Have We Reached a Transformative Moment in Philanthropy?
On June 15th, the New York Times ran a headline that doesn’t say it all, but it certainly gives a clear signal that change is happening in philanthropy circa 2021:
“Giving Billions Fast, MacKenzie Scott Upends Philanthropy”
“Upends” may count as a bit hyperbolic, but the first part of the headline begs a question for those less familiar with the ins and outs of traditional philanthropy: Why does someone simply giving money “fast” indicate philanthropy has reached an inflection point?
Because, believe it or not, giving away money, even for a billionaire, is often a long and complicated process that requires a staff and offices and lawyers and accountants. Just Google the “Bill and Melinda Gates Foundation,” and…1,602 employees with a $49.8 billion endowment. As for the MacKenzie Scott organization that donated a total of $6 billion in 2020 and 2021, there really isn’t an organization. It doesn’t exist. There isn’t even a website. How is that possible?
According to Scott, for her first round of giving in 2020, she and a handpicked team of advisors “looked at 6,490 organizations and undertook deeper research into 822.” They ended up with a total of $4,158,500,000 in donations for 384 organizations. And then…they just gave them the money. Often, millions of dollars per recipient. Done with an email, or even just a phone call. And perhaps the most “upending” fact of all: There were no strings attached. The receiving organizations could do with the money what they willed. With no explanation. So, on second thought, maybe “upends” is not hyperbolic.
Echoing the dramatic New York Times headline is Nick Tedesco, president & CEO of the National Center for Family Philanthropy, and a former manager at, yes, the Bill & Melinda Gates Foundation. Tedesco says, “I think MacKenzie, in many ways, dispelled some of the myths that have been holding certain families and individuals back. She, in many ways, threw the gauntlet down and said, ‘What are we going to do about this moment and all that come after?’”
As can be seen, while Scott in throwing down the gauntlet skipped many drags on giving, her strategy in selecting recipients of her second round of largesse was carefully calculated. As she put it, these 286 recipients were “Teams Empowering Voices the World Needs to Hear.” And one of those carefully selected teams was New Profit, an innovative, equity-focused national venture philanthropy organization created 23 years ago by and for social entrepreneurs.
So, it is no surprise that New Profit got the attention of Scott with its emphasis on, and history of, grantmaking and support for what New Profit calls “proximate leaders of color.” That made New Profit a perfect fit for Scott’s strategy with its focus on “social sector infrastructure organizations.” And in terms of what constitutes a “proximate leader,” New Profit describes them as those individuals who have “the deepest knowledge about the assets in their communities and the systems that must be transformed.”
As the organization’s founder and co-CEO, Vanessa Kirsch, puts it: “For equity in giving to occur, funders need to trust the leaders and organizations they intend to support.”
“For 23 years, we have supported visionary leaders through a signature mix of unrestricted capital and strategic support, all underpinned by deep trust and partnership,” Kirsch said. “As funders, we need to change the relationship dynamic to fully back the leaders who are closest to the communities we aim to serve because they’re the experts.” Kirsch applauds Scott’s and her husband Dan Jewett’s generosity and boldness.
“It’s exciting to see Scott and Jewett bring broad awareness to what is truly needed at this pivotal moment for philanthropy—trust and humility,” Kirsch said.
And certainly, over the past 18 months. Two sweeping occurrences—one a worldwide and near cataclysmic virus, the other an American and global awakening regarding racial injustice—have injected not only a heightened sense of urgency into philanthropy, but a realization that it needs some fresh thinking and approaches. As the Wall Street Journal put it last November: “The COVID-19 pandemic is forcing donors, volunteers and nonprofit organizations to rethink how they give and receive charitable aid.”
A recent Worth reader survey on philanthropy bears this out (see more on the survey below). Some 87 percent of these high net worth individuals (HNWI) said they plan to make changes in their giving pattern. And recent high-profile activism for racial justice is triggering calls for change. A recent headline at online magazine Inside Philanthropy declared, “Black Lives Matter, COVID and Equity: Philanthropy Must Step Up for the Long Struggle.”
