Pinch Me I Must Be Dreaming: Is This the Future of Philanthropy?

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October 24, 2010; Source: National Center for Responsive Philanthropy  |  In a guest post on the National Center for Responsive Philanthropy’s blog, Bill Somerville of the Philanthropic Ventures Foundation predicts six trends for philanthropy that will be noticeable by 2014. He makes these predictions based on pressures that are building in the current system of philanthropy, including; increasingly burdensome paperwork and slow decision-making in the face of urgent need, a shift of generational power, a resurgence of interest in grassroots initiatives, and a need for more entrepreneurial grant-making to tackle complex issues.

It’s our bet that, appreciative as they are of existing philanthropic largesse, many non-profits will be thrilled to hear the predicted changes for the sector. These changes include:

  • More entrepreneurial mindset within foundations: “Philanthropy will involve more risk taking” and “more tolerance for an occasional failure”
  • More focus on seeking out and funding “outstanding people and organizations,” versus long drawn-out application processes, as the means to undertake due diligence
  • More true partnering between grantors and grantees: “More collegial relationships” between applicants and foundation staff
  • More trust-based relationships within foundations, resulting in more discretionary grant-making and faster grant-making processes
  • More discretionary and flexible funding for grassroots programs in particular
  • A critical mass of young people engaged in philanthropic work, bringing new experiences, perspectives, and practices to shape the field

Are any of these changes already well on their way to being the norm in your experience? Are these the most important changes we need in philanthropy? And, do you think the predictions will come to pass?—Kathi Jaworski

  • Nick Booth

    I think they are starting to happen – the seeking out orgs is – but it can’t be acknowledge as long as other older structures survive.

    People themselves are also managing to make more happen with less, often leaving well funded but slow initiatives look wasteful.

  • porcia silverberg

    Bill Somerville is an amazing champion for nonprofits and innovative social changemaker!

    I look forward to witnessing & participating in the new trends of philanthropy … I dream of the day when Bill’s beliefs are the norm and he is respected simply for being an brilliant philanthropist rather than a [i]maverick[/i] grantmaker!

    Porcia Silverberg
    ED, Thrive – The Alliance of Nonprofits for San Mateo County
    http://www.ThriveAlliance.org

  • Chasity Keen Larios

    I completely agree. In fact, I have personally been involved in #1, #3 and #6.

    I think a lot of the change is driven by the new nonprofit leaders of my generation who don’t have a “traditional” approach to philanthropy. Nonprofits need to start thinking more like a business.

  • Gail Perry

    Love these. Want to see them happen. But change is hard, especially in the very comfortable foundation world.

    The groundswell of interest in social change is going to be a huge factor in the future.

  • Asukwo Etuk

    The predictions have already started taking shape. I am a witness taht some of them are already here with us.

  • June Wallace

    This is very encouraging;a shift in attention to all important social change issues such as Human Trafficking; particularly Child Sex Exploitation and Trafficking fueled by internet porn are new on the horizon and the “old school” did not seem to be stepping forward to tackle these issues. Less time delays; less paperwork; new relational thinking – all much needed in these days of little or no government funding.

  • Tom McSorley

    This projection is on target. Entrepreneurial, collaborative, innovative,direct benefits, less administration, social engagement and co-occurring revenue generation for proven sustainability are all the key words to look out for. There is a sea change coming and it is for the better. Guerilla type tactics, that get the job done, rather than the slow cures or slow solutions will win the day. Social networking will be crucial. Enhancement of an organization’s technology will be the biggest driving force.

  • Stephen Wunderli

    We’re already seeing some of these trends. At Operation Kids, we look to partner with nonprofits that benefit kids, and have solid grassroots volunteers. We provide matching grants for PSA production and have had great response from those nonprofits that can act fast, be effective and are good collaborators. We’re seeing some real change in how willing groups are to work with each other to leverage resources. It’s exciting.

