MCF Giving Forum, Summer 2006 - New Forms Of Giving

•	E-Newsletters
•	Giving Forum Newspaper
•	MN Grantmaking News
•	People In The News
•	In The Media
•	Philanthropy Blogs
•	Nonprofit Calendar
•	Jobs

Summer 2006

"New" Forms of Giving, or a New Definition of Philanthropy?

by Sylvia Lindman

Over the last two decades, the American philanthropic community has identified several trends that challenge the very idea of what philanthropy means. For example:

Immigrants and refugees who settle into a new country are sending money back to their homelands to make life better for friends and relatives there.
People of modest means are pooling their charitable dollars to make a greater collective impact, claiming philanthropy for the middle and lower classes, not only the wealthy.
People are practicing their faith through giving — not only making donations to their churches but expressing their values through their gifts to other charitable organizations.
Traditional foundations are empowering ethnic groups in their communities to practice philanthropy in their own ways and are learning from them.

Members of Hmong Women's Giving Circle.

If "traditional" philanthropy refers to the familiar landscape of private and community foundations and corporate giving programs, what is sometimes called "new" philanthropy refers to the many diverse forms of giving that are increasingly apparent today. Of course, many people — particularly in Minnesota — argue it isn't new at all.

"What's really new is that [traditional grantmaking structures] are finally starting to recognize all these other forms. They've been in existence forever, but I don't think they've been acknowledged," says Chris Andersen, president of the Lutheran Community Foundation, a national organization based in Minneapolis.

"It's like saying Columbus discovered America, when in fact it was there before he knew it was there," says Jacqueline Copeland-Carson, vice president at U.S. Bank Private Client Group and a senior fellow at the University of Minnesota's Humphrey Institute.

The industrial age built many fortunes, and many industrial leaders created foundations as vehicles for their giving. Endowed, institutional philanthropy became the visible model for the 20th century, symbolized by foundations bearing prominent names such as Ford, Kellogg, Carnegie, Rockefeller and Pew. And when, in the 1940s and 1950s, community and private foundations began to organize into associations, foundations gained a collective voice and presence in the social and political arenas. Philanthropy became synonymous with a world of wealth and privilege belonging mainly to white (and largely male) European-Americans.

Many other forms of giving remained below the radar. Their spheres of influence were limited to a particular community, neighborhood, church or other institution, or even a single family. People of all ages, income levels, races and ethnicities were giving time and money to help others. Indeed, the impulse to share with others is embedded in our DNA. We are a species who need each other.

"The way I define philanthropy, it's the means by which a social group — a family, a foundation, a giving circle — pulls together their financial, human and intellectual capital to promote the collective social good," Copeland-Carson says. "From that perspective, philanthropy has existed as early as people organized into social groups, providing mutual support, putting together other financial and in-kind resources, volunteering to address some social or community interest or need."

Driving the Discussion

"Philanthropy has existed as early as people organized into social groups, providing mutual support, putting together other financial and in-kind resources, volunteering to address some social or community interest or need."
— Jacqueline Copeland-Carson, U.S. Bank

If these diverse forms of giving have always been with us, how did they become a major topic of discussion within the field? Three forces help explain the trend. First, U.S. demographics have been changing for some time. The country is racially more diverse every year, with greater proportions of African-Americans, Latinos and Asian-Pacific Islanders living among a smaller share of European-Americans. Traditional grantmakers could hardly ignore the demographic trends, which affected their grantmaking as the populations served by nonprofit organizations became more diverse, and as new nonprofits, many of them founded by immigrants, began applying for support.

"Populations are changing and markets are changing," says Jo-Anne Stately, vice president for development at the Indian Land Tenure Foundation, based in Little Canada. "Across philanthropy, particularly if you're community foundation, you need to know your community, who your donors are and who your donors are going to be."

Second, in response to those changes, foundations explicitly sought board and staff members who could represent racial and ethnic diversity and bring new perspectives to their grantmaking. Stately, who until recently was a senior program officer at The Saint Paul Foundation, says, "It wasn't unusual that community foundations like Saint Paul started to look at themselves and examine how they were really representing the community."

Stately began as a volunteer, invited to offer a Native American perspective when The Saint Paul Foundation was first considering a multicultural endowment fund to serve the African-American, American Indian, Asian-American and Latino communities. Now she is an experienced philanthropic professional working for a national constituency.

Third, as they matured, and often as younger generations took their places on boards of directors, some private and community foundations and corporate giving programs increasingly wanted to see results from their grantmaking. Many became frustrated with traditional charitable giving, which seemed only to preserve the status quo. If, for example, a foundation's giving was organized around poverty reduction, the board might reasonably ask why, after 20 or 30 or more years of giving to the cause, poverty still seemed as large a problem as ever. These foundations sought to be more strategic and targeted in their grantmaking, and they were eager to learn about other ways of working.

These trends converged to bring about an intense self-examination on the part of several philanthropic organizations. Their studies of giving patterns produced some surprising results, showing, for example, that foundations and corporations accounted for only a small share of U.S. giving overall. In 2003, only 11 percent of contributions came from foundations and 6 percent from corporations, while 75 percent came from individuals. The process of self-examination resulted in awareness of a much bigger, more democratic philanthropic landscape than had been perceived in the past. Foundations today are beginning to understand that there is much to learn from the democratic practice of philanthropy.

