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Sunday, 18 February 2018 20:02

Equity, next-gen donors among top trends for philanthropy in 2018

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Equity, next-gen donors among top trends for philanthropy in 2018 Courtesy Photo

GRAND RAPIDS — Philanthropic and nonprofit organizations will focus much more of their efforts on the issue of equity in 2018 and beyond. 

That’s according to Kyle Caldwell, the executive director of the Dorothy A. Johnson Center for Philanthropy at Grand Valley State University

The topic of equity ranked fifth on the Johnson Center’s list of 11 trends in philanthropy that it expects to materialize this year.

“What we see this year in contrast to last year is the amount of activity, interest and focus around inequity and how we think about it,” Caldwell said. “I’m not surprised about equity and inequity as an issue in our society because we’ve been talking about income and wealth disparity.

“What was interesting to us is where we see equity and inequity cutting across access to data and how foundations should evaluate themselves. Once you put those glasses on that say we’re identifying equity and inequity in the field, it gives you a very different perspective.”

The Johnson Center’s trends report notes that “huge demographic shifts” will drive the creation of new resources for the philanthropic sector to work on equity and push for changes. These shifts will have profound ramifications for local communities and the national landscape if equity in access to health, education and the workforce is not achieved, according to Juan Olivarez, a member of the leadership council at the Johnson Center cited in the report. 

The philanthropic sector has been taking a step back to examine how its practices may be promoting or mitigating inequities, Caldwell said. The organizations need to ask whether nonprofits that serve vulnerable populations have the same access to quality data and determine how foundations could review their grant-making portfolio through an equity lens.

While grantmaking bodies invest in organizations that provide greater returns or that have the most capacity, they can often miss grassroots groups focused on addressing equity issues on a smaller scale, Caldwell said.

“While we might say that grantmakers need to provide more flexibility to smaller organizations, smaller organizations will have to raise their standards and seek out opportunities to collaborate,” he said. “It can’t just be that funding is more important than a higher risk. There has to be the possibility that they are ready to receive larger resources.”

Collective giving, such as giving circles, is providing opportunities to make small contributions with low-risk capital to many grassroots organizations, he said, noting that the practice also creates a learning community that looks at new ways to invest and digs deep into issues.

The Johnson Center report refers to this trend as democratized and diversified philanthropy, which ranked at the top of its list. 

“Giving circles and other collaborative groups have tripled in number since 2007 and that number is expected to grow,” Jason Franklin, the Johnson Center’s W.K. Kellogg Community Philanthropy Chair who has done extensive research on collaborative giving, stated in the report. 

According to Caldwell, many donors like the appeal of pooling their resources together in giving circles for a greater impact. Political causes, women’s issues, and the impact of environmental changes on communities are among the major rallying points within the collective giving movement.

“What we’re seeing is the evolution of intermediaries. People are not giving to institutions, they’re giving to causes,” Caldwell said.

Funders tend to focus more on organizations and goals that are specific to a geographic area, or so-called “place-based philanthropy,” according to Teri Behrens, director of the Institute for Foundation and Donor Learning at the Johnson Center. Additionally, the complexity of creating measurable change on an issue at a national level can be daunting. 

“Increasingly, funders are seeking to be more strategic in their giving by focusing on a specific area, thereby increasing the probability of making a change and being able to measure it,” Behrens stated in the report.

Caldwell thinks the trend toward place-based philanthropy will continue to grow because people can see a more immediate impact. Additionally, more next-generation donors have bought into the related “localist” movement, he said. 

“The localist movement is really growing among younger generations,” Caldwell said. “The neighborhoods are coming back and the population growth that we’re seeing in Grand Rapids is the younger generation. They’re focused on local investing in areas such as buying local and local food sourcing.”

However, their philanthropy goes well beyond local borders. They also are giving on a global scale to address specific needs, as are donors of all ages.

The report calls this “the globalization of philanthropy,” which ranked third among this year’s trends. While giving typically remains a local action, some philanthropic sectors seek to broaden their giving to better connect with the rest of the world.

Because of technology and because the world has shrunk, it has changed how we communicate,” Caldwell said. “People can now give in ways that have a global impact and can feel as though they’re part of a global movement.”

The ongoing and effective engagement of donors remains another concern for Caldwell. Next-generation donors have expressed a desire to engage alongside the organizations to which they give.

With America’s multi-millionaire and billionaire baby boomers embarking on an unprecedented $59 trillion transfer of wealth over the next half-century, these next-generation donors will likely become the most significant generation of philanthropists in history, according to research from Michael Moody, the center’s Frey Foundation Chair for Family Philanthropy. 

The impact on philanthropy from next-generation donors ranked as the second most-important trend listed the report.

“These generations will be significant because they will have both unprecedented amounts of wealth to give along with a zeal for revolutionizing philanthropy through new strategies and innovations that are shaking up the field,” Moody stated. 

Along with these new ways of addressing needs on a local, national and global level, Caldwell said philanthropic leaders in Michigan are continuing to monitor the intersection of the nonprofit sector with government. He cites the significant role the philanthropic community played in the Detroit bankruptcy and said there is a blurring of the lines between nonprofits, commerce and government.

“If philanthropy is seen as the backstop to government, what’s the role and responsibility of taxpayers? We have to look at the responsibilities of government and the willingness of nonprofits to step in,” he said. “We could really be changing the way the public and private sectors look.

“We are in the middle of a huge transformation in the philanthropy and nonprofit sector. I don’t think we know yet what that is, but we are really, really pushing the borders of a lot of envelopes and we have to recognize that that’s happening.” 

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