Donors are joining hands at a pace we have never seen before — a trend that seems poised to continue to unlock billions more dollars in the coming years. Prompted in large part by the desire of many donors and grant makers to find more effective ways to advance equity in the United States and around the world, these collaboratives could show the way to unlocking greater giving to support social justice. And they could lead to a shift in how philanthropic dollars are distributed — most of these collaboratives are led by people of color and others who have direct experience navigating an unequal world.
Our recent research found that the pace of establishing new collaboratives — broadly defined as entities that either pool or channel resources from multiple donors to nonprofits — has shifted into high gear.
These collaborative funds include efforts to improve the lives of people in a particular location, such as the Southern Reconstruction Fund, or those that enable people directly affected by a problem to decide where money should go, like the Amazon Defenders Funds. Other pooled funds galvanize philanthropic interests in specific topics or issues such as Media Democracy Fund and organizations that raise substantial sums of money to spread effective solutions, such as Blue Meridian Partners. Some of the funds weave together many of those approaches to match their distinct goals.
With support from the Bill & Melinda Gates Foundation, we conducted a survey of collaborative funds last year and followed up with interviews and group discussions with roughly 100 donors and leaders of the funds. Nearly three out of four respondents reported that they formed their organizations after 2010; more than half had launched since 2015. And 16 of the 97 survey respondents created their collaborative funds in 2020, the highest number of organizations established in a single year.
Many foundations and philanthropists, including newly wealthy individuals and families, are working with collaborative efforts to start giving without first setting up staffed foundations. Collaborative giving provides donors the same advantages that investment funds like mutual funds, private equity, and hedge funds provide investors — diversification and access to specialized expertise. The specialists do the research to identify grantees and can provide management and other support that helps grantees advance their work.
Collaborative funds also offer specialized knowledge, skills, and relationships, which can often lead to creative solutions and funding opportunities that traditional philanthropy may overlook. Close ties with community leaders, for example, provide donors who give through a collaborative fund insight into local community organizations, assets, and opportunities. As David Weil, CEO of the Schusterman Family Philanthropies, says: “I’m doing this [collaborative] to engage in a learning process with others, and that will help guide me to make other direct-grant choices.”
The collaborative funds in our study estimated their grant making totaled $2 billion to $3 billion in 2020. But here’s the thing: As a group, they said they could do much more. Collectively, they estimated that they could disburse up to $15 billion a year with minimal growth in current staffing. If you consider that previous research has found that collaborative funds can produce substantial impact, the opportunity really stands out.
How collaborative philanthropy stands apart from traditional philanthropy
Collaborative funds offer a range of compelling philanthropic opportunities. Those who responded to our survey expressed a particular focus on issues of racial justice, climate change, and economic mobility. More collaboratives in our survey named racial justice as their primary issue than any other cause. By contrast, none of the 25 foundations that gave the most in 2020 explicitly referred to racial equity or racial justice in their mission statements, though many work hard to incorporate equity into their grant making.
The way collaborative funds seek to make a difference s also strikingly different from how foundations tend to operate. The most favored approach of the collaborative groups we interviewed was systemic change through “building fields and movements” — translating to about a quarter of all resources distributed by our sample of collaborative efforts in 2020. By contrast, building fields and movements attracts scant support among all grant makers. For example, over 14 years just 7 percent of “big bet” grants, those of over $10 million, went to building a specific field, like reimagining the criminal-justice system or responding to the climate crisis.
Collaborative funds also have more diverse leadership than foundations. Nearly half of the funds reported being led by people of color, compared with only 10 percent of U.S. foundations. Many institutional philanthropies are working hard to integrate racial equity into their strategies and ways of working. Owing to their relative newness and powered by leaders of color, some young philanthropic collaborations have the strategic freedom to explore new avenues for social change to advance racial equity, unencumbered by the parameters of traditional philanthropy.
What could get more dollars flowing to collaboratives?
Our research found that many donors’ hesitance to join a philanthropic collaborative could be overcome by shifting their attitudes in the following ways:
Embrace philanthropic collaboration as a model for giving. Donors often derive satisfaction from getting personally involved in grant making, cultivating relationships with grantees, and identifying ways they can add value. “It’s really not the norm to do this kind of [collaborative] giving — so there’s no real pressure to do things this way,” said Olivia Leland, founder and CEO of Co-Impact, a global collaborative for just and inclusive systems change. Advocates for philanthropic collaboration acknowledge the norm but see room for diversification. “You don’t have to pick one or the other,” says Weil. Consider that in the investment world, individuals pick stocks and mutual funds. Similarly, in the philanthropy world, grant makers can pick individual grantees and support collaboratives.
Deepen understanding of how best to change systems. Survey respondents who identified field or movement building as their top priority have a particularly hard time raising money because most donors would rather support efforts to deliver services. Yet the only way to create lasting change is to tackle the structural forces that lead people to need food banks, experience higher rates of incarceration, or confront any number of other inequities.
Nevertheless, research has shown that the groups that push for changes in social and government systems and structures are routinely underfunded. “There is often a great distance between what systems-change leaders are doing — programs, services, advocacy efforts — and what funders are expecting, which is often specific social-impact outcomes in short time frames,” said Liza Mueller, vice president of thought leadership at Echoing Green, which supports social innovators in the early stage of their work to advance systems changes. Collaborative funds offer a means to help more donors learn about the power of nonprofits that can make a real difference on systems and structures.
Get comfortable with power sharing. Grant makers have traditionally preferred to maintain control over funding decisions, rather than ceding power to their grantees and the people they serve. Many collaborative funds work differently — and for good reason. Notably, funds working on racial equity and justice were the most likely to embrace a shift in grant-making power dynamics. Vanessa Daniel, who recently stepped down as CEO of the Groundswell Fund, an organization that supports social-justice movements, made a strong the case for this “different way” of funding in an open letter signed by 31 leaders of social-change efforts: “The ‘different way’ must include a significant transfer of resources into the control of institutions where people of color, who are primarily accountable to their communities, have the ultimate decision-making power over where dollars go.”
The future of philanthropic partnerships
We believe the momentum behind collaborative funds signals the potential for things to come if more donors — both private foundations and wealthy individuals and families — engage. The proliferation of funds offers options for any donor to find something of interest. Moreover, collaboratives provide much-needed capacity in areas where donors frequently struggle: discovering worthy nonprofits they couldn’t find alone, supporting leaders of color with direct experience in the communities they serve, and giving in ways that address systemic challenges.
The new wave of philanthropic collaboratives offers grant makers compelling reasons to join their efforts. They’re ready for the next wave of donors so they can live up to their potential.
