The past three years have injected a tremendous amount of disruption and uncertainty into fundraising planning and execution. Seismic events – from a pandemic to economic disaster to visceral examples of racial injustice – have both solidified philanthropy’s importance and spotlighted the challenges it faces in the 21st century.
Here, we summarize some of the most important trends across the field of philanthropy and offer suggestions for planning and responding to the changing tides of revenue. In addition, we look at how various donor segments might consider the nonprofit perspective, and provide links to current thought leadership from around the field for further illumination.
Which philanthropic trends would you like to find out about?
Public Will, Public Trust, and Changing Sentiment
Entire books have been written about the historical underpinnings and uniqueness of American philanthropy. But it would be a mistake to enter into a discussion about trends related to the field without reminding ourselves that giving is driven by dual motives. First, there’s the ephemeral influencers such as goodwill, emotion, and religious and personal values. Second are the policies (such as the tax code) that create, for some, financial incentives for acting on one’s intent to give. These factors cannot be separated: Public will is what drives policy stasis or change.
Nonprofits, as well as organized philanthropy, understand the importance of maintaining public will not just to motivate giving, but also to retain tax benefits that underpin the flow of philanthropic funds and aid the industry directly through policies such as sales and property tax exemptions.
One of the most important factors impacting giving to nonprofits now and over the next 5 years is public will, which is largely dependent on public trust. The Edelman Trust Barometer (the premier longitudinal study of public trust in society’s major sectors, including government, business, media, and nonprofits) shows that public trust in US nonprofits has declined over the past 5 years. For more than two decades, Edelman has asked Americans how much they trust nonprofits to do what is right using a 9-point scale. This method resulted in a score of 58 for nonprofits in 2017, and 50 in 2023 – both squarely in neutral territory but clearly declining.
Here, find a few trends to consider as highlighted by the Trust Barometer.
Trend one: Nonprofits rank alongside business as the most trusted of the four major U.S. institutions
Despite a less-than-resounding level of confidence, it is important to note that, generally speaking, nonprofits are trusted just as much as business (the most trusted institutions in the US) and vastly more than government and media. In 2017, nonprofits and businesses were ranked equally, with scores of 58 each. Both have declined, but business has maintained a slight edge in 4 of the past 5 years.
The following table shows US trust scores from the Edelman Trust Barometer for the past six years.
| Edelman Trust Barometer: US respondents' trust scores for the following institutions | |||||||
|---|---|---|---|---|---|---|---|
| Nonprofits | Business | Media | Government | ||||
| 2023 | 50 | 55 | 43 | 42 | |||
| 2022 | 45 | 49 | 39 | 39 | |||
| 2021 | 50 | 54 | 45 | 42 | |||
| 2020 | 50 | 50 | 48 | 39 | |||
| 2019 | 52 | 54 | 48 | 40 | |||
| 2018 | 49 | 48 | 42 | 33 | |||
| 2017 | 58 | 58 | 47 | 47 | |||
Trend two: Nonprofits as effective drivers of positive change
In terms of public confidence in the ability of nonprofits to effect change, business and nonprofits ranked equally (within one point of difference). However, nonprofits scored higher than business when respondents were asked about how these institutions go about affecting change (i.e, the factors that underlie their values). Nonprofits were widely seen as “having a vision for the future I believe in” and scored over 18 points higher than business in terms of “serving the interests of everyone equally and fairly.”
Trend three: Public cites “competence” as the main differentiator between business and nonprofits
While they feel that nonprofits are the most ethical entities, respondents rank nonprofits lower than business in terms of competence (but not as low as government or the media). By contrast, they see business as ethical but also as the most competent of the four institutions. In terms of trust, this factor seems to drive the public to indicate that business is better able to solve societal problems than nonprofits.
So why does the public rank business higher than nonprofits in competence? Two specific metrics provide insight. First, nonprofits and business are evenly ranked in their ability to coordinate cross-institutional efforts to solve societal problems. However, business far outranks nonprofits when it comes to perceptions of their ability to “successfully execute plans and strategies that yield results.”
