The Michigan-based Dorothy A. Johnson Center for Philanthropy recently published a fascinating report entitled 11 Trends in Philanthropy for 2019 (1). It sets out some reflections on the emerging opportunities and challenges for the charitable, or non-profit, sector in the United States. While the focus is purely on philanthropy in America, some of the identified ‘trends’ reflect what is also happening here in the UK:
The boundaries are blurring between philanthropy and business
The report highlights that the different ‘sectors’ used to define society have traditionally eschewed the idea of ‘blurring’ the boundaries between them. Thus charities have often been reluctant to become too ‘businesslike’, while businesses – adhering to the views of capitalists like Milton Friedman – have insisted that free market principles would be weakened if businesses were to add ‘social responsibility’ to their corporate aspirations. Yet, as a growing trend, the boundaries between business and philanthropy are now being blurred at an astonishing rate.
For the UK charity sector, the blurring of those boundaries has been essential. Large or small, all well-run organisations have recognised the necessity of adopting sensible business practices. And many charities have developed their own trading or commercial ventures to bring in much needed investment, albeit on a ‘not-for-profit’ basis. For businesses, the blurring of boundaries has led many to donate to specific charities or broader philanthropic causes in order to fulfill their corporate social responsibility obligations. Others have supported new ‘social enterprises’ – combining good business practice with a philanthropic ethos – or have established specific funds to support grant making as a form of ‘social investment’.
The blurring between the charitable and public sectors has been no less dramatic. For many years UK charities have relied on state funding to support their work. Much of this has been around applications for grant funding, but the shift in the last two decades has been towards the commissioning of charitable services using established procurement processes, contracts and service level agreements. In an era of austerity, some public sector bodies have gone further in creating their own not-for-profit ventures to take over the running of essential public services. Like businesses, government departments and local councils have begun to work closely with the third sector to develop strategies for social investment that are about the long-term and ‘impact investing’.
As religiosity changes, donor engagement needs to adapt
While religious organisations in the US have benefited from charitable giving for decades, the amount of money donated to such causes is declining as Americans become less religious. The report suggests that charities need to rethink how religious affiliation could inform and impact on philanthropy in the future.
The same can be said of the UK. Annual research by the Charities Aid Foundation has demonstrated that while roughly a fifth of all donations are given to religious charities, this amount is declining as fewer and fewer people identify with a particular faith or religion(2). While those with a religious affiliation are more likely to give – and will often give more – their philanthropy is not limited to faith-based charities. Many religious givers will happily support secular causes. For charities, the emphasis should be on identifying campaigns, causes and social needs which can attract a ‘broad church’ of people with religious or spiritual beliefs, rather than focusing on the religious denomination of individual donors.
Nonprofits are playing a vital role in civic engagement
We are told that America is experiencing something of a surge in civic engagement, with charities “benefiting from increased awareness, donations, and public passion”. Charities seem to be playing a bigger role in the democratic process, with many more people prepared to give their time, talent and treasure to charities which support the new wave of ‘impact politics’.
In the UK, charities and their willing volunteers have become more visible and vocal in campaigning for change across a wide range of social and policy issues. And with the declining faith in politics and politicians generally, many people are looking to charities and socially-minded philanthropists to advocate on their behalf. Research in 2018 showed that following the EU Referendum there has been a significant upsurge in the numbers of people claiming to be active in supporting political or social causes(3).
The wealth gap is becoming a giving gap
While there has traditionally been a strong correlation between giving in the US and the ups and downs of the nation’s economy, the report points to a more glaring trend – the wealth and income gap between the rich and the poor, and the impact this is having on charitable giving.
This trend is also mirrored in the UK. Research this year has shown that while the overall level of charitable giving has increased to over £10bn each year, this is being donated by fewer people giving more – and yet, those giving more are not the wealthiest(4). A recent feature in the Financial Times suggested that the average level of giving among high net worth individuals – with £1m-£10m in investable assets – was £500 a year. Among the ultra-wealthy – those with more than £10m – it was only £240(5).
Charitable giving in the US may be undergoing something of a sea change, but there appears to be quite a transformation occurring here in the UK too – let’s hope it’s an unstoppable change for the better.