How Philanthropy can Adapt to a Changing World

Philanthropy has undergone a considerable transformation in the past few years. Issues from climate change to social justice have demanded collective action on an increasing scale. Simultaneously, technology is creating new social problems while also providing tools to address today’s most difficult challenges. On top of it all, demographics shifts and social trends are reimagining our notions of community and society.

Philanthropic organizations are under scrutiny for their effectiveness and traditional models that are stifling innovation and limiting the reach of support for beneficiaries. Private assets can still be a powerful tool for public good. Still, there is a lot of work to improve upon as new efforts are required to help philanthropy adapt to changing times and instead find improved models and approaches that offer the best support. New models are being shaped for philanthropy to blossom in an ever-changing world:

Democratizing Philanthropy

A critical step toward reimagining philanthropy —  and making it more capable of solving inequality — is to democratize it. It is vital for those that hold power to share their wealth through philanthropic programs like The Giving Project. Others are doing so by encouraging big donors to donate to organizations with a broader base of support to minimize the chance that their funding will face plutocratic bias. Still, other players are developing models that integrate participatory grant-making, a process where traditional beneficiaries have agency over how resources are used. 

The rise of networked models of social change and protests like The #MeToo Movement and Black Lives Matter allows organizers and movements to take issues into their own hands with the help of new technologies. As donors find ways to support these movements that empower the organizations and communities without stifling their progress, it can help democratize philanthropy in a more fulfilling way.

Representation and Diversity Matters

A genuine shift in philanthropy is only effective if the field reflects the world’s diversity and the people and communities it seeks to serve. To form better representation, many organizations have asked themselves whether their organizations’ workers and board of trustees are balanced in gender, ethnicity and background. As philanthropy becomes more popular globally, it must reflect local cultural traditions of giving and support. A growing middle class could be a driver of more efficient philanthropy. Research from the Charities Aid Foundation indicates that if the middle class philanthropists in the south hemisphere donated at the same levels as people in the UK, charity would gain $345 billion each year. But this emerging middle class of to-be philanthropists may use a different approach than the Western models that have propped up philanthropy in the past.

Innovation in Philanthropy

Balancing the freedoms of philanthropy with the rising need to support social justice in a democratic society may be challenging. Innovation and supporting new models and solutions is an essential part of the sector’s expansion. Philanthropy can be a powerful tool for discovering new and improved ways to bring aid to communities in need. Innovators like Elon Musk and Dustin Moskovitz are recognized for their contributions to industries that could help change humanity. And while it’s important to follow in their footsteps, we must always ask if the innovative opportunities they create reflect what society needs at that moment.

Transparency and Trustworthiness

In coming years, a critical challenge for philanthropy will be securing openness and transparency. Some anonymity may be necessary to protect a donor or recipient, but aspiring to openness can help rebuild trust and transparency throughout the philanthropic sector. It’s crucial to maintain legitimacy about where funding comes from, or the potential effect philanthropy may have on democracy. It may also help generate more innovations if data is available and innovation becomes decentralized, so more people have the opportunity to make progressive change.

Of course, a significant challenge for philanthropic transparency may be the tendency of major donors to avoid using traditional philanthropic structures and instead use commercial entities like limited liability companies (LLC) for their philanthropic goals. Mark Zuckerberg and his wife Priscilla Chan chose this path for philanthropic work, while John and Laura Arnold also made waves by shifting their foundation to an LLC. The benefit of this move is that it offers more flexibility, making commercial investments or support of political campaigning easy. However, it also requires less transparency from the donor, which can undermine the integrity of efforts to make philanthropy more open.

As philanthropy faces many challenges, the sector requires better engagement with far-reaching technologies and societal change, which philanthropy has been slow to incorporate into its models. It’s vital that we examine the existing structure and dynamics within the sector to see where problems are rampant and how we can evolve our practices to become more effective for the people and communities they are meant to serve.