Edelman Trust Barometer: Global competence and net ethical scores, 2020-2023
The nonprofit opportunity
The story here is not one of competition, but responsibility.
Polarization is accelerating in our world and our country. Many of the institutions that undergird society – public health, the justice system, media, and all forms of government – are solidly distrusted. Only two sectors – business and nonprofits – hold a comparative advantage when it comes to informing debate and delivering solutions that citizens trust. Therein lies a big responsibility for nonprofits. As a “most trusted” institution, nonprofits must leverage the public trust they’ve amassed to play a more forceful role in raising trust universally and driving change.
To do that, as an industry, we should focus on amplifying our strengths and shoring up our weaknesses. A short list of those qualities, as indicated by the Barometer:
- In the eyes of society, our industry’s strength lies in creating bold visions that are aligned with the currents of societal values – or, as specified in the Edelman Trust Barometer, with respondents’ conception of “how I see my future.”
- The sector also ranks most highly in pursuing “what is fair.” This translates into fair pay, equal opportunity, shared power, information transparency, and equity, among other factors.
- Nonprofits are perceived to be the most capable at coordinating across sectors to create positive change.
- Though the sector is seen as the most ethical of the four institutions, perception of the sector’s effectiveness is weighed down by the idea that it is not as capable in “execut[ing] plans and strategies that get results.”
The trends point to several imperatives for the sector:
Storytelling that aligns with values, a vision for the future, and expectations for information, inclusion, and results
First, nonprofits need to loudly reinforce our alignment with a shared vision of the future that is more equitable and holds the promise of equal opportunity.
To do that, our greatest opportunity is to amp up the volume on storytelling which provides proof that a shared vision can be accomplished. These stories should background appeals for money and focus instead on the change that has been realized. And, because trust is low and polarized generally, the quality of information should be high. Stories should be accompanied by hard data that shows success and failure transparently, and should invite both feedback and collaborative action.
Collaborative action across sectors that leverages trust to build public will
According to the 2023 Barometer, the public is four times more likely to believe initiatives will be successful when sectors work together. Nonprofits are the most highly ranked collaborators out of all the sectors. In fact, one might say that this is our superpower relative to how the public sees us. Nonprofits should harness this leadership power to help bridge the public’s gap in trust regarding government and media by creating opportunities to work together.
Nonprofits already understand the power of this “shared halo” effect in our many years of partnerships with business: As business has taken on more social responsibility, public trust in business has grown (as the Barometer readily indicates). Business and nonprofits working together with governments can increase trust by giving the public more confidence that the solutions they provide will in fact be successful.
Impact data that demonstrates competence
In a media world catering to increasingly short attention spans and on-demand expectations, there are many proxies for competence. In business, stock price is a pervasive metric of success, regardless of reality. In government, GDP is the metric that rules, regardless of other measures of community health. Nonprofits, however, have no such proxy (however inexact) to articulate impact. Although stories are important, they are often geared toward donation requests, rather than proof of effective solution building.
Nonprofits should focus on the quality of information they provide to the public, and work to create success metrics that can be linked to real change and, ultimately, change the narrative about the sector’s overall competence (as perpetuated by historic media throughlines and XXXX). Nonprofits make up 10% of private employment in the US, hold incalculable assets, and contribute significantly to economic and social wellbeing. It is imperative for nonprofits to claim and frame that data in terms of our industry’s importance in policy making, the expectations we have for our role in co-creating solutions, and in the way we articulate our competence to the public overall. Doing so will build trust in the sector as an effective industry that gets results.
Resources
Private Foundations
The last three years have reinforced what has long been known about philanthropy: Donors respond in times of crisis.
But beyond the headlines documenting an outpouring of generosity and reactive support, changes are afoot within the grantmaking segment of the nonprofit sector, in terms of both entities and infrastructure. Below are some of the most significant trends – those that nonprofits must understand as we move into the next decade.
Trend one: A sustained focus on equity
As recently as 2016, diversity, equity, and inclusion (DEI) did not even make the list of top interests among foundation staff. By 2021, DEI had emerged as the top issue for US funders, as revealed by the Hewlett Foundation survey of foundation professionals. Given the fact that the murder of Ahmaud Arbury, one of the most widely covered racially-motivated murders of the past few years, was committed in Georgia, foundations in our state have aligned with this trend.