  • Aryeh Sherman

    Bill Somerville’s suggestions are logical but may not reflect the reality of the great majority of foundations that are digging in against the onslaught of nonprofits banging on their doors for some relief as government continues draconian cutbacks in funding. Perhaps the current wave of retiring nonprofit CEOs will begin second careers in the foundation world; if that happens maybe someone will then understand the reality that nonprofits face today.

  • Karen O

    I am coordinating a High Impact tyouth development initiative in our community. This initiative was started by 17 funders and is being perpetuated by a collaborative between the funders and the community stakeholders, namely nonprofits, city, schools, businesses, faith-based, parents, and youth. It is the wave of the future and it is working!

  • Jeff Carroll

    The changes are coming and to some extent being driven by social enterprising efforts. Social Change agents that are to one degree or another self funding, are looking to grantors for a different kind of assistance. A traditional NPO is looking for program funding in order to sustain their efforts and existence. Social enterprises are looking to foundations in the same way a for-profit looks at equity investors. They need the capital for growth, not survival. I’m convinced this type of nonprofit is as much of the solution to funding in the future as a change in attitude within the funding community.

  • Karen Schumacher

    8)
    Not business as usual for stagnate NPOs – As a “newer” innovative org – we look for partnerships that are not just a piggy bank, but a relationship that can facilitate change on both ends. Looking forward to seeing more of these predicted changes!

  • Shellina Lakhdhir

    Future of Philanthropy looks great. In our organization we say “there are no silver bullets” – that we will take risks and learn from them.

  • Van Crosby

    I’ve read Bill’s book (Grassroots Philanthropy)twice and I can’t agree more. Most philanthropic organizations have become way too slow in deciding who gets what—-I would say: take a risk and let the rest take care of itself. The idea is to help and do it when it truly helps the cause or individual not when it bureaucraticly convenient.

  • Jeffrey Schlekie

    I entirely agree with this article. Great perception! Don’t Litter!
    http://www.thelitterbugz.org

  • Oleg Redko

    Future with 7 Billion people starting from 31th of THIS October, we will have to be taught to make a CHANGE in the society and help, so aggressiveness of the corporate culture will be needed for SURE! 🙂 Let’s fight, it is time to become hardcore in the non profit sector!

  • Mimi

    Totally agree and appreciate the validatation of my thoughts. I spent 18 years with a national non-profit and watched it move out of grass-roots arena to national signature event and the entire org lost its focus and mission and it became very vanilla.

  • Jean McCrady

    Jeffrey, your “Don’t Litter” comment caught my attention and I say Amen! I am a Board Member for Alabama PALS (People Against a Littered State), and a world without litter is my dream.

  • Kathi Jaworski

    I am excited to see all the observations that these changes are beginning to happen! Thank you for taking the time to add your comments!

    If I could add one more thing to the list, it would be this. “More funders will evolve their evaluation role to emphasize real time learning and adaptation that has immediate value for their nonprofit partners. They will [i]invest[/i] in helping such partners conduct meaningful real-time evaluation toward relevant outcomes, no matter what the size of the nonprofit. As the folks at the Bill and Melinda Gates Foundation already suggest (see http://www.gatesfoundation.org/learning/Pages/a-guide-to-actionable-measurement.aspx,), they’ll take the lead role themselves in tracking and sharing information about long term collective impact across time, projects and communities.”

  • Amanda Belzowski

    Hi, I’m 14yr old Amanda and ever since I was really little I’ve had a Lemonade Stand to raise money and awareness to fix kids’ hearts. I’ve raised over $161,000 but more importantly I speak at schools, conference and other places to teach everyone that you are never too little to make a big difference in this world. I’ve done it 1 glass of lemonade at a time. Everyone can make a difference when they believe in themselves and in the power of 1 person and passion and perseverance.
    I am so glad that Mr. Somerville believes that young people can be the leaders of tomorrow. I tell people that we are already leaders today. This year I added teaching a course called Nothing’s Impossible Young Entrepreneur Course to 9-15 year olds and also started a teen event called Lemon-Stock to get older kids to continue helping even if they’re too old for a lemonade stand (I passed mine to my 5 yr old brother) 🙂
    Mr. Somerville, I think what you do is amazing and if you know anyone like you in Toronto Canada that I could meet, I would be honoured and if you come to Toronto, please don’t forget to get in touch with me – thank you for what you do!!

