Where is philanthropy headed over the next 10 years?
That’s the central question that our What’s Next for Philanthropy in the 2020s project has probed with more than 200 philanthropy executives, professionals, donors, board members, experts, and grantees since the start of 2020.
Against the backdrop of the Covid-19 pandemic, growing demands for racial justice, and other challenges that have unfolded over the past 18 months, our conversation surfaced exciting ideas about how philanthropy could evolve. What if, for example, agility and innovation were prioritized over meticulous processes and closely defined outcomes? What if grant makers set up community “accountability councils” instead of just “advisory councils”? What if foundations shared their endowments with historically marginalized populations to truly begin building assets in those communities?
Other leaders we spoke with were more circumspect about whether philanthropy will, or should, significantly change. They noted that the field is insulated from many of the forces that drive adaptation in other industries and circumstances. Permanent endowments, strong long-term investment returns, and massive wealth creation have buffered philanthropy against financial pressures faced by many grantees and communities. The Tax Reform Act of 1969 cemented the legal and regulatory framework for foundations, and many grant makers in the United States remain broadly governed by those rules five decades later. Sustained public critique has the power to change the field, but it’s hard to know what will actually stick. Most critiques simply fade away over time.
With relatively low financial, regulatory, and public pressure, what’s next for philanthropy usually mirrors what has always been.
Yet while philanthropy is often insulated from change, the past 18 months have shown that it is not necessarily immune. The pandemic and calls for racial justice have spurred many grant makers to adapt to a changing context. Decades of entrenched practices, such as spending the minimum required by law and grantee reporting requirements, changed in a rapid period for many foundations.
Pressure to Change Over the next decade, we expect a handful of powerful social, economic, and political trends and forces to put similar pressure on grant makers to change. In our new report based on our interviews and research, we’ve identified seven “big shifts” that have the potential to significantly influence philanthropy:
Economic inequality, which is at once producing tremendous new challenges and need in communities while also creating fortunes that are bolstering philanthropy at a massive scale.
Extreme political polarization that is dividing communities along partisan lines, politicizing previously apolitical issues, and making it increasingly difficult for philanthropy to remain outside the political sphere.
Shifting demographics that are changing the face of communities, donors, and the issues they aim to address. Traditional philanthropy — white, male, and older (oftentimes even dead) — is giving way to a far more diverse group poised to take up the mantle of community change.
New momentum to advance racial justice, which, after decades of work by activists, is driving organizations to grapple with systemic racism and bias in both their external actions and their internal practices and cultures.
Ubiquitous technology and access to information that allows people to easily communicate and connect, to build and share data, and to coordinate and organize action in new ways but that also creates new challenges that philanthropy will need to address in its work.
A state of climate and social emergency that can exacerbate existing problems or trump the planned agendas of a community or grant maker. Philanthropy can no longer escape being called upon to act and respond to what may become the “new normal” of increasingly frequent public crises.
A social compact in flux, which is fundamentally reshaping both how people relate to the institutions of business, government, and the nonprofit world and how the different sectors relate to one another.
While none of these forces are new, and each of them is significantly changing nonprofits and foundations on its own, they are also combining, accelerating, and reinforcing one another in complex ways that are fundamentally transforming our lives and our communities. Altogether they are creating a whole new context for the work of philanthropy.
Experimenting With New Approaches
Alongside these shifts — and, in many cases, in response to them — grant makers are continuously experimenting with new and rediscovered ideas along the margins of the field. Our research has surfaced four of these key “edges”—approaches that can ride the momentum of big societal shifts and scale in a way that may allow them to influence, or even overtake, the core practices of philanthropy over time. Those are:
Rethinking philanthropy’s role. Many grant makers are reconceptualizing their role in creating social change. Whether it’s MacKenzie Scott giving large, no-strings-attached gifts or the Omidyar Network ambitiously taking on the challenge of “reimagining capitalism,” grant makers are getting more deliberate about how they choose tools and approaches to make a difference. Approaches can include getting out of the way of talented nonprofit leaders, changing large-scale systems and cultural narratives, responding more flexibly to urgent community needs, and promoting innovation where existing solutions are proving insufficient.
Balancing power. Growing awareness of economic, racial, and social disparities has shined a light on the imbalanced power dynamics that underlie philanthropy. Organizations like New Profit and the Whitman Institute are exploring how they can drive impact by directing funds toward organizations led by and working with people of color. They are also sharing power with — and in some cases, even ceding it to — those who are more proximate to community issues. Other organizations, like Arnold Ventures, are leaning into the power and influence they hold, using research, analysis, and policy advocacy to address pressing problems like gerrymandering and gun violence.
Leveraging the resources of others. Philanthropy has never had the resources to solve pressing social issues alone. But grant makers are getting much more sophisticated in how they influence and leverage the assets of others — not only working with other foundations and donors but finding new ways of working with business, as the James Irvine Foundation is now doing with TV and film studios in Los Angeles, or influencing government funding flows, as a coalition of other grant makers in L.A. has recently done to help address homelessness.
(Re)Designing the enterprise. Philanthropies have often been guided by a number of “default settings” for how they organize and structure their work and their people. But many foundations are finding traditional organizational models and board governance approaches are no longer the best fit for achieving their goals. In today’s social-change landscape, they are experimenting with new structures, talent, and governance strategies. The W.K. Kellogg Foundation, for example, has adopted “agile” practices, a methodology from software development that relies on constant collaboration across functions, which has helped the foundation integrate internal silos and flatten hierarchies as the organization moves toward more self-sufficient, cross-cutting teams.
Achieving Greater Impact
We don’t expect the core of most grant makers’ work to change quickly or all at once (which will feel reassuring to some leaders and frustrating to others).
We’ve found that when new approaches directly challenge the core practices of grant makers, it often raises “organizational antibodies” that further dampen change and protect current structures, programs, positions, and grant-making portfolios.
To be sure, there’s value in commitment and consistency amid dynamism. But many of the big shifts now buffeting the world will be hard to ignore, even for philanthropy. Foundations and donors can still choose not to respond. But the events of the past 18 months suggest that grant makers that aren’t open to adapting their practices to match the shifting realities of their communities may, at best, be leaving the potential to achieve greater impact on the table and, at worst, be at risk of losing relevance and influence.
Our hope is that grant makers can begin to make time, space, and even resources available for exploring new edges in their work, rather than simply reacting after the fact to the external shifts happening around them. That way, even though no one truly knows what’s next for philanthropy, grant makers can be more intentional about writing their own futures in the years ahead.