According to Philanthropy Southeast’s 2022 report, Leading with Courage: Reshaping Southern Philanthropy for a New Era, DEI is being prioritized by 82% of their members (comprising community, independent, corporate, family, and health legacy foundations across the Southeast). Further, 50% of surveyed members state that their focus on equity began in 2020, while a third note they have built upon an existing focus over time.
In terms of funding priorities, we expect the focus on DEI to continue, but also for donors to refine their approach to impact in this area. Some of the most notable approaches include integrating DEI into grantmaking standards, widening the pipeline for new applicants, trust-based philanthropy, and gathering information about what works.
- Integrating DEI into grantmaking standards: There are certain aspects of DEI that will become part of the expectations for grantees. For example, nonprofits report an increase over the past two years in the number of grantmakers requesting board and staff demographic information in their funding applications. In addition, Philanthropy Southeast reports that there is a growing number of foundations actively reconstituting their boards and leadership with diversity in mind, reflecting their growing determination to move beyond rhetoric.
- Widening the pipeline for new applicants: To start, many foundations have retooled application requirements. This has taken a number of forms. One promising practice is the creation of a two-tiered application process, where step one requires a very brief presentation of some basic information, with more in-depth information required only if and when an applicant is assessed. This type of intake saves nonprofits time, recognizing the capacity limitations of nonprofits generally, but particularly of many (historically under-resourced) BIPOC-led and -serving entities. A second promising trend is targeted outreach to and preparation of diverse applicant pools. For example, leaders in Macon have allocated funds to conduct outreach to nonprofits that have been historically underrepresented in local grantmaking. In Atlanta, the United Way has funded a similar initiative targeting small, BIPOC-led organizations. Capacity workshops and grant-specific preparation sessions for local grant applicants are further strategies for widening the applicant pool and diversifying grant recipients.
- Trust-based philanthropy: Decades of nonprofit calls for more flexible funding practices seem to have been aided by the convergence of DEI-forwarding trends. Following the recent series of crises, grantmakers appear more open to providing operational or broadly flexible program support than they have historically. One notable shift is the increased willingness of donors to cede power in grantmaking relationships, putting greater emphasis on grantee voices. Nonprofits will hear the term “trust-based philanthropy” more often over the next few years, an approach that features less prescriptive uses of funds, multi-year and/or sustained funding, and a more collaborative process for crafting support, denoting “trust” that providers know how to use funds in the way that produces the most impact.
- Gathering information about what works: The 2021 Hewlett Foundation study, involving over 1,500 grantmakers, notes that one challenge for funders is that “existing information about DEI in philanthropic practice lacks depth, with a need for more nuance regarding how funders can support equity, and the need for community voice and lived experience to inform DEI efforts.” The Hewlett study pointed out that 89% of grantmakers reported that they rely on peers and colleagues as “a main source of knowledge about the practice of philanthropy.”
The nonprofit opportunity
Despite the fact that structural inequity has been recognized as a driver of so many issues that the charitable sector focuses on, the field only now seems to be galvanizing around equity (rather than the symptoms of its absence) as an area of focus. This means that new funding will fuel innovation – encompassing “small-i” innovation, in terms of what works in singular organizational approaches, as well as “big-I” innovation, in terms of massive systems change.
Inherent to the rapid pace of transformation is an openness to new partnerships, new constructs, and fresh thinking. Nonprofits can be partners in informing philanthropic strategy around equity in a few different ways.
Informing the field with measurement and analysis
First, these findings point to the need for nonprofits to really dig into impact measurement and data analysis to inform the field. But even more importantly, nonprofits can find opportunities to have proactive conversations, covering promising interventions as well as approaches that don’t work, while being open about what’s needed to do the work well. Nonprofits can lead the way on systems change at the policy level and on collaborative, cross-sector solutions that leverage capital in new ways to fix big problems.