Characteristics of "New" Philanthropy

"I think a corner has been turned about how philanthropy is organized, and it will possibly never be the same again. It is by definition becoming much more participatory, more diverse, more inclusive, more strategic and focused on underlying systems and structures of injustice."
— Steve Newcom, Headwaters Foundation For Justice

Just as the "new" philanthropy reflects the increasing diversity of donors, in terms of race, ethnicity and income, it also reflects a diversity of giving strategies to achieve a desired outcome. While traditional philanthropy was often defined by the source of the funds — large donors, for the most part — new philanthropy seems more concerned with effective use of the funds, whether to help a family back home, advocate for social justice, provide skills to a particular age or ethnic group, or something else.

"In my mind, the characteristics that define the new philanthropy are both who is involved in making the decision and the intent of the philanthropy," says Steve Newcom, who is leaving his position as executive director of the Headwaters Foundation for Justice in Minneapolis in October after 18 years. "The new philanthropy is characterized by a much more participatory, community-based model, not just a small pool of high-wealth individuals who do grantmaking. Another characteristic is to move beyond the strictly charitable model to addressing, in a more fundamental way, the systems and root causes of issues that require charity."

In addition to the influence of more diverse donors, several trends are helping shape the ways people contribute:

Online giving: Online donations usually go directly to a specific organization. Both large and small nonprofits have embraced Internet giving, which accounted for some $2 billion in contributions in 2003. Although the Internet has been especially good at attracting small gifts, increasingly larger gifts of $1,000 or more are also being reported. The Internet has also facilitated spontaneous giving, such as donations to relief agencies immediately following the Asian tsunami in December 2004.

Local giving: Community foundations have been particularly responsive to donors' interest in investing in their own communities. Many larger community foundations also serve smaller component funds dedicated to the needs of rural areas and smaller towns within their region. For example, the Minneapolis Foundation offers philanthropic consulting services through its Metropolitan Philanthropy Program, which serves several suburbs.

Communities of interest: Community-type foundations have sprung up to serve people who are united by a common interest, such as communities of faith, gender, race or sexual orientation. Such organizations typically award most of their grants to organizations supporting the same community of interest.

Hands-on giving: Many individuals are looking for greater involvement in giving decisions. The growth of donor-advised funds, provided by all types of community foundations as well as financial institutions, reflects this trend by enabling individuals to research and recommend charities of their choice. "Part of what a community foundation can do," Andersen says, "is give individuals greater power to realize their values." Another example is the growth of giving or donor circles, informal associations of donors to pool their resources. For instance, a group of hotel workers might each give $10 a week for one year, and at the end of the year make a collective decision about how to use it. At the entrepreneurial end of the scale is Social Venture Partners, an organized donor circle that encourages entrepreneurs to get involved with nonprofits as donors and volunteers.

Chris Andersen emphasizes the responsibility to help people be thoughtful about their giving. "We try not only to facilitate the existing desires of donors but also to educate and raise the standards for accountability," he says.

As many donors look more closely at how their gifts are used, there's also growing diversity among grant recipients. Faith-based giving, rural philanthropy and international giving are often cited as new philanthropy trends across all types of foundations and giving vehicles.

In recognition of this trend, many philanthropic organizations — such as the Minnesota Council on Foundations — and community foundations offer resources that make it easy to research organizations and give independently or connect with others who have similar interests. Many such resources are online and available 24 hours a day.

How "New" Influences "Old"

The "new" philanthropy is not only becoming more visible and pervasive, but it is perhaps also changing the way some long-established philanthropic organizations conduct business. For example, as more people of racially and ethnically diverse backgrounds get involved with foundations, the more they learn and the better qualified they become to join the boards and staffs of "traditional" foundations and corporate giving programs and to influence how those organizations work.

Stately is a good example, from her beginnings as a volunteer, then a staff member, and now an executive with a Native American organization, the Indian Land Tenure Foundation, which itself is headed by a former program officer at Northwest Area Foundation, Cris Stainbrook. The fact that its staff members are experienced in the workings of philanthropy and know the laws that govern it makes the new organization more effective from the outset.

In addition, people who get involved with philanthropy at the grassroots level, whether through an informal giving circle or a formal donor-advised fund, can experience the joy and responsibility of giving. In turn, they tell others, and the trend accelerates.

In part because of the influence of "new" philanthropy principles and in part because of changing demographics among donors, some mainstream philanthropy is moving away from social services that do little to change the status quo and toward systems change.

"The conversation in philanthropy has evolved," Newcom says. "I think a corner has been turned about how philanthropy is organized, and it will possibly never be the same again. It is by definition becoming much more participatory, more diverse, more inclusive, more strategic and focused on underlying systems and structures of injustice."

More Information from the Summer 2006 Edition of Giving Forum

Thank you to the sponsors of this issue of Giving Forum:
$5,000 Sponsor
$5,000 Sponsor
$1,000 Supporter	West Central Initiative