  • william perrin

    a good piece – we are already making grants in this manner over at the Indigo Trust. we mainly invest in web tech or community based matters and the traditional approach just kills them

    see http://indigotrust.wordpress.com

  • Kzen

    Sounds great but why do we wait for 2014
    If we want a change this is the time
    let

  • Gregory Kurth

    I’ve been following the venture philanthropy futurists for awhile but I think the economic crisis is forcing foundations to act more like banks and emergency funders for critical needs in non profits. Foundations like to talk about “community impact” but I don’t see concerted efforts to fund portfolios with other grant makers or streamline meaningful changes in administration.

  • Melvin Thompson

    As one of those newly minted nonprofit leaders, I couldn’t agree more. Some of these foundations are fairly myopic and often fail to see how some nonprofits blur the lines and contribute significantly and directly to other needs.

    Quick example. At Habitat for Humanity Chicago South Suburbs, it has been difficult getting education-based foundations to fund us because we preserve affordable housing. Yet these same staid organizations are rapidly “discovering” that safe, decent shelter is the essential platform to health, education and well being. But here’s the kicker. They’re spending millions of dollars on research that nonprofits like ours already know.

    We could use a changing of the guard in many respects to better illuminate the overlap of causes we serve.

    Lastly, let’s try not to be run too much like a business because in my opinion, there aren’t tons of great ones out there.

    Enjoyed reading everyone’s thoughts.

  • Martin Flores

    I recently made the jump from the private sector to work on my passion with a non-profit. It is certainly a challenge to ask people that have no other experience other than non-profit work, to think and act like a business. I have experienced in my brief non-profit career that decision making is often made with short sighted vision and a lack of business acumen. These challenges however have not impacted my passion for the work I now do on a daily basis! My only regret is that I did not make this jump ten years ago! Change is good only when it has purpose, intent and execution.

  • Michelle Sidrane

    It is always dangerous to make gross generalizations based on one’s own experience. What you see in your organization may not be representative of what happens in others. I am researching a book on transitioning from corporate to not for profit, having done so myself over 10 years ago. I would like to hear from more successful “transitioners”!

  • PBdP

    There will be a moment where businesses will seriously look at the outcome of their corporate giving:
    – Do they provide ROI in terms of reputation and image?
    – Do they meet their shareholders’ interests?
    – Do they meet market’s expectations by addressing customer’s most regarded issues?
    – Do they target strategic instead of tactical outcomes?
    – Do they meet recipients’ needs?
    – Do they make any difference in the world?
    For many of corporate philanthropic programs I know, the answer to most of the above questions is NO!
    So there is something wrong.

    Philippe Buteri de Preville
    http://www.mundumnostrum.org

  • G Wood

    After reading Mr. Somerville’s predictions regarding the future of Philanthropy, I was very surprised. All of his points other than the last one regarding young people, would be my definition of good philanthropy. Being involved in Philanthropy for 30 years and a Trustee of a Foundation, we have been living the future for years.

  • Doris

    I like these ideas! This is the way I saw it from the beginning. We have invested so…much as a NPO in our community,and struggled to get the help needed. We are forming a youth community advisory committee board to consult with us regarding their own needs and peer issues; in addition, write their own proposals for scholarships for future careers and help the org. fundraise and deliver the services where they are really needed!

  • Thomas Cole

    Michelle, I jumped over to the not-for-profit sector after 20 years in business. While “successful” is often difficult to quantify, my small org is poised on the brink of being able to change the course of an entire industry. This next year will be pivotal. Shelter Revolution, an advocacy effort, remains self-funded to avoid the distractions of fundraising and the danger of being co-opted by others – a real possibility when trying to make large changes. Check us out at http://www.ShelterRevolution.org.

