Chronicling Philanthropy’s Generation of Impact

By Susan Wampler

 

In a new paper released by The Center on Philanthropy & Public Policy, A Generation of Impact: The Evolution of Philanthropy over the Past 25 Years, Jim Ferris, Director of The Center and the Emery Evans Olson Chair in Nonprofit Entrepreneurship and Public Policy at the USC Price School of Public Policy, details the myriad changes that have shaped the field over the last generation — and that are setting the stage for philanthropy’s future. The paper emphasizes the strategies that are defining this generation of impact. A companion paper reveals how these forces have played out in southern California during the same timeframe. The work builds on The Center’s two decades of providing in-depth research and analysis aimed at deepening understanding of philanthropy and creating tools that help foster meaningful change.

“Since its inception in 2000, The Center has had a front-row seat to generational changes in the field,” says Ferris. “This generational change, in the scale and scope of giving, frames a period of substantial development of strategies designed to achieve greater impact.”

“Giving – from all sources – in the latter half of the 1990s was at a scale and pace that was unprecedented,” the report notes. “In fact, it established a new plateau.” During this time, foundation giving increased four-fold, from $20.2 billion to $78 billion, adjusted for inflation. The number of foundations created, as well as total foundation assets and giving, skyrocketed. Strikingly, foundations have more than doubled — from 40,000 in 1995 to more than 86,000 in 2017 — while total assets have grown from $373.4 billion to $1.03 trillion over the same period.

While the majority of private giving continues to come from individual donors, the share of foundation giving has doubled over the past 25 years – from 9 percent to 18 percent of total private donations. “This trend foreshadows the influential role of foundations in shaping the philanthropic landscape and the dynamic between new donors and legacy foundations,” Ferris says.

 

Strategies for Greater Impact

Along with this growth has come a bolder mindset that philanthropy can contribute to solving critical problems through strategies that unleash greater impact. A Generation of Impact identifies eight approaches that have given shape to philanthropy as we know it today.

The first two, strategic philanthropy and capacity building, were at the heart of the venture philanthropy movement that introduced an investment mindset, including a focus on theories of change, logic models, and outcome metrics. Since those early days, these strategies have evolved and have become core to foundation policies and practices.

On the heels of those bedrock strategies, several approaches centering on collaboration emerged as another key method for heightening impact. These strategies include:

  • Alliances between philanthropic organizations — National collaborations have become more commonplace as large foundations have united to tackle large-scale issues. For example, the Hewlett, Packard, and McKnight foundations partnered to establish ClimateWorks in 2008 to lay out an ambitious course for philanthropy aimed at reducing carbon emissions.
  • Public policy engagement from the outside — Foundation engagement in public policy has gained traction in the last two decades. The speed at which the marriage equality movement caught fire across a number of states surprised even those funding it.
  • Partnering with government from the inside — Philanthropy offers more flexibility and nimbleness than government, while the scale of resources at the disposal of public agencies can create the greatest impact.

This set of collaboration strategies reflects the recognition that the problems that donors and foundations seek to address are of greater magnitude than what any one actor alone can accomplish. These tactics have broken down the insular nature of philanthropy and expanded its playbook.

A final set of strategies revolves around philanthropic structures, operations, and practice — and how these choices can enhance impact. These include:

  • Focus on diversity and inclusion to increase foundation effectiveness, especially as philanthropy works to serve vulnerable communities and advance equity
  • Impact investing to unleash the power of endowments
  • Giving structures that are more agile, such as donor advised finds, limited life foundations, and limited liability corporations

 

Los Angeles Lens

The companion paper, Foundations in Los Angeles: An Assessment of the Last 25 Years, examines how these same eight strategies have found expression here in southern California. As A Generation of Impact highlighted the growth of foundations’ influence nationally, this timeframe marked a similar expansion of the Los Angeles philanthropic community. Foundations created since 1995 represent 65 percent of all L.A. foundations, hold 41 percent of total foundation assets, and represent 49 percent of total L.A. foundation giving.

The methods that have been firmly established as part of the local landscape are: strategic philanthropy, capacity building, collaboration, and partnering with government. This trend reflects the growing sophistication of the L.A. philanthropic community, which includes a portfolio of national, state, and regionally focused foundations. Other strategies that are gaining traction locally are diversity and inclusion, public policy engagement, and impact investing. However, the extent to which they will take root is an open question.

National networks and organizations for like-minded funders have created an ecosystem that strengthens philanthropy by providing opportunities for learning and action for greater impact. These networks include Grantmakers for Effective Organizations and Mission Impact Exchange, academic research centers such as The Center on Philanthropy & Public Policy, philanthropic advising groups such as Rockefeller Philanthropy Advisors and Bridgespan, and broad-based foundation membership groups.

 

Looking to the Future

“Undertaking this study has been a daunting challenge,” Ferris notes. “The field is not monolithic. But it is evident that the eight strategies that have emerged over this period are creating a new template for philanthropy. Cumulatively, they account for a generation of impact. We are mindful that the story of this generation is not yet finished. In particular, just as the new donors from a generation ago created ripples in the field, so can today’s new donors spur change.”

 

 

The Center on Philanthropy & Public Policy promotes more effective philanthropy and strengthens the nonprofit sector through research that informs philanthropic decision-making and public policy to advance community problem solving. The Center is a part of the USC Sol Price School of Public Policy, which works to improve the quality of life for people and their communities, here and abroad.

For more information:
Please contact
Gregg Millward, Senior Director of Development, The Center on Philanthropy & Public Policy at gmillwar@price.usc.edu or (213) 740-1776.