Elevating community voices
Second, nonprofits can help foundations hear the voices of their end users. Though the use of storytelling has been effective, they could do even better by inviting end users into the grant process as co-creators, integrating their voices in collaborative report generation or as on-the-ground ambassadors for the work. A great model for this, along with various tools for implementation, is offered by Feedback Labs, a Washington, D.C.-based nonprofit advocating for co-designed change models – an approach that seeks out and integrates the feedback of end users into design and implementation. Feedback Labs’ 2023 national conference, presented in Atlanta, was sponsored by the Blank Foundation and engaged many local foundations, which is another reason we see this as an area of growing interest. Learn more about Feedback Labs here.
Partnering for systemic change efforts
A third opportunity lies in collaborative, collective impact-like models for addressing systemic barriers to equity goals. The 2021 Hewlett Foundation report noted that larger foundations were most interested in systems work related to DEI, while smaller foundations were more likely to be interested in functional topics such as grantmaking, governance, and giving trends. Nonprofits in specific subsectors or locations could seize the opportunity to present joint proposals for comprehensive and/or coordinated solutions. Further, nonprofits can improve their visibility with national donors that don’t often know who their likeliest local partners are. Coordinated groups could approach national donors with collaborative proposals that address systems change. Nonprofit entities could also explore national partnerships by providing a “landing pad” for replicable solutions that hold promise for the South.
The bottom line is that foundations are open to learning, and nonprofits have an opportunity to proactively lead initiatives that enable relevant and cooperative knowledge sharing related to equity initiatives and needs.
Trend two: Place-based philanthropy
The topic of collective impact bleeds into another notable trend: the broadening of place-based philanthropy. This type of philanthropy isn’t new. However, after years of gathering data from successful models such as Purpose Built Communities, and following a pandemic that has exposed (and expanded) the need for strong local infrastructure, donors are exploring place-based initiatives with renewed vigor. This ranges from a doubling down on specific place-based initiatives among community foundations (in terms of both leading strategy construction and galvanizing donor support) to collaborative support for local policy initiatives (like revamping restrictive zoning that stymies affordable housing development).
In other words, place-based strategy is moving beyond mere grantmaking to take more complete advantage of foundation assets including funds, relationships, political influence, and staff time (as dedicated to cooperative strategy leadership).
However, as place-based strategies expand, this means a natural narrowing of focus for the donors involved. For nonprofits that are more broadly focused or have a wider geographic footprint, that creates a growing issue in terms of support. The tip of the movement is easy to see in the number of foundations engaged wholly or partially in place-based strategies, for example in The Annie E. Casey Foundation’s Atlanta Civic Site and The Zeist Foundation’s focus on the Edgewood community.
But greater growth can be seen via donor-advised funds (DAFs) at community foundations or Fidelity Charitable. Not only can individuals create DAFs, foundations can construct DAFs – for example, within a community foundation – and use them to deploy funds more flexibly, such as for strategies that are unusual for its mainstream grant programs. These strategies could range from investing in small local grantees to conducting research to policy projects.
As community foundations continue to align around equity-focused strategies, particularly given how place-based strategies fuel greater equity gains, we will see growth in DAF participation and the further narrowing of grantmaking focus inherent to that approach. Concurrently, the recruitment of local donors, including companies, to place-based initiatives may also change the priorities of historic funding partners or the amount of funding available to nonprofits that fall outside of these priorities.
The nonprofit opportunity
Nonprofits have opportunities to join current efforts that fill gaps in local strategies and, in some cases, to replicate successful models in local communities. To identify and understand areas of potential collaboration, nonprofits must keep abreast of local governmental initiatives, particularly as they involve economic development goals.
For example, if a lack of affordable housing is thwarting efforts to lure business location, nonprofits have the opportunity to catalyze solutions; for instance, by pushing collaboratively for policy shifts or leveraging philanthropic assets to secure CDFI loans for development objectives.
Trend three: Economic turmoil and impacts on donors
Generally, nonprofits experience immediate and latent impacts to fundraising efforts during periods of economic turmoil. Certainly, fundraising initiatives aimed at small donor cultivation, such as events or annual campaigns, are impacted almost immediately. As conditions impact companies, their giving levels follow suit – particularly for those outside endowed corporate foundations. The same is true of foundations: On the heels of a rough investment landscape in 2022, and continued uncertainty in the immediate future, foundation resources are bound to feel the impact.
