By Alexis Cooke, Consultant, The Alford Group
On Wednesday, June 17, The Alford Group hosted a panel of national experts and funders to discuss Giving USA’s Annual Report on Philanthropy in 2019 in light of current realities, new opportunities and our future as non-profit staff, funders and philanthropists. The full discussion, along with The Alford Group’s Giving USA report, may be found here.
As Brenda Asare, The Alford Group’s President and CEO, noted as she opened the panel discussion, we all had high hopes for 2020 – momentum within the sector was strong and anticipated to continue at the close of 2019 and through 2020. Of course, no one knew what was coming nor how incredibly important that cushion would be to the survival of many nonprofits. As leaders representing funders and philanthropists across the country, Laura, Marguerite, Steve and Beth offered critical insights into philanthropy today and provided some hope as Brenda said “we must look up and ahead, as that is where we are all going.”
The pandemic response coupled with the need for systematic change for social justice and racial equity led to shifts in philanthropy over the past four months – in some cases resulting in significant increases in giving. The panel elevated two key themes related to funder and donor behavior – demonstrating that even at the most challenging of times, the spirit of philanthropy brings us together:
#1 – Donors and funders want to see immediate impact and their dollars at work now
Donors were primed for participation, as the economic impact of strong headwinds drove philanthropic momentum coming into 2020.
As a result of the pandemic and need for urgent, direct response, donors want and expect to see their philanthropy at work immediately and are taking more risks.
Donors are responding to short-term call-to-actions and, for the most part, seeing returns on those investments as nonprofits scrambled to clarify and fulfill their missions while pivoting stewardship and operational mechanisms.
Many donors reprioritized and increased their giving to address basic human needs and support vulnerable populations within their local communities. Beth McCaw, Washington Women’s Foundation, shared that donors are accelerating pledge payments and funders are unrestricting previously restricted commitments, supporting general operating and capacity building funds and, in some cases, drawing on lines of credit from their endowments in order to make cash immediately available.
Marguerite Griffin, Northern Trust, noted that clients are thinking differently, investing differently, then they might have traditionally. Some are considering fiscally sponsored organizations and private foundations are giving more than the required 5% while looking at new ways to deepen the impact of their philanthropy while investing their portfolios. Steve Maislin, Greater Houston Community Foundation, added that he and his colleagues are seeing new modes of fund distribution being tested and implemented including direct deposits and gift cards.
Marguerite acknowledged the Giving USA 2020 report data highlighting that estate giving has been relatively flat over the last several years. She speculated that this is tied to donors wishing to make a difference during their lifetimes, and that this trend will continue as donors seek to use their resources now to make an immediate impact.
Laura Coy, William Blair, noted that moonshot philanthropy – the big-bet causes that represent huge headlines with global-scale impact that attracts the ultra-high-net worth – is on the rise through a variety of vehicles. She is seeing less bifurcation of individuals and corporations in relation to giving.
At Washington Women’s Foundation, Beth shared that she and her colleagues eliminated all metric based reporting requirements from their grant program in an effort to remove barriers for their grantees. She hopes “trust-based philanthropy” may become a lasting trend. Rather than focusing on long term outcomes and metrics, Laura noted that William Blair shifted its focus to rapid rate of returns as part of their COVID-19 response. Laura shared that the definition of corporate philanthropy is expanding as a tool and resource, and not just a check. This will positively impact the nonprofit sector. William Blair is increasing efforts around what they already do well – “doing good with what we are good at doing.” For William Blair, this relates to a multi-phase response effort that focuses on immediate recovery to further catalyzing their capital investment to address long-term needs.
#2 – Collaborations and connections can maximize ROI on philanthropic investments
A silver lining as we continue to grapple with our response to COVID-19 and how to drive true and deep systematic change for social inequities is that we are doing so collectively with an understanding that we are better when we leverage our resources together.
Steve has seen donors look closely at the organizations they typically supported and sustain or increase giving to those that are operating the most effectively. Most donors recognize that they cannot support every organization and so shifted their giving and narrowed their focus during the last four months – elevating general operating and capacity building support. Funders and donors – the very, very wealthy and those more on my level – are finding new ways of partnering in an effort to maximize impact and drive efficiencies and effectiveness.
Mega donors and the Giving Pledge are driving factors that sustain philanthropy increasingly year-over-year. The Giving Pledge specifically presents a collective cry for mega donors to give away their wealth. It makes sense for well-run, high-visibility foundations and funders to come together on issues and magnify impact. Marguerite referenced Warren Buffet’s decision to contribute to the Bill and Melinda Gates Foundation as a model for high-net worth funders (as well as more modest funders) to think about how they can join with others to make the biggest difference.
Beth added that the #HalfMyDAF challenge is another example of fellow philanthropists calling on each other to give and give together through an incentivized initiative to release a greater portion of the $120 billion tied up in Donor Advised Funds.
Beth recognized that collaborations take a lot of time and it is important to notice those who are collaborating, but also those who are not. There will continue to be cracks and gaps for all those who are NOT at the table.
