This is the first in a series of articles exploring trends in philanthropic giving from Gary Cates, Chief Philanthropy Officer
for ProMedica
, a national not-for-profit health and well-being organization.
Arriving at the unprecedented intersection of multiple societal factors, philanthropic donors in the United States have the unique opportunity to drive new, innovative change moving forward – if they are willing to grab the steering wheel.
Over the past two years we have been plunged into the depths of the deadly COVID-19 pandemic, witnessed the related economic fallout, and experienced new waves of social, racial and political discord. At the same time, we saw a record level of charitable giving in the United States ($448 billion in 2020, according to Giving USA) and we are in the midst of the greatest transfer of wealth taking place over the next two decades (an estimated $60 trillion), creating an opportunity for unparalleled philanthropic giving.
As pundits describe a deepening divide in our nation, fueled in large part by these multiple societal factors, philanthropy can be an effective tool for bridging the gap. But building that bridge is going to require a new way of thinking for donors, advisors, not-for-profits and community stakeholders.
At the onset of the pandemic, many funders focused on “hand out” programs – safety net initiatives, agencies and programs that offer direct financial or in-kind relief. The response was both appropriate and needed. But, as impactful as this relief-focused giving can be in a crisis, it does not promote long-term systemic change.
Moving forward, attention and philanthropic giving must begin to transition toward the task of fueling longer-term recovery and rebuilding efforts. Said another way, it’s putting a new emphasis on “hand up” initiatives, particularly those that address the root causes feeding the need for safety nets. Unfortunately, too many not-for-profits have no plans for driving themselves out of business. Donors can change that dynamic.
In my experience, there are five things I believe donors, and their advisors, should consider in making philanthropic plans. And, in turn, these five considerations will guide fundraisers, and the organizations they represent, to maximize their efforts.
- Start the process by bringing the full team to the table. Wealthy donors rely on advisors to help develop their strategies, plans and portfolio. Philanthropy is an important component of that portfolio and should not be short-changed. Donors/clients should ask that the full team be assembled – including wealth advisors, asset managers, tax attorneys, accountants, and the philanthropy professional. Building lifetime financial plans should be a holistic endeavor, including all of the individual’s goals and interests - and that means charitable giving too. Earlier philanthropic involvement can lead to more effective, more integrated and often larger gifts. The philanthropy professional can bring innovative ideas to the table to tailor pledges over time, leverage planned gifts such as life insurance, and even combine donor vehicles to accomplish more. Done right, this earlier involvement can help donors better accomplish their goals and dreams.
- Demand bolder collaboration among charity organizations. Addressing the systemic issues which are facing our communities will require new, bigger and bolder collaboration and partnerships. Many of the barriers and disparities we are witnessing are not one-dimensional. Impact initiatives must be coordinated, shared, and synergistic. Responding to complex issues requires complex approaches. Funders need to demand that organizations and agencies take on new ways of working together if we are to make any progress.
- Enforce impact measurements. Now more than ever, we need to look at the metrics used for philanthropic investment – and those metrics should be more impact-oriented than activity- based. Simply measuring activities leads to working within silos and focusing on individual agency efforts. At a time when we should be seeking fundamental changes in society, funders should be focused on driving dramatic, big-picture results. Big-picture metrics will require grant recipients to think bigger and act more collectively. For this reason, funders should insist on metrics that look at overarching impact goals. For example, a food agency can count the number of meals or families it serves over a given time. While important, this metric says nothing about ending the underlying problem of hunger. How many of those meals are going to the same individuals? What is happening to the number of households in the community experiencing food insufficiency? The bigger-picture metric would be reducing the prevalence of hunger in a defined geography – which might require the food agency to work with other not-for-profits.
- Incrementally move outside the status quo with giving. There is no doubt the organizations that historically enjoy a donor’s generous giving rely on those funds – and donors should consider keeping them in their plans. However, to fuel bigger impact, donors also must be willing to change things up a bit. I am not recommending wholesale change, just doing a few things differently. Ideally, donors should consider either increasing their philanthropy bucket or moving a smaller percentage of it into new areas. Like the old adage goes, doing more of the same thing, and expecting it to deliver different results, is insanity. If donors want to fuel true impact and see sustained change, it’s time to make some new investments. Based on the last Giving USA report (2020), just a 2 percent increase in charitable giving in the US would equate to almost $9 billion! It could be a great start to incrementally moving outside the status quo.
- Reward initiatives that are strategic and innovative. As we have seen over the past two years, safety net programs are important and play a role – and there will continue to be a need for safety net programs. However, as attention turns to more long-term responses, with an eye toward accelerating sustained change, there will be a growing need for initiatives that are strategic in their approach and innovative in their implementation. Strategic initiatives are built around longer time horizons, they incorporate multi-dimensional interventions, and are more holistic in their approaches. Strategic initiatives typically seek to solve underlying factors rather than simply addressing immediate symptoms, and their innovation comes by working with others in new and bolder ways. Funders interested in sustained recovery and rebuilding should intentionally encourage strategic and innovative approaches by directing significant funding in this direction. Recipient agencies and organizations will follow that direction.
Beyond the actual dollars charitable donors will give in the coming year, they can drive an even bigger impact by the way those dollars are given – assembling the full team, demanding collaboration, enforcing outcome metrics, giving in new ways and rewarding strategic, innovative root-cause initiatives. It’s a great opportunity for givers to collectively grab the wheel and steer in new directions.?
