Seizing the moment to shake up philanthropy
Five trends that are reorganizing the way funding agencies can work for philanthropic causes.
Credit: Alejandro Ospina
From the “new normal” to the “never normal,” from “multiple crises” to the “polycrisis,” our language keeps evolving to describe the volatility and uncertainty that the last few years have made painfully clear. The pandemic, earthquakes, economic crises, droughts, wars—the list is not new, but the costs have been devastating. Now more than ever we need to be asking what we can do to make ourselves and our movements for social and climate justice more adaptable, resilient, healthy, and effective.
Among those questioning their practices are funders of social change. Last year, Spring researched and spoke with funding practitioners about how philanthropy is changing. We focused on five trends from 2020–2022, each of which looks at shifts that have happened and the opportunities that they reveal. To create strong movements, we need money to move in service of just and life-sustaining work. These trends are a reminder that there are changes happening in the field and that now is the time to keep pushing for more and better funding.
Five funding trends
Trend 1: Big funding pledges. Big money is being pledged to big causes. Since 2020, bilateral and multilateral donors and philanthropic foundations have made large commitments to funding gender equality; climate action, including funding for Indigenous peoples and local communities; and racial justice. Some of these pledges also include a focus on community level and movement support.
The pledges do not guarantee transparency and accountability. However, as more funders ask questions about justice, equity, and systems-change in their work, we need to find ways of turning that talk into real practice. Especially now, when donors are looking for ways to get money into the hands of grassroots groups, youth movements, Indigenous communities, and other leaders, it is a critical moment for bringing as much wisdom and experience as possible into developing these new funding relationships and mechanisms.
Trend 2: Bringing flexibility, relationships, and organizational health into grantmaking practices. During the pandemic, funders around the world introduced unprecedented flexibility into their grants by extending timelines, easing reporting requirements, increasing unrestricted funding, and developing more collaborative relationships with grantees.
The need for such practices and the proponents of them long predate the pandemic—and disparities continue to persist for organizations in the Global South and those led by women and people of color in the Global North. Nevertheless, funders have seen these shifts work. There are growing funder movements for unrestricted funding and covering “full costs,” practicing trust-based philanthropy, and strengthening participatory grantmaking. All of this opens opportunities to transform the relationship between donors and grantees.
Trend 3: New uses of extreme wealth. As foundations and donor institutions question themselves from the inside, high-net-worth individuals are disrupting traditional philanthropic practices from the outside. MacKenzie Scott has given over $14 billion to over 1,600 groups since 2019 in mostly large, unrestricted grants. The Bezos Earth Fund and the TED Audacious Project have taken a similar approach, giving amounts that far exceed a typical yearly funding cycle. Yvon Chouinard, Patagonia’s founder, turned the company over to a nonprofit and trust to fight climate change.
These moves have spurred a useful debate about what effective philanthropy and grantmaking looks like. And while these actions don’t redeem extreme wealth, they can expand our imagination (and the imagination of donors and other high-net-worth individuals) about how wealth is both generated and used. For the organizations that do receive these large grants, the money also creates new opportunities to leverage their position of growth to renegotiate funding practices and relationships with other donors.
Trend 4: New philanthropists respond to crises. Radical acts of generosity and solidarity are hard to quantify, are often rooted in community, and are usually not captured in reports on philanthropy. What the reports do tell us, though, is that private philanthropy grew in many parts of the world during the pandemic. Mostly focused on high-net-worth individuals, these reports cite private philanthropy growing substantially in India, the United States, Brazil and other parts of Latin America, and across African countries.
Alongside these reports sit uncomfortable data on deepening inequality and the fact that the ten richest men doubled their fortunes during the pandemic. We need to continue challenging inequality. We also need guidance and support for wealthy individuals who find themselves asking the question “What can I do?” In the shadow of the pandemic, there is an opportunity to shape how new philanthropists understand their role in the ecosystem and to bring them into the conversation about how to return wealth to communities and invest in social justice.
Trend 5: New financial tools and technologies. Finally, there have been ongoing developments in how to mobilize funds and leverage private investment in social impact. In the midst of the pandemic, the Ford Foundation and others issued social bonds to mobilize more resources to support groups. We’re also seeing more and more uses of innovative finance and impact investing—from impact bonds to Environmental, Social, and Governance (ESG) investing tools like green bonds. More and more foundations are also looking at how they can align their investment portfolios with their values.
These tools invite creative thinking about how to incentivize social justice outcomes, mobilize and leverage resources, and generate impact beyond grants. However, the practices are still very much emerging. They need refining, critique, and much more inclusive conversation with practitioners and communities about how they are developed and applied.
Seizing the moment
Philanthropy has not been radically transformed; and yet through the pandemic and intersecting crises, we have seen donors and philanthropists reflecting, questioning, and trying new practices. These are all windows of opportunity to continue to push for more creativity, flexibility, and expansiveness in how money is leveraged in service of a better world. From wherever you approach your work for social and climate justice, there are still opportunities to help to shape how money moves. We need more groups to have conversations and renegotiate relationships with their donors, more stories of how funding practices can be changed, and more funders to continue to advocate within and between their institutions for more curiosity and creativity regarding new practices.
In the words of activist and philanthropy strategist Theo Sowa:
“When philanthropy is at its best, it takes risks, it’s open-minded, it’s visionary. This is the moment when we can push it to do more of that because philanthropists are questioning themselves … [they are] thinking ‘maybe I could do more.’ And we have to find a way to help them do that.”
Liliane Loya is a philanthropy specialist. She works to advance rights-based strategies and, in 2021, she founded INNO, a consultancy to help funders adopt trust-based philanthropy practices and innovate on grantee-centered approaches.
Ellen Sprenger is a co-executive officer of Spring. A facilitator and thought partner on financial resilience and innovation, organizational strategy, and philanthropy, Ellen is committed to making space for more complexity and humanity in collaborations for social and climate justice.
Lucas Paulson is a writer, facilitator, and creative collaborator who supports groups working for social and climate justice. He is a project coordinator for Spring and has also worked with OpenGlobalRights and JustLabs, where he authored Narrative Spices: An invitational guide for flavorful human rights.