Community Matters: Philanthropy

Philanthropy in the United States traces back to the 17^th century. During this period, religious organizations and charities founded by European settlers conducted acts of charity and practiced charitable giving. In the 18th century, a shift towards a more organized approach to philanthropy emerged, as evidenced by the creation of the first private foundations, such as the Peabody Fund and the Rockefeller Foundation. As the 19th century unfolded, the Industrial Revolution brought about a surge in wealth, leading to the establishment of additional foundations like the Carnegie Corporation and the Ford Foundation. Moreover, this era witnessed the rise of corporate philanthropy, with businesses actively contributing to charitable causes.

In the first half of the 20th century, philanthropy continued to grow in prominence, with foundations and corporations playing a significant role in funding social programs, education, and scientific research. The Great Depression and World War II created an increased demand for philanthropic support, and in the second half of the 20th century, philanthropy became increasingly institutionalized with the establishment of professional associations, tax laws that incentivized giving, and new forms of charitable giving, such as donor-advised funds and charitable trusts.

In the 1980s, a new donor typology emerged due to information technology and globalization. Hall (2016) characterized the new donor as the “new billionaires” who were predominantly younger men, active business leaders, activists, and result-oriented individuals who wanted to yield measurable impacts. Additionally, Hall asserted that as the source of wealth was global, the young financiers began to consider global problems of hunger, disease, the environment, and economic development. The philanthropic landscape varied between foundations. For instance, the Bill and Melinda Gates Foundation focused on the global front of health, financial products and services for people with low incomes, and agricultural development. In the United States, the foundation focused on funding schools, libraries, and scholarships.

Another example comes from the founders of Google, who created a social enterprise for-profit foundation combining business and social change. At the same time, the development of democratic societies in Central and Eastern Europe became the focus of financiers like George Soros. According to Hall (2016), a definitive shift occurred in philanthropy during this era in that the focus of philanthropy changed from advanced industrial nations supporting developing nations to a flow of aid and influence in a broad area of multidirectional initiatives.

Fast forward and consider a recent report by Fidelity Charitable that the Millennial generation, now between the ages of 25 and 40, will align their giving with their values. The Millennial and younger generations who consider themselves philanthropists will inherit an estimated 73 trillion, lending a fresh perspective to giving back. The rise of technology and globalization has additionally led to new forms of philanthropy, including online giving platforms, impact investing, and social entrepreneurship. Philanthropic giving will continue to play a crucial role in addressing social and environmental challenges (wicked problems) in the United States and worldwide. However, the intrinsic values of the Millennials and other generations will drive philanthropic giving in the 21st century.

The intrinsic value a donor ascribes to a nonprofit organization constitutes the philanthropic value of the organization to the donor (Clary, 2022). Intrinsic value, as defined by the Stanford Encyclopedia of Philosophy, is the value that that thing has “in itself” or “for its own sake.” The intrinsic value a donor ascribes to a nonprofit organization originates within the donor making this an important concept as donors can be individuals, organizations, foundations, or businesses who donate time, money, experience, skills, or talents to help create a better community.

An organization considers its intrinsic value to donors by focusing on several key aspects demonstrating its worth and impact. The intrinsic value of an organization to donors is not solely based on financial metrics but also on its mission, effectiveness, transparency, and the emotional connection it establishes with its supporters. Here are some essential factors that contribute to an organization’s intrinsic value to donors:

Mission and Impact: Donors are more likely to support an organization with a clear and compelling mission aligned with their values. The organization must effectively communicate the positive impact it creates through its programs and activities, showcasing real-world results and success stories.

Transparency and Accountability: Donors want to know how their contributions are utilized. Transparent financial reporting and disclosure of the organization’s activities help build trust and confidence in the donors. Demonstrating responsible stewardship of funds is crucial for retaining and attracting more donors.

Efficiency and Effectiveness: Donors want to see that their donations make a difference. An organization must demonstrate that it uses funds efficiently, with a significant portion going directly to programs and services rather than administrative overhead.

Communication and Engagement: Effective communication is vital to inform donors about the organization’s progress, challenges, and future plans. Regular updates, impact reports, and personalized engagement efforts make donors feel valued and involved in the organization’s journey.

Stories and Testimonials: Sharing powerful stories and testimonials from beneficiaries, volunteers, and staff can create an emotional connection with donors. Such narratives illustrate the real-world impact of their donations, motivating donors to continue their support.

Long-term Vision: Donors often appreciate organizations with a well-defined long-term vision and strategic plan. Demonstrating how the organization works towards sustainable solutions can instill confidence in donors, knowing their support contributes to lasting change.

Personalization and Recognition: Recognizing and acknowledging donors for their contributions, regardless of the amount, foster a sense of appreciation and loyalty. Personalized thank-you notes, exclusive events, or other forms of recognition can enhance the intrinsic value to donors.

Community and Networking: Building a strong community of donors and supporters can increase the organization’s intrinsic value. Donors often find value in being part of a network that shares their passion for the cause.

Feedback and Listening: Actively seeking donor input and incorporating their suggestions can demonstrate that the organization values their opinions and is committed to continuous improvement.

Adaptability and Resilience: In a rapidly changing world, organizations that can adapt to new challenges and maintain resilience in the face of adversity can inspire confidence in donors communicating to the donor that their support is being utilized effectively.

Overall, an organization that is transparent, accountable, impactful, and responsive to its donors’ needs and expectations will likely have higher intrinsic value and, consequently, attract sustained support because community matters.

In Community,

Dr. Pat

Dr. Patricia A. Clary is a syndicated columnist who consults with nonprofit and business sector partnerships that promote strategic community impact agendas to solve complex societal issues through governance, collaboration, and convening leadership. Connect with Dr. Clary at patriciaclary.com, LinkedIn https://www.linkedin.com/in/pat-clary/, Facebook PatriciaAClaryPhD, or [email protected]. ©2023 All Rights Reserved.