Charitable giving may seem like a fairly straightforward exchange: from donor to charity. But it is actually made up of many layers and multiple dynamics, many of which are invisible. This – the giving infrastructure – is what connects donors, charities, and social causes. Some consider that “philanthropy support organisations are the scaffolding on which civil society is built”. If this is the case, then how the giving infrastructure is built matters a lot.
A society’s giving infrastructure does not exist in isolation. Its existence is connected to other societal infrastructures – economic, political, and social. How money is created in society impacts how giving occurs.
With this in mind, how might we think about statistics such as the fact that one per cent of the global population owns more wealth than the rest of the world combined? Or that poor economic conditions over the past several years have led to mergers of corporations, further consolidating the wealth of the few?
Or even the connection between economic and political infrastructures, whereby policy reforms benefiting the wealthy are said to help a free market? One such example being the continued discussions of removal of estate tax in the US, which would transfer billions of dollars in assets towards heirs and away from taxes.
All of these events have implications for civil society – and for the operation of philanthropy.
Is the creation of wealth by capitalism all bad news? Not at all. The wealthy who participate in philanthropy are spearheading some important new models of giving.
Innovation within wealthy philanthropic groups are leading to new forms of giving. Initiatives such as the Giving Pledge, Founders Pledge, and Entrepreneurial Giving help corral the accumulation of this wealth into philanthropic activities. These include impact investing: the blending of social mission and market returns.
Groups are developing which allow shared learning and investment, including Co-Impact, which brings together philanthropists to create system-level changes. And other groups are developing new uses for limited liability companies for philanthropic giving and investing, as used by the Chan Zuckerberg Initiative.
Innovation can be a good thing, as it forces us to ask what might not be working within the traditional fundraising relationship.
The traditional model seeks to attract annual donors, who initially may donate little but often. The relationship continues over time, allowing donors to give larger gifts of money. It further continues into legacy or planned gifts, which occur after a donor dies. The benefit of the relationship development of this model is in supporting the education of an individual as a philanthropist and providing the charity with a developing advocate.
But charities’ boards of directors often invest in short-term fundraising plans over longer-term relationship building with current donors, despite the expense, both in terms of time and cost, for charity to find new donors. These costs are what donors see in the flyers through their doors and advertising campaigns of charities. This short-term approach has additional side effects of burn-out within the fundraising industry. It can also lead to donor fatigue, the phenomenon by which too many requests for donations from multiple charities are met with apathy or refusal from donors who might otherwise have provided support.