  • Samantha Castle

    These changes are already in action and swiftly becoming more apparent. Our We Give a Damn Programme in South Africa that promotes philanthropy amongst young professionals is constantly looking at different models with respect to giving. At one of our recent meetings young people had vigorous debates about how they would like to give. Some of the very same points mentioned in this article were confirmed in that discussion regarding Grantmaking. Young people are prepared to take more risks with their investment and take much more of an entrepreneurial approach. Our programme

  • Jan Mowbray

    “Perhaps the current wave of retiring nonprofit CEOs will begin second careers in the foundation world; if that happens maybe someone will then understand the reality that nonprofits face today.”
    I can’t agree with you more. It would be even better if some of the for-profit retiring CEOs got involved in the NFP/NP sector in a management position.

  • Debi Brooks

    When Michael Fox launched his foundation, his intent was never to start something from scratch. A diligent review of options led him to create his own public charity as no org was singularly focused on funding research for new treatments–the greatest unmet need for PD patients.

    He was genuinely focused on impact and for him (and luckily for me as co-founder) this meant finding business-minded folks for staff and board positions. But, as Jim Collins would remind us, there are good businesses and bad businesses so it isn’t fair to simply say the non-profit sector should adopt more business practices.

    I transitioned from the for-profit sector to the non-profit sector and I observe that we have core practices at MJFF that are uncommon at other non-profits. Among other things, we employ a “use of capital” model that informs everything from “no endowment” to our risk-taking posture within the research funding landscape to our investment in talent/staff. We see ourselves as problem-solvers.

    I happen to believe that for an organization to move the dial vis-a-vis the complex problems we face in the NFP sector, top to bottom commitment to such philosophies (the ones above are ours but may not be right for every org) must be obsessive. There is significant passion in the NFP sector — I’d like to see more organization leadership (staff and board) committed to improving the environment for results.

  • StephaniePH

    We are starting social enterprise to open women’s health centres for low income women in Nairobi. Our most common question is – “why aren’t you a non-profit?” Our answer “we want our customers to be the women, and not donors or donor organization.”

    IMO these changes can’t come too soon!

  • Marian Bender

    Hi –
    I was a marketing director in the high tech field in the late 90’s – climbed the ladder but didn’t like what I found at the top. Kind of accidently fell into working for environmental non profits and now can’t imagine going back to the for-profit sector. I would be happy for talk to you re: your book.
    320-420-42798

  • Santos Maldonado

    I agree with the observation that fewer people are making more happen yet the initiatives seem wasteful or not as perceived as such. From what I have observed I conclude that generalization is probably not best measure of what is occurring. What happens with existing partnerships in one region may differ greatly in other areas. Perhaps the structural changes will catch up to the emerging reality. Philanthropies lag due to their familiarity with doing things as in the past – I am confident they will flex and provide more wiggle room for non-discretionary funding.

  • AnnaG

    These are great goals to work towards, but it always depends on the source of your funding. The Foundation I work for has several programs that are funded with “private/corporate” funds, that can respond quickly to requests, there is a lot of trust for program managers to “do their own thing,” etc. But we also have a lot of “public/government” funding and until the red tape goes away, I don’t see the workload for the foundation or for potential grantees lessening because there are very strict guidelines as to how these funds can be used (have to be competed or need sole-source justifications) and how the use is reported on (again onus is on the grantees and the foundation to provide this information).

  • Rick Murray

    I have been running a small non-profit from my home. It is a build-a-bicycle program that was started by accident when I salvaged a couple old bikes for my wife and I to ride with our grandchildren. Soon enough many kids started coming around asking me for bikes and to fix the bikes they have. People started just coming by and donating their old bikes. The impact on my community has been very positive, but I have been thinking on how I can expand this. Trouble is, people like me have no idea how to set ourselves up as legitimate non-profits and grow into other communities.

    How does one even find someone who can come in and guide this little program into greater programs? I sure don’t have the knowledge or experience to legally set up and run a program and everywhere I go I get no answers. Run the business? No problem. That I can do and have been doing for years now. Be a non-profit? I need someone else. Money? We have none. This program has cost me a ton over the years, but I am not sorry for one dime spent after seeing the results. But I know this can be so much more!

