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The traditional model of charitable giving is changing, with donors looking to solve problems and make a real impact
Those searching for a silver lining amid the coronavirus pandemic might find it in the response of philanthropic donors large and small: Twitter co-founder Jack Dorsey pledged $1 billion1, Martin Lewis of MoneySavingExpert has distributed £3.4 million through a newly created emergency fund2, and more than 1.5 million people supported Captain Tom Moore in raising £30 million plus for NHS charities3.
The urge to help through charitable giving is as old as the need to fight off disease. Dutch philanthropy scholars René Bekkers and Pamala Wiepking set out eight key drivers of giving, all of which have been triggered by the current crisis: awareness of need, solicitation, costs and benefits, altruism, reputation, psychological benefits, values and efficacy4 .
Donors feel better and more in control for taking some positive action during the crisis, and companies have gained valuable recognition for stepping up to help. Add to these drivers a sense of urgency – which always works to increase donations – and the result is an impressive collective expression of philanthropy.
In response to such generosity, it might seem churlish to question it rather than just applaud. However, even the best intentions can have negative consequences or be implemented poorly. In Rhodri Davies’ book Public Good by Private Means, he identifies potentially negative aspects of philanthropy – namely, those efforts that are:
- Ineffective: not of sufficient scale to solve anything
- Inefficient: funds just sitting there not doing any good
- Conventional: risk-averse, funding the usual and traditional
- Patronising: addressing symptoms not causes
- Self-indulgent: a pleasant hobby or self-serving
Contemporary concerns highlighted by Rob Reich, Professor of Political Science at Stanford University, author Anand Giridharadas and others include that the wealthy don’t give as much as they can or should; that major donors are a threat to democracy as they use their wealth to gain influence and status; and that the wealthy are too far removed from those they wish to help.
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More meaningful giving
When it comes to giving better, ‘better’ is a loaded term. It begs the question: better than what and better for whom? Some would argue that ‘better’ philanthropy acknowledges the power dynamics and inequalities in society and seeks to address these with approaches such as ‘trust-based’ and ‘participatory’ philanthropy.
These methods start from the belief that those on the ground know best what their community needs. Advocates here include philanthropist Ise Bosch; the approach can also be seen in action through FRIDA The Young Feminist Fund – where young women and girls work together to determine how funds are allocated.
Others would argue that ‘better’ will come from not being led by donors’ preferences and passions, but from taking an objective and rational approach to identify the most good that resources can do, calculated by lives saved or quality of life metrics.
Those taking this ‘effective altruism’ approach include Toby Ord, who founded Giving What We Can, and the organisation GiveWell, which identifies charities that “save or improve lives the most per dollar”.
Whatever approach is taken – effective altruism, trust-based philanthropy or one of a number of other models (venture, big bet, community, effective, catalytic, impact, experiential) – there is a trend for modern philanthropists to shift from ‘cheque book philanthropy’ to having a more thoughtful, intentional plan. Rather than spread their money and attention across a variety of dissimilar causes, donors focus on the change they want to see in the world, becoming an active participant in solving a problem.
Michael Moody, co-author of Generation Impact: How Next Gen Donors Are Revolutionizing Giving, interviewed donors in their 20s and 30s and found they “consider just writing cheques – and especially waiting until [they] retire to write cheques – to be the most uninspired and ineffective way of giving. They want to give their time and their talent, and they want to do so in meaningful ways.”
As well as this shift to engaged, impact-driven giving, there is also a significant rise in collective giving. Giving circles, which pool donors’ resources and decide together how best to allocate these funds, tripled in number in the US in the ten years to 20165 .
Recognition that social and environmental problems are complex, global and too big to be tackled alone has resulted in a rise in collaboration. Funders have come together in both words (for example, London Funders led the ‘We stand with the sector’ coronavirus pledge, which has been signed by over 350 funders)6 and deeds (such as the Climate Leadership initiative, where 29 philanthropists pledged $4 billion to combat climate change)7 .
What's next for philanthropy?
In terms of the next big thing, there are many claims being made for philanthropy’s role in a post-coronavirus society.
Will giving reduce as a recession hits, or will people be more aware of needs and give more? Will the recent trend in increased funding for the environment continue? Will donors think locally or globally? Will the calls to tackle racial justice lead to a shift from giving money to deliver services to support for structural change?
What is clear is that the need will be great – 84% of UK charities reported a decrease or significant decrease in their income during lockdown. At the same time, 47% reported an increase in demand for their services8.
These debates can be confusing and off-putting for a philanthropist who is seeking to use their money to make a lasting difference. There are so many options to do good that it is easy to get overwhelmed. Donors also put pressure on themselves – their money is precious, and they want it to make a difference and not be wasted. The fear of getting it wrong, and being seen to do so, can too often induce paralysis.
So what can they do? The priority is to make a start. Find a focus, listen to those active in your area of interest, and work with others. As attention shifts from emergency funding to investing in recovery, the charitable sector has an urgent need for more funds from thoughtful people looking to help. The rewards are great – for society and philanthropists.
Trusts are not regulated by the Financial Conduct Authority.
1 www.philanthropy.com, 7 April 2020
2 blog.moneysavingexpert.com, 26 May 2020
3 bbc.co.uk, 1 May 2020
4 “A Literature Review of Empirical Studies of Philanthropy,” Nonprofit and Voluntary Sector Quarterly, 2010
5 “The Landscape of Giving Circles”, Collective Giving Research Group, 2017
6 covid19funders.org.uk
7 www.climateworks.org
8 “Impact on the charity sector during coronavirus”. Research from the Institute of Fundraising, NCVO and Charity Finance Group, June 2020
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