We must also remember that many foundations increased giving over the course of the pandemic beyond the 5% payout requirement. At this time of inflation, layoffs, and tapering government support, there may be a dynamic by which foundations can no longer fill the gaps for struggling nonprofits or increasingly in-need communities without negatively impacting assets.
One mitigating factor, however, is the ability of donor-advised funds (DAFs) to provide sustainable sources of funding. As noted above, private foundations have increasingly created more flexible pools of funding in the form of DAFs which, though not necessarily recession-proof, can be a source of stability during recessionary times. This is because grants originating from a DAF are made independent of the contributions into it. Unlike individual and foundation giving, as well as (to a certain extent) government funding – which tend to go up during good economic times and down in times of economic struggle – DAF owners can contribute to an account when the economy is strong and recommend grants when the economy turns.
Recent research into DAF grant flows seems to confirm this dynamic. Between 2007 and 2015, DAFs had a median payout rate of 13% (far more than the 5% requirement among foundations). The study also noted that during recessionary periods, DAFs had higher flow rates, a measure of total grant dollars awarded against total contributions received in a given year: The median flow rate peaked during the height of the recession in 2008, coming to 103%, versus the median flow rate of 87% for the 2007-2016 period. To put it more simply: Over 2008, the median DAF sponsor granted more money than it received.
The bottom line is that DAFs are currently considered a counter-cyclical force in terms of sustainable revenue during economic downturns.
But there are also negatives in the exploding popularity of DAFs. As donors to Fidelity Charitable put $14 billion into their DAF accounts in 2021, and many financial-services companies and community foundations climb on board, the problem for charities is two-fold. First, while tax deductions for invested capital are taken in the year made, there is no time requirement for distributing grants to charities. Second, once a donor transfers money into a fund, the sponsoring organization (e.g. Fidelity) becomes the legal owner and donor. It can therefore be quite difficult to determine who the actual source of the giving is, and in turn how to develop a relationship – or even how to thank them. This opacity has created a dilemma for the sector in terms of fundraising tactics as well as donor accountability and transparency.
The nonprofit opportunity
Most nonprofits do not have a deep understanding of donor-advised funds (DAFs) at community foundations or national sponsors like Fidelity Charitable, Schwab Charitable, or the National Philanthropic Trust – despite the fact that these funds made up the six top recipients of donations to all charities since 2008. Nonprofits should make it a priority to learn more about how DAFs function and how they can build strategies to tap into this vast and growing pool of resources. The Chronicle of Philanthropy put together a set of resources to help nonprofits understand DAFs, including a tactical guide to attracting DAF gifts.
Some top-of-mind ways to leverage the accelerating DAF movement:
- Prompt donors by including a note on all materials stating that you accept gifts from DAFs.
- Mirror the DAF model by setting up a fund that enables DAFs to give now but direct their gifts later. DonorsChoose.org is such an example, where account holders can make a donation to the charity and wait to direct it to a project that they wish to support.
- Add an online “widget” to your website allowing donors to give directly from their DAF. (Many ready-made, easy-to-implement widgets can be found online.)
- Form relationships with your local community foundation. The better they know you, the more apt they are to recommend your charity to their donors.
Resources
Leading with Courage: Reshaping Southern Philanthropy for a New Era
Philanthropy Southeast
Place-Based Philanthropy: A Milken Institute Guide
Milken Institute
Learn About the Loop
Feedback Labs
Charitable Giving by Affluent Individuals in 2020
Bank of America
Tool Kit: Understand and Tap Into Donor-Advised Funds
The Chronicle of Philanthropy
5 Ways to Attract Gifts From Donor-Advised Funds
The Chronicle of Philanthropy
Corporate Philanthropy
To understand corporate philanthropy and the trends that shape it, nonprofits must shift the lens they typically use. Instead of focusing on the more typical motives driving philanthropic intent in the foundation and individual donor world, nonprofits must recognize a more blended set of motives that encompasses both what is good for society and what is good for business. Understanding the currents that influence business success is paramount to establishing partnerships with business now and in the foreseeable future.
