/in-philanthropy-gen-z-and-millennials-do-it-their-way
Reid, C., & Salehi, S. (2022). Retrieved from https://www.evaluationinnovation.org/publication/toward-a-trust-based-framework-for-learning-and-evaluation/
Wolverton, L. (2023). Retrieved from https://quoimedia.com/the-charitable-wealth-problem/