  • Ram Ramanan

    YES please see Porters big idea HBR Jan Feb2011 on creating shared value and of course Prahlad’s Bottom of the Pyramid

  • Michelle Hensley

    🙂
    This is a good concise article along with Philippe’s information. I am also after 8 years running a np and a few years of grant writing appreciate simple and easy to understand. My son helps me a lot because he understands social media and I personally love what Charity Water does. You can become discouraged or you can learn and participate. Thanks for the information!

  • Ellen Strohm

    American Bible Society has been applying these principles in granting for over seven years. The results have been strengthened programs and increased grant impact as ABS works with the organization to plan its objectives based on track record and capacity bringing a greater benefit to both the program and its benficiaries.

    A welcome side effect of the trust built between the organizations is increased transparency in reporting. Knowing the objectives were something within the reach of the program, ABS evaluates the results not just based on return on investment type analysis, but looks at a range of factors influencing the outcome. Never a pass or fail, but a pass and learn process.

    Glad to see the principles are spreading!

  • stephanie s twitty

    ..well said Crosby and I fully concur. particularyly with the thought too many foundations and grantors are unwilling to help when the cause/individual is most in need.

  • Srini Kadamati

    Enjoyed this article immensely and agree with many points made.

    I’m a student at UT Austin that co-founded a startup with 4 other students and entrepreneurs here in Austin and we’re looking to disrupt how nonprofits find volunteers and how busy students & professionals give back to their local nonprofits & their community.

    There are 2 salienet points this article made that we’ve experienced ourselves. First off, our startup is a huge risk. We hope that bigger nonprofits will be our customers, which is a huge assumption. We want to make an impact more so than make money, which I think is key for startups looking to contribute to the nonprofit / philanthropy sector. Second, we’re looking to build really strong relationships with nonprofits and the nonprofits they support, are involved with, or simply know and not view them as customers first.

    If any of you guys are interested in volunteering more or are a nonprofit that struggles to find volunteers, check us out at http://www.2hourcommitment.org. We’re in BETA mode, but have 90% of the MVP platform built out and will be launching in 2 weeks. If you got any questions, you can reach me at Srini@2HourCommitment.org.

  • Parker

    I am the president of GlobeMed at University of Missouri-Kansas City. GlobeMed is an organization dedicated to the movement for global health equity. We aim to meet this end through partnerships with organizations in some of the most disadvantaged communities in developing countries. We are able to do a lot with little money and our focus on sustainability empowers the community to have ownership of the projects we implement. In our work, at the chapter level, we would have very little purpose for incredibly large donations as just funneling money at our projects would only have adverse affects.

    I believe that the grassroots nature of our work, the focus on sustainability, empowerment, and efficiency is what has made our organization so appealing to university students and donors. Five years ago we started as about a handful of students trying to find their places in the movement for global health equity. No we have grown to 1500 students with 46 grassroots partners in 18 countries on 4 continents. And we’re not stopping any time soon! We are currently in the process of developing our national office that provides resources like grants for our on-site internships titled Grassroots On-Site Work (GROW), as well as put on conferences that bring all the chapters together, and provide invaluable resources for each of our chapters. Their work is essential to helping our chapters thrive and they would benefit greatly from larger donations. This year the national office is trying to bring representatives from our partners in countries like Uganda, Guatemala, and Thailand to our annual Summit in Evanston, Illinois. This will greatly strengthen the partnerships between the students here that dedicate their time raising funds and awareness with the volunteers and professionals from our pratners that work on-site day in and day out. If you would like to either support GlobeMed at UMKC visit http://www.razoo.com/story/Globe-Med-At-Umkc or our national office visit http://www.razoo.com/story/GlobeMed.

    I hope this shameless plug resonates with you. I’m excited for my future life-long commitment to nonprofit work. I cannot wait to see some of Bill Somerville’s predictions realized. This sector could certainly use some new faces and rules.

  • Susan Smartt

    Hi Michelle,
    I was a pioneer in the late 1980s making the transition from corporate to not for profit. Would be happy to share my experience.

