Through the pandemic-related turmoil of 2020, many nonprofit organizations shifted focus or practices while others shined a light on longstanding disparities around health outcomes, racial equality and economic opportunity for people of color, researchers say.
The findings are included in the “11 trends in Philanthropy for 2021” report that was issued last month by Grand Valley State University’s Dorothy A. Johnson Center for Philanthropy.
The report, now in its fifth year, shares insights across 11 essays on emerging issues in the philanthropy sector.
“One of the things that strikes us every year as we’re writing this is how interconnected they all are,” said Johnson Center Executive Director Teri Behrens. “That is what led us to write that first (essay), ‘Dynamic and disruptive forces are increasingly at work.’”
Some of those key forces that are driving change and disruption include more concentrated wealth, increasing giving mechanisms and an increasing focus on diversity, equity and inclusion in philanthropy. The report tackles timely and heavy-hitting topics related to social justice funding, trauma-informed philanthropy, foundation payout rates, the overlapping roles of government and philanthropy, the globalization of philanthropy, philanthropy and reparations, and the nonprofit sector’s role in building public trust.
“The sector is roiling around all these changes that are interacting with each other and creating real disruptions,” Behrens said. “If you read through the 11 trends, you can really see connections and how they all connect to each other.”
Philanthropy, business, government overlap
For Behrens, one of the most interesting trends relates to the erosion of public trust in governmental institutions, and the nonprofit sector’s role in fostering public trust.
“The nonprofit sector has more trust than government and business and has the opportunity to step up and really work toward building public trust in each other and our public institutions,” she said.
Another trend to watch is the role of philanthropy and government overlapping in the public sphere, which is increasingly complex as foundations and donors step in to fill funding shortfalls and gaps in services.
The blurring of business and philanthropy earned mention in the 2019 trends report and continues to accelerate at a rapid pace. The trend is evolving in several ways, including entrepreneurs and startups taking on social missions and a greater commitment to charitable giving and social responsibility.
“There are a lot of different ways businesses are saying, ‘It’s not all about me and maximizing my profits, but how do I contribute to the social good?’” Behrens said.
Growth of social justice funding
Economic disparities among people of color and racial injustice boiled over in 2020, prompting more grassroots efforts to support social justice causes. In an essay accompanying the report, the authors note there has been an increase in smaller donations by ordinary citizens to combat social and racial injustice.
Larger donors, including many foundations, also instituted policy changes to “decolonize” wealth and give nonprofits more freedom to use those funds how they see fit. Funders have loosened restrictions on their grants and their grantees, and there seems to be a shift toward advocacy and efforts to change public policy.
However, even with less restrictive gifts, the authors warn other complications could arise, including the risk of movement capture. This involves pressure that funders put on nonprofits around funding priorities and programs that shy away from activism and emphasize self-help and self-actualization.
For instance, the Black Lives Matter Global Network Foundation began to formalize its structure in 2020. It remains to be seen whether large funders will continue to give freely or tighten the guidelines around unrestricted resources for social justice causes and movements.
Where the money flows
The power dynamics at play within philanthropy — and where and how much money flows to nonprofits — isn’t new. But there is growing criticism among social justice leaders, scholars and sector critics about foundation payout rates, the distribution of grant dollars to Black, Indigenous, People of Color (BIPOC)-led organizations, and the restrictions placed on grantees.
An essay that Behrens co-authored with Michael Layton, GVSU’s W.K. Kellogg Community Philanthropy Chair, notes the most intense debates center around how much funding is being distributed. More than $1 trillion is sitting in private foundations, and another $120 billion is in donor-advised funds.
The sector also faces tough questions around who benefits the most from philanthropy, why BIPOC organizations have long been overlooked, and cumbersome grant requirements. Many leading foundations, including the W.K. Kellogg Foundation, are beginning to question and address racial inequity in their grantmaking practices.
That includes how the money is distributed, the application process, reporting requirements, and other guidelines that often exclude smaller, less established, and minority-led organizations.
“One of the things we’re certainly starting to see more research on is how much money goes to BIPOC organizations,” Behrens said. “We don’t have a lot of good national data.”
Existing research shows that organizations led by people of color don’t have the connections or the history of networks to get access to donors. They tend to be smaller, informal groups that get started to serve the needs of a local community.
“Some of those organizations that can have the most impact on a local level have a hard time getting access to funding,” Behrens said.
Philanthropy and government
The relationship between government and philanthropy has always been fluid and complex, but the boundaries are growing increasingly blurry. An essay in the Johnson Center report explores the interplay between the two and the growing reliance on philanthropy to step in when government falls short.
In Michigan, the Detroit Grand Bargain, which saw foundations and donors step up to fund pensions for retirees and save the Detroit Institute of Arts, is one example. And the Foundation for Excellence in Kalamazoo involves two local donors aiming to raise $500 million for an endowment that would keep city tax rates stable and support municipal programs.
The fundamental question of who should do what in a democracy stood out to author Tory Martin, Johnson Center director of communications and engagement, during her research.
“That’s a broad question we have wrestled with for over 200 years,” she said.
The nonprofit sector’s response to the COVID-19 pandemic brought the issue front and center. After a lackluster coordinated federal response for testing, contact tracing and personal protective equipment distribution, foundations across the country offered financial assistance and worked with nonprofit partners to deliver critical services.
“These blurring sector-boundary questions are really dominant forces going on in the field that are pushing us all to define what is the role of philanthropy, what is the scope of philanthropy and what should we expect of ourselves,” Martin said. “The systemic problems we face as a country will only be solved together, by cross-sector and cross-community partnerships.”
Using the report
Nonprofits and others in philanthropy can use the report to “think about how it might impact them and spark some ideas about how they can do their work differently,” Behrens said.
While past reports highlighted more specific trends, the 2021 report deliberately examined broader themes, Martin said. In addition, cross-sector partnerships and cross-community partnerships rely on having good data, which is another trend highlighted in the report.
“For nonprofits, it’s very much about understanding the skills, resources and movements that they need to be successful,” Martin said. “A lot of these trends talk about what is essential, cutting edge and what you need to be good about, like data. If you can use data effectively, you are ahead of the curve.”
Western Michigan Planned Giving Group hosted two presentations by Johnson Center staff in 2020, and uses the annual trends report to guide and inform members’ work. The professional membership group includes development executives and nonprofit fundraisers as well as CPAs, lawyers and trust officers involved in charitable gift planning.
“Their work really does help guide some of our work and helps us just be aware of the situations that our donors are facing,” said Jennifer Yelovina, vice president of Western Michigan Planned Giving Group. “It really provides a great overlay for the environment. It helps inform our practice with regard to gift planning and development strategies, keeping in mind the larger perspective.”
