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Revisiting Big Questions for Philanthropy, Part 1: Changes in Philanthropic Practice

Date: March 19, 2024

Phil Buchanan

President, CEP

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This is first in a series of posts in which I will revisit some of the big questions for philanthropy discussed in a post published in the fall of 2022.

The four years since the COVID-19 pandemic brought the world to a standstill have seen unprecedented change in philanthropy. Struck by how much had changed, I wrote a post in the fall of 2022 laying out — and sharing my thoughts on — seven big questions facing big philanthropy.

I want to return to these questions to consider what we now know about answers, and, perhaps, add a few more questions to the mix. I’ll do that in a series of posts in the coming months.

For now, let me start by addressing the first question I posed: Will the changes in how foundations and donors support nonprofits be sustained — and implemented thoughtfully?

My answers? Yes, the changes are being sustained and, mostly yes, they have been implemented thoughtfully. Still, I worry about the tendency to dumb discussions of philanthropic practice down to simplistic binaries.

But let me start with the first part of the question. We know a lot more than we did even in 2022, especially when it comes to foundations. There is now a considerable body of evidence that many of the shifts in practice on the part of foundations in response to the pandemic have, indeed, been sustained. What started as a situational adaptation — and what many worried would be just a blip — has become a sustained shift toward more streamlined processes and the provision of more unrestricted support. Indeed, we see evidence that, at many grantmaking institutions, changes in practice continue.

We have documented this through extensive research based on foundation self-reporting and, perhaps more powerfully, nonprofits’ direct experiences. On the latter front, we see in our Grantee Perception Report (GPR) dataset that grantmakers have streamlined their processes, leading nonprofits to spend fewer hours on proposal creation and reporting. They have also increased their provision of general operating support, though it’s still more the exception than the rule.

Moreover, in our State of Nonprofits 2023 report last year, we reported, among other findings, that shifts in foundation practice appeared to be continuing even well after the pandemic. We noted that “many nonprofit leaders report an increase in trust from funders” and that a majority “are experiencing changed practices, such as streamlined applications and reporting, removal of restrictions, and receipt of multi-year funding from foundations.” Four in 10 reported increased offering of multiyear support from their foundation funders over the preceding year.

We are currently analyzing just-collected data for our State of Nonprofits 2024 report, due out at the end of May, to see the extent to which nonprofits continue to see and experience change in funders’ practices.

The trend toward more widespread adoption of approaches that research has shown to better support nonprofits and their effectiveness is hugely positive and long overdue, in my view, and is likely to contribute to more impact on pressing issues. It’s now clear that 2020 led, for many foundations, to a kind of philanthropic reboot. My hope is that this change is sustained, deepened, and broadened. The shifts in practice I have described here are crucial, but likely represent just the beginning of the common default settings that can use re-thinking (others that come to mind include how goals and strategies are developed and who sits on foundation boards).

That said, let me turn to the second part of the question, about thoughtfulness. Much of what has been done has been deeply thoughtful, and we shouldn’t underestimate the challenge of re-thinking longstanding practices at any organization — and perhaps at funders in particular given the lack of external pressures they face.

But, more broadly, I worry about a tendency in the wider philanthropic discourse to over-simplify discussions about practices and approaches. In 2022 I described it this way:

Too often, we’re presented with binaries. A reporter focused on philanthropy recently asked me whether I was a proponent of strategy and assessment in philanthropy or if I was in the trust-based camp — as if those two were somehow mutually exclusive. … But this is a totally false, and very unhelpful, choice. Thoughtful donors and foundations reject the notion that there need be a dichotomy between strategy, assessment, evidence, and learning on the one hand and trust, listening, and flexible support on the other. They recognize that trust develops over time. They embrace mutual accountability. They realize that, while the knowledge and expertise of those closest to issues should be respected, foundation staff and donors do often possess useful knowledge, too.

Too much of the discussion about philanthropic approaches today seems to assume that the choice is whether to be MacKenzie Scott or Bill Ackman. If Scott is on one end of the continuum of mega-donor behavior, “yielding” — to use the word she has chosen as the label for her giving — power to organizations she supports through massive and totally unrestricted gifts, Ackman is on the other. (Yielding isn’t what Ackman is doing; it’s what he’s seeking.)

But those aren’t actually the only choices.

The reality is, most big donors, even those who admire Scott and believe there is much to be learned from her approach (which CEP is studying in a multi-year research effort), don’t want to be as hands-off as she is. Nor do most donors, thankfully, want to emulate Ackman’s aggressive efforts to get organizations (and companies) to bend to his will.

There is a vast middle ground and plenty of examples of thoughtful and effective donors who are able to balance their own desire to contribute something beyond their dollars with an approach that respects the knowledge, expertise, and needs of those they support. The objective for these donors is to contribute to meaningful, positive change — to impact — and they see a strong, trusting relationship with the nonprofits they support as a crucial component part of how they achieve that. These relationships help inform funder and grantee alike, allowing each to improve.

As Varja Lipovsek, director of learning, measurement, and evaluation at Co-Impact, argues in a recent piece for Alliance, “it is a false dichotomy to pit ceding control against measuring impact.” Thoughtful donors, whether individuals or grantmakers, understand that taking a trust-based approach doesn’t need to mean they don’t carefully vet and select nonprofits to support — or that they’re not data-driven in their work. They reject both false binaries and the absolutism of the moment.

It’s possible, for instance, to think it’s absolutely crucial for nonprofits to receive more unrestricted and multi-year grants without adopting the overly simplistic notion that there is never a time and place for a one-year or program-restricted grant. As Rodney Christopher of BDO has argued thoughtfully, “With some meaningful changes from the current norm, project grantmaking can be consistent with supporting nonprofit financial health. Indeed, project grants do not have to be the four-letter word of philanthropy.”

Let’s resist the tendency to assume any one shift in practice — from supportng intermediaries to impact investing or even the provision of general operating support — is the single silver bullet, the best move in all situations, or the answer to all our prayers. Let’s try to tone down the absolutes and simplistic slogans.

So, yes, we can and should absolutely celebrate the shifts in practice that have occurred in philanthropy since 2020. They are positive and, hopefully, they can be just the beginning.

At the same time, I hope we can also be thoughtful and nuanced and guard against orthodoxy — and against dumbing everything down to simple checklists or bromides.

In my next post in this series, I’ll turn to the second question from my 2022 post, about whether philanthropy would sustain a focus on racial equity.

Phil Buchanan is president of CEP, author of “Giving Done Right: Effective Philanthropy and Making Every Dollar Count,” and co-host of the Giving Done Right podcast.

Editor’s Note: CEP publishes a range of perspectives. The views expressed here are those of the authors, not necessarily those of CEP.

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