Here are a few of our observations.
Trend one: The business of purpose is growing
As explored above, business is now the most trusted institution worldwide. Edelman’s 20-plus-year-long longitudinal study (see full discussion here) shows, clearly, that people across the globe trust business just as much as nonprofits to do the right thing and believe that business has the greatest capability to achieve results. Notably, respondents’ level of trust in their employers is very strong, even among those who feel the most polarized. This means that people trust employers to provide accurate information, formulate products that consider societal impact, and create solutions that have true societal benefit.
This level of trust is both a responsibility and an opportunity. In the war for talent, customers, and supplier loyalty, as well as new market growth, companies understand that observable proof of alignment with the issues that cut across society – inclusiveness, purpose, sustainability, health, and economic equity – is critical to success.
This could take many different forms, such as ensuring that leadership at a consulting firm is decisively diverse, which resonates with potential customers who value the solutions that such a team has proven to provide; corporate giving in support of causes that align with company sustainability goals, in an effort to influence policymakers as much as consumers; and much more.
The bottom line is that purpose is no longer the unique domain of nonprofits. As exerted by consumers and employees, the pressure on business to do more about societal issues is intense.
The obvious challenge for nonprofits is to pay attention to public will more closely, where in the past they have perhaps taken it for granted. If purpose is increasingly perceived as the domain of business, how then do nonprofits differentiate their value to the public in order to retain their trust and support? As the pressure to raise tax revenue goes up in light of current government debt loads, does the perception that charities are not capable of producing significant results endanger the tax policies that underpin the sector? These questions point to the need for nonprofits to shift the narrative about our capability and history of impact, both with the public and with policy makers. In short: We need to communicate our impact, not just our needs.
A second challenge is recognizing the dual motives that drive business: purpose on the one hand, economic gain on the other. As a trusted institution, business has an advantage over government and media. Business possesses a great ability to influence policy related to protecting its interests and positioning the US economy for growth. Therefore, nonprofits should be alert to policy shifts in areas that align with their interests.
One example: ongoing deliberation over expanded use of state or federal public lands. In particular, Georgia plays host to constant battles over mining in the Okefenokee and port expansion, putting wildlife habitats at risk. On the local level, tax breaks for business location can impact revenue for community projects while simultaneously increasing local demand for human services. Nonprofits can be important advocates for restraint and conscientious planning, and important allies for governments seeking to engage citizens in informed debate and to balance corporate influence.
The nonprofit opportunity
Providing credibility for business partners
First, nonprofits can work as business allies in purpose-driven work at a time when it is extremely difficult to take collective action on anything. Businesses face a reputational minefield when entering into highly politicized issues like climate change, energy shortages, healthcare access, and economic inequality. For instance, they risk overstepping and under-stepping. They risk coming across as inauthentic – a brand-buster with consumers and employees. Where it aligns with the mission, nonprofits can leverage their trust with the public to help businesses navigate that risk. For their part, businesses can command the attention of and convene policy makers in a way that nonprofits often struggle with. Properly aligned, the two most trusted institutions – business and nonprofits – could prove formidable in advancing toward purpose-driven goals through mutually beneficial objectives.
Information and execution outsourcing
Second, nonprofits can be a powerful outsourcing agent for businesses, tapping their philanthropic and commercial aims by executing a ground game around their purpose-driven objectives, or serving as a source of expertise, research, and replicable models. Additionally, nonprofits can provide important insight and introductions into the communities they serve, aiding businesses that need ways to listen and build empathy around the impacts of inequity, climate impact, community wellbeing, and more.
Community understanding and coalition-building
Third, nonprofits can catalyze business support by taking the time to understand the issues that matter most to business in their local areas and serving as a safe convener of coalitions for collective action. Workforce development is one example of this type of coalition-building. Groups like the Metro Atlanta eXchange for Workforce Solutions (MAX) bring nonprofit, business, academia, and government together to solve workforce issues in Atlanta, ranging from talent shortages to trend identification to policy shifts that directly impact talent supply for workforce needs. This type of model can be replicated around a myriad of issues, and nonprofits can play a vital role by convening and coordinating change agendas.