The editor and founder of Inside Philanthropy, David Callahan, thinks that WSJ’s report on rethinking philanthropic strategies and Worth’s findings on changing giving patterns and IP’s stance on philanthropy stepping up not only will occur, but are occurring. “Philanthropy nearly always reflects what is happening in contemporary society,” Callahan says, “and we can already see our changing world’s effect on philanthropy, with corporations pledging money to racial justice efforts and emergency philanthropic funding programs for community-based organizations to tackle COVID-19.”
But as recent surveys show, while corporations are making commitments to racial equity, they and funders of all kinds are continuing to grapple with the “how” question, even as there is a clear movement afoot to change direction in giving. Still, to Callahan’s point, during the month after George Floyd’s tragic death, over 1.1 million individual donations were made to Black Lives Matter, and at Higher Heights for America, which fosters political empowerment of women of color, donations increased tenfold. As that article in IP put it, “who would we be if foundations ignored this extraordinary cry for help?”
And while large donations from the ultra-ultra-rich are always welcome, who are the key funders for many nonprofit organizations so they can fund differently and address new needs in new ways? Their donors, of course, whose steady giving helps make it possible for these organizations to do humanity’s good works. We can, of course, include among those donors the HNWIs who read Worth. And here’s a question we wanted them to answer: “While leaders in the philanthropic world talk of ‘urgency’ and ‘rethinking,’ what, if anything, has changed in your pattern of giving?”
And we not only wanted to know which philanthropic issues most concern Worth readers, we wanted to engage them as partners in an effort that helps evolve and improve the impact of philanthropic giving. To accomplish that goal and create an ongoing dialogue, as mentioned, we began with a survey of Worth readers on the topic of their giving.
When asked the causes to which they channel their donations, readers put “education” at the top of their list, followed by, in descending order, “women and girls,” “human services,” “arts and culture” and “health/disease alleviation.” Asked if he saw any surprises on this list, Callahan at IP said: “Education is almost always number one, but women and girls at number two is a bit of surprise.” And evidence of this newfound importance is that tenfold increase in giving to Higher Heights for America.
Over the past two years, charities and foundations, and nonprofits in general, faced huge challenges, but they did critical and innovative work to continue serving their constituents. CNBC, in an article this past May, quoted a midyear 2020 analysis done by an organization called Candid, a nonprofit tracker, which suggested that “up to 28 percent of nonprofits could shut down.” Meaning, donors shifting their giving emphasis may not be good news for all foundations and charities. So, to remain whole, they may want to pay attention to this finding from the Worth reader survey:
Here are the top three qualities that Worth readers value in a charity:
- Strong and visionary leadership;
- A consistent level of engagement;
- A commitment to diversity, inclusion and equity.
Clearly, with diversity, inclusion and equity being in the top three of qualities donors value, close attention must be paid by charities to this issue, not only to serve the underserved, but for the very continued existence of a nonprofit charity or foundation. And finally, as mentioned earlier, respondents to the Worth survey are in the mood for a change when it comes to their philanthropy. And what counted as the biggest change they sought?
Some 58 percent want to become part of a “community of philanthropists.” Which raises the question, “What does a community of philanthropists look like?” While there is no template for such a community, Callahan says it can go basically one of two ways: “You can have a group of philanthropists with common interests who see that joining forces will have a greater impact, and they actually pool their money, then give it to one or more favored causes. Or, it can be more like a club, where donors just agree to target certain organizations or causes.”
Of course, the ultimate goal in creating a philanthropic community is to use any and all donations for the greatest impact. And with this article, Worth commits itself to doing what it can to help foster community around urgent social issues, and we would welcome from our readers any suggestion on how our publication can foster what some call “giving circles.” Let us hear from you with your ideas about how to foster not just increased giving, but an increase in equitable giving.