What Next for Philanthropy in 2024?

Hilary Pearson

January rolls around once more and we try to make sense of the year behind and the year ahead. Last year, I avoided predictions, as did others, given the turbulence of our world. Instead, I listed some hopes and fears for 2023. It turned out to be a roller coaster year, with more downs than ups. Both the hopes and the fears were relevant and relatively accurate. As we move into 2024, which I expect to be no less of a roller coaster, I would like to venture some hopes but also reiterate some fears for foundations and philanthropy.

Before I get to that, I want to frame my thinking, as I did last year, around the nature of effective foundation philanthropy, which I see as an act of relationship.  Not just a handover but an exchange. Not all about control but about combining resources. In this frame, both funder and “doer” (a description I like better than grantee or fund recipient) bring their value (and values) to each other in an ongoing relationship. The challenge of this is that it takes communication skills and accountability responsibilities.

In late 2022, Phil Buchanan of the Centre for Effective Philanthropy (CEP) expressed this view of philanthropy as relationship in a long public essay about big changes and big questions for philanthropy which is still very much worth reading. Commenting on what he and I and others see as the false binary of strategic versus trust-based philanthropy, he noted that “thoughtful donors and foundations reject the notion that there need be a dichotomy between strategy, assessment, evidence, and learning on the one hand and trust, listening and flexible support on the other. They recognize that trust develops over time. They embrace mutual accountability. They realize that, while the knowledge and expertise of those closest to issues should be respected, foundation staff and donors do often possess useful knowledge, too.”

Buchanan was addressing the debate that is very much on in the foundation world around the pressure to shift to “trust-based” philanthropy, or flexible giving, or unconditional funding, such as that practiced most famously by the American philanthropist MacKenzie Scott. She has been giving unsolicited and unconditional large gifts to nonprofits for several years, in an ultimate act of trust. Buchanan’s organization is studying the impact of Scott’s giving, which has up to now resulted in over US$ 16.5 Billion given to more than 1,900 nonprofit organizations.  CEP’s research indicates that “Scott’s unconventional approach, unusual both for the size and unrestricted nature of the gifts, is resulting in dramatically positive effects for both recipient organizations and the work they’re doing.”  While convincing on the merits of trusting recipients, this is not a model of relationship philanthropy. Scott herself and her team do not seek ongoing relationships. Her team identify recipient organizations in a quiet and anonymous process, and surprise them with offers of large and unconditional gifts. Her approach requires expertise, evidence and evaluation on the part of her team, but there is no dialogue. It’s not likely to be replicated widely, no matter how positive the outcomes for the recipients.

What is clear is that flexible or unconditional giving still needs to be based on some understanding and support for the goals, leaders and work of the organizations receiving the funds. And this to me suggests that funders, if they want to be effective, must move into closer relationships with partners, cede some control and develop the trust needed to work together. So, why are many funders and recipients resistant? Many reasons are suggested: lack of staff, time or data, desire for discretion, wish to maintain control (on both sides). But if you are interested in making social change, in having an impact on the problems you choose to focus on, you surely also want to be in dialogue, to learn, to share and to develop through greater proximity. And that means talking to the organizations you might count on to implement the strategies you believe will lead to change.

What does it take to become more comfortable in relationship? No easy answer. It takes time, attention, perseverance and yes, trust. If funders want to commit themselves to building relationships in 2024, they could start with some of the questions that Kathy Reich of the Ford Foundation posed in her recent blog Funders and NonProfit Leaders: Can We Talk?  Here are some of them:

  • What would it look like for donors and doers to have authentic, open conversations about what it takes to achieve lasting social change, and what roles are more, or less, constructive for funders and nonprofits to play?
  • How might we bring foundation boards and nonprofit boards together, to dialogue about the challenges facing their organizations and the sector as a whole?
  • How might we dismantle the sense of grantmaking as a transactional negotiation between funders and nonprofits, and instead foster a sense of shared purpose, mission, and strategy?

Some useful questions to begin your board discussions in 2024!

Turning now to this coming year, I hope that…

  • More funders will share their experiences in building relationships. The growth of affinity and peer groups of foundation staff in Canada is encouraging. Perhaps we will see more peer groups for board members too? And more transparency around the successes and challenges of relationship work.
  • More funders will create learning agendas, for their staff and for their boards. For some examples and tips on creating learning agendas, see my blog on the topic.
  • More funders will contribute to shared data infrastructure for better learning. Some Canadian funders are supporting the Charity Insights Canada project at Carleton University; philanthropy intermediaries are engaged through the Federal Nonprofit Data Coalition.  Better data is crucial to learning and to better relationships.
  • More funders will build climate action into their strategies.  You don’t have to be an environmental funder to do something about the impacts of the climate change that is upon us.  For some ideas and examples see my blog on the topic. And the Year One Report from the Canadian Philanthropic Commitment on Climate Change.

I fear that…

  • Funders will resist bolder moves into mission-driven investing. Markets continue to be volatile and there is a backlash against ESG and “green” investing.  Could this deter foundation investment committees?
  • Nonprofit infrastructure in Canada will continue to struggle for sustainability. Intermediaries are hugely valuable and generally underfunded. This is an area where funders may be tempted to pull back if resources are tight. But the value created extends to all. Vu Le put the case well in this blog Intermediary Organizations are Vital…
  • Foundations will become more risk averse…because of criticism, because of a governance failure, because of media attacks, because of a project failure. To counter this, choose and resolve to work on one of the ten steps suggested by the Philanthropy Transformation Initiative.

Let 2024 be a more hopeful than fearful year for everyone.

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