Trend two: The issues of the day are issues of the decade
Nonprofits should understand that business has much to lose in not addressing issues like equity, workforce shortages, climate change, and employee well-being, among other locally-driven issues.
For instance, equity is not simply a moral mandate for business: Engaging diverse pools of workers is now imperative for future business success. Business recognizes that, as baby boomers retire and birth rates have slowed, the US has a declining number of workers. Indeed, economic studies have shown that unleashing the economic productivity of historically ignored demographics would result in over $XX billion in the DC area alone.
Business also realizes that the Great Resignation of the past few years indicates a shift in worker mindsets toward greater intention and purposefulness. Businesses that can’t align with the values of a future workforce and demonstrate actual work toward common goals won’t be competitive for talent (or consumers). Therefore, nonprofits have seen, and will continue to see, corporate philanthropy dovetail with these objectives.
The nonprofit opportunity
Heretofore, sustainability has been the domain of environmental nonprofits. We see that responsibility broadening. For example, organizations like Lifecycle Building Center, an organization that recycles building materials from renovation projects, is engaging architects and developers by providing them an easy way to execute reuse strategies. Urban agriculture entities have been bringing the food supply closer to end users, for example by supplying area universities with fresh produce, while also providing jobs for those re-entering the workforce. Climate and sustainability is an area rife with potential for nonprofits to explore coalition-building and alliances with business.
Equity, climate, and workforce development will be leading areas of focus within corporate philanthropy and community involvement for the foreseeable future. Nonprofits will need to consider not just how their work supports these issues, but how they measure their impact and articulate their progress. Nonprofits can take a page from business in terms of examining suppliers, reviewing internal sustainability measures, and communicating their efforts to improve.
Trend three: Large companies are increasingly looking for greater efficiency while narrowing their focus
Efficiency gains for large companies means fewer grants, but in larger amounts – that is, a contraction in the number of grants rather than in the amount of capital contributed.
Corporations see these partnerships as investments that tie to business objectives, whether that means talent retention, sustainability or policy goals, or tightening partnerships with customers or suppliers. Thus, they are increasingly seeking out organizations that can help them accomplish these objectives efficiently by providing replicable models, expansive territory coverage, the internal operating capability to meet the demands of a large effort, and the marketing and communications capability to create integrated messaging and broad reach.
In addition, we note that large companies are tightening their focus in terms of issues – a trend that has been building over the past decade. However, business is also attuned to the fact that the public wants to see results in their areas of largest concern, and that they trust business to create that impact. Consequently, business leaders are focusing philanthropic strategy and resources to those ends.
For example, companies are heavily focused on equity in a manner similar to their foundation counterparts – but unlike in the foundation world, the (larger, multi-national) corporate philanthropic world places gender equity on the same stage as racial equity. The difficulty for large companies is that the public also expects to see results locally. This creates efficiency issues: more grants to manage, more reputational risk, etc. Nonprofits that use distributed models can provide this local visibility as grantees, hosts for corporate volunteerism, and publishers of promoted impact stories.
Nonprofits can expect this consolidation trend to continue, and should note a change in the overall number of grantees as well as shifts in both what is being funded and how those funding partnerships are being integrated more closely with business objectives. Ultimately, this will create deeper expectations for the nonprofit partners that garner investments.
The nonprofit opportunity
Align where there is alignment (gender, race, topic)
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Look for partnerships with large nonprofits to take the work local
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Trend four: The rise of purpose-driven business coalitions
Disaster relief TK
International relief TK
Health TK
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Resources
- Top Takeaways from the US Chamber's 2023 State of American Business Address / US Chamber of Commerce
- How Businesses Can Better Support Their Communities / US Chamber of Commerce
- How Large Companies Are Approaching Corporate Giving / US Chamber of Commerce
- Business Support for Racial Equity and Inclusion / Boston College Center for Corporate Citizenship
- Ready Response: Employee Relief Funds, Disaster Response, and More / Boston College Center for Corporate Citizenship
Find out about all the latest sector developments in the rest of our 2023 Sector Trends Report