There is an urgency for out of the box thinking as funders and donors look at ways to leverage change in our communities and deploy funds quickly. Steve shared that the Greater Houston Community Foundation is administering funds on behalf of the county for the first time ever, working with a local consultant to gather large data sets to identify and serve the most vulnerable. Steve shared a meaningful example of programmatic partnership where local unemployed restaurant workers were recruited to help with food distribution. Community foundations around the country are leading community funds – often partnering with United Way and other public society benefit organizations. More and more of these community-based collaborations are occurring across the philanthropic sector.
What does this mean for the future of philanthropy and how can non-profits maintain the pace of giving, pivot strategic goals and maintain donors?
As Brenda noted, this era is representing a shift in thinking and we should take hope. There is focus on both capacity building and resiliency building. Donors are primed to give with new depth of purpose, and nonprofits are optimizing their internal operations, focusing on the heart of their missions and impact and adapting to meet the needs of a culture of philanthropy that drives for change where every voice matters.
In addition to knowing who your donors are and managing stewardship cultivation and stewardship strategies to deepen those relationships, Marguerite stressed the importance of relationship building within philanthropic families – asking your donors who they make their charitable decisions with and creating strategies to engage the whole family. Younger family members increasingly want to focus on social justice and this moment has provided a forum for them to elevate this giving agenda. Laura added that organizations need to know who their advocates are in the communities they serve. These advocates will be our next generation of fundraisers and philanthropists. Third and fourth generation family members may not hold the majority of the wealth yet, but if they are on the board of their family foundation and engaged, they will be energized and helpful. Beth noted that giving collectives and Donor Advised Funds are growing exponentially. There is a lot of wealth tied up in these foundations, family foundations and DAFs, and deepening relationships will expand and open access to these giving vehicles.
Communicate and Engage
Steve described non-profits as the bridge between donors and communities. To expand your reach and build relationships, combine data with powerful stories and communicate consistently and clearly. Marguerite stressed urgency and organizations need to remain responsive. Many clients are looking beyond this year end and into next – looking one and two years out from now. Organizations should share with donors what is needed today and, in the future, engaging donors in capacity building and infrastructure conversations. Beth noted that fundraisers should not be afraid to ask for support. Funders understand that this is a vulnerable time for organizations, and that nonprofits do not have all the answers right now. She stressed that organizations might not have time to collate all the data and perfect each story – do not let this get in the way of communicating with your donors.
Current realities are driving a surge in philanthropy following a 13% decrease in the share of U.S. households who gave to charity between 2000 and 2016 representing 20 million fewer donor households. Over the last four months, giving increases demonstrate a return of donors’ trust back to nonprofits and their willingness to be responsive, nimble and collaborative. The panel repeatedly acknowledged the role collaboration has in our ability to maximize collective impact. Steve shared that it is rare for both funder and nonprofit institutions to address mission fulfillment through comprehensive collaborations. His advice: Take the lead, help organizations have this mindset and dream together to build stronger alliances. Laura shared that William Blair is looking at compounding capital. This is the time to see how challenge grants can double the impact of philanthropic dollars. Do not consider corporate philanthropic support as dollars alone, look at employee resource and business groups for partnerships with a focus on equity and engagement in the community.
Marguerite has seen clients think differently about where they placed resources in the past vs. where they should invest now. Funders are interested in learning how to support organizations that do not look like the traditional nonprofits they previously supported – such as those that are fiscally sponsored (501(c)(4)). Laura encouraged nonprofits to dig deeper into the CARES Act as organizations pivot from immediate response to sustaining momentum. Complex giving and planned giving will become important to accessing the additional pools of capital. Organizations can better leverage the CARES Act, as well as educate their donors and funders.
In addition, we need to educate ourselves, listening and learning.
The current focus on social justice and racism should endure for years and organizations need to embed principles and values with an honest eye towards challenges and barriers within leadership, infrastructure and operations.
Steve shared that he and his colleagues are educating themselves on black-led neighborhood organizations and business – for their initiatives, as well as to provide next generation donors who are looking for resources. Beth shared a concern that after this intense period of response, we will return to a traditional model of distribution. There are gaps within the pandemic response nationwide. She encouraged everyone to be careful and patient – learning where else transformative work needs to occur and the initiatives that will address these needs. She shared there is a hunger among philanthropists for as much education as possible – about causes, impact and giving vehicles.
Giving USA 2020 Reflections
In closing, Brenda asked each panelist for their reflections on Giving USA 2020’s Annual Report on Philanthropy in 2019. Steve shared that he is interested in the decline in International Giving as a subsector in relation to how the pandemic has shown how interconnected we all are globally. Laura reflected on the trends of mega giving – where we are seeing a decline in individual donors but an increase in giving by dollars due to high-net worth individuals making big bets and huge investments. Marguerite imagines the trends around estate giving will remain relatively flat as more and more donors are looking to make a difference during their lifetimes. Beth was pleased to see some recovery in 2019 after 2018’s IRS data reported $54 billion less was itemized in charitable deductions. Beth is hopeful this trend will continue and not only because of the pandemic.
For more resources, check out Working Toward the Next Normal: COVID-19 Resources Toolkit