  • Abby Dotz

    Rick,
    I will graduate this spring with a BA in Nonprofit Organization Management and can appreciate your quandary… other than hiring a consultant, other options- 1)is there a college or university in your area that offers nonprofit classes? Maybe you could speak with the school and audit an intro to nonprofit class (my program also includes classes on fundraising, grant writing, planned giving, community relations and marketing, management, ethics, research methods.)I’m currently enrolled in the capstone Strategic Planning course, the objective of which is to go through the entire process of starting a new organization or a new program at an existing organization… for some students this process is completely theoretical, but others are working with individuals in the community… maybe this type of arrangement might be possible in your area? 2)I am also the president of the on-campus student organization of nonprofit students… perhaps a similar student organization exists in your area? (I’m not sure where you are- you could see if there’s a local Nonprofit Leadership Alliance chapter in your area or other nonprofit student group… if anything like our organization, the students would seize an opportunity to assist you, a chance for them to also gain additional practical experience.) 3)You could contact your local chapter of Association of Fundraising Professionals or Young Nonprofit Professionals Network who may be able to help you directly or refer you to someone who could. Other possibilities- attending a conference and spending a good deal of time on the internet finding additional resources. You sound passionate about your idea… best of luck with your endeavor!

  • Mike Shumann

    I am most heartened by the trend toward foundations tolerating the occasional failure. I’ve worked for several non-profits that would never acknowledge ANY failure or disappointment for fear of jeopardizing future funding. As a result, these non-profits compromised their intellectual honesty. Hopefully, non-profits can respond in kind to this trend by being more open and honest with funders.

  • Martha Moriarty

    I’ve been in this industry for over 15 years. It seems like this is a pendulum swing. When I first began fundraising and writing grants, it was about relationships and trust, you could call up a funder you had a good relationship with, pitch your idea and they’d say, “go ahead, submit something, I’m sure we’ll support it.” Then the pendulum swing went the other way to no one answering the foundation’s phone – just submit your paperwork, follow procedure and be sure you have proven results before applying. I already see this pendulum swinging back to relationships and trust again and am glad for it. It will spark innovation and creativity in our industry again. It’s good change, but we all must be mindful that there are some wonderful projects just outside of our personal and professional networks, whether we are funders or nonprofits.

  • Michael Tarnoff

    Two comments: First, I agree wholeheartedly with the six points in the aticle — but I also note that they are directed primarily toward grantors / foundations, not necessarily toward grantees — i.e., organizations that provide health / education / welfare services to populations in need. Foundation are of course an important galaxy in the non-profit universe … but they certainly are not the whole universe. In spite of that, all of the comments refer to “non-profits” as though they all can be measured by this foundation yardstick. I think we need to be careful about establishing a one-size fits all set citeria for the so-called “non-profit” sector when in fact there are sub-categories within the sector that are fundamentally different species. Second, I think it can, in some circumstances, be somewaht dangerous to wncourage “Nonprofits …. to start thinking more like a business”. We all learn in business 101 that the the optimum place for a business to conduct its affairs is at the point where the demand curve intersects with the supply curve. Every decision a business makes (whether they know it or not) is an attempt to measure where that intersection occurs and move closer to place. But for many direct service provider non-profit organizations, the demand curve for there services or programs is infinity. Foir thiose organizations, they have no choice but to develop a unique and fundamentally different approach to organizational decision making. “Thinkg like a business” could, in some cases, lead down a path that is not in sync with the organizations’ mission. Conclusion — I think this article is great for foundations, but I urge caution in trying to apply it uniformly to other types of non-profits, especially direct-service provider organizations.

  • Elaine Katz

    Our grantmaking program is young, approximately 5 years old, focused on programs that increase employment for people with disabilities. At Kessler Foundation we have always strived toward best practices, including those highlighted in the post, and undergone self-evaluation & external evaluation of grantmaking. Many of our large grants are entrepreneurial and our smaller grants ($5K-$50K) all include indirects. We have provided emergency funding and about to embark on a new cash grant/plus-no interest-loan option to a grantee to stretch funding options.