Johnson Center studies evolving philanthropic landscape
By Elijah Brumback
April 27, 2014
A new generation of donors, acute needs and increasingly blurred lines between profit and nonprofit enterprises are reshaping the philanthropic landscape.
In Grand Rapids, the Dorothy A. Johnson Center for Philanthropy housed at Grand Valley State University is poised to lead an examination of how the models for charitable investment are responding to a shift in the paradigms of both donor involvement and organizational best practices.
To support the effort, the center developed a new role in 2010 and appointed Michael Moody, Ph.D., to serve as the Frey Foundation Chair for Family Foundations and Philanthropy. A national search for a second candidate to serve as the W.K. Kellogg Chair for Community Philanthropy is currently underway.
Both positions are the first of their kind in the nation and are expected to advance the knowledge and understanding of progressive philanthropic efforts, said Beverly Grant, associate director of the Johnson Center for Philanthropy.
“Community philanthropy is in a time of major change and innovation,” Moody said. “Foundations are thinking differently from how they have in the past and donors are thinking differently about how they can involve themselves, collaborate and work across sectors in communities.”
Changes in donor thinking and the way charitable institutions approach operations are linked in large part to a massive transition of wealth, experts say. MiBiz first reported in January 2013 that roughly $40 trillion, much of which is designated for charitable giving, will pass from older generations to a “relatively small group of GenXers and Millennials” in the coming years. The findings are part of joint study from the Johnson Center and 21/64, a New York-based multi-generational consulting group.
While the patterns and practices of charitable giving in previous generations are well documented, researchers studying philanthropy today are only starting to develop a clearer picture of how future generations are contributing to causes at all levels.
“There is a lot more information available for people to understand problems outside their community. At the same time, people are getting engaged and contributing to their local communities in different ways,” Moody said. “There are way more options now than just the United Way, through religious institutions or big foundations.”
This doesn’t mean philanthropy is moving away from big checks and naming rights to buildings. Those types of gifts will continue to play a big role, but donors are increasingly finding more active ways to contribute beyond just signing checks, Grant said.
“A lot of new donors want to have boots on the ground and are interested in seeing exactly where their contributions are being used through every step of the process,” she said. “They don’t just want to give money. They want to give time as well as treasure and many donors now are interested in more information-based giving.”
Organizations like United Way have to start changing their model to keep charitable giving relevant with the next generation of donors, Moody added.
“People today are less likely to say, ‘Just take that (contribution) out of my paycheck.’ They want to be more involved,” he said. “This is exactly the type of philanthropic change we think we can help explore.”
With the needs of communities more acute than they have ever been and given the shifts in the ways funds are distributed to charitable organizations — whether through the government or other sources — there are more expectations for nonprofits to perform, Moody said. While donations have long been the primary revenue stream to fund operations, nonprofits have to look beyond donations and start identifying opportunities for earned income streams, he said.
At a time when more information and avenues for charitable giving are becoming available, public calls for increased transparency and regulatory scrutiny are also on the rise. However, these reactions aren’t necessarily making it harder for existing groups to continue
their operations, nor are they causing impediments to new philanthropic entities, Moody said.
“This next generation has no qualms about saying that they want to see as deeply into organizations as possible,” he said. “They’ve grown up in a much more transparent world, and greater media attention has allowed more exposure of unethical behaviors and practices. It’s not that there is more unethical practice happening now, it’s just that we are more aware of it.”
One frequent criticism — and the way in which many nonprofits and charitable organizations have been judged over the years — is how these groups apply dollars programmatically and in particular, how much they spend on overhead. But this means of validation is also slowly losing its meaning in favor of a focus on measuring overall impact, Moody said. Donors are interested in how much change an organization can effect, no matter the structure, he added.
“It’s a time of innovation. Social enterprise, microfinance and all sorts of things that don’t look like traditional philanthropy are happening, but in the end, it’s still transferring capital to meet needs,” he said. “People today don’t want to have to keep the way they are as consumers separate from who they are as philanthropists. We’re entering a new world where we need good information and reach to show some guidance. The pace of change in the philanthropic community is unprecedented.”