Seven Things That Scare Us About the Future of Philanthropy

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Note: This article was originally published on June 9, 2022.

What does the future of philanthropy look like in the United States? And do we like where that road might lead?

Predicting the future is a tricky business, but it’s pretty safe to say that we’re living in an era of intense philanthropic churn. The old world of foundation-led grantmaking is now interacting with, and at times being supplanted by, a brave new world of billionaire disruptors, bulging donor-advised funds, politicized funding, and forceful structural critiques. If we’re living in a New Gilded Age, this one’s shaping up to be just as formative for a new era of charitable giving as the last.

A lot of good will likely come of this transitional period, not least from groundbreaking new philanthropic titans like MacKenzie Scott. But that’s not what we’re dwelling on here. Instead, permit us to be pessimistic for a bit and examine how the charitable sector could veer horribly off course, and how that might be happening already.

As much as we are tracking the day-to-day, grant-by-grant activity in the sector, a big part of our mission is also trying to get a sense of the big picture of who is funding what and why. Sometimes those trends are crystal clear, and often they are encouraging. Other times, it’s like staring into a black hole — one that could bring forth any number of terrifying outcomes, intended or unintended.

Below are six of those possible outcomes that we are most concerned about regarding where philanthropy is headed next. It’s not an exhaustive list, but it does reflect some of the key frailties of a sector that remains very much the province of the wealthy, the powerful and the well-connected — and hardly a bastion of democracy.

Assembling this list, I was struck by the tension between action and inaction, movement and stasis, progress and backlash. In a lot of ways, we’re most scared by the prospect of what funders might not do, and a crippling adherence to the status quo. On the other hand, radical swings in funder behavior are also grounds for real concern.

At a time when change is not only desirable but inevitable, making the right choices about which changes we pursue and which changes we fight will determine in no small way whether philanthropy can live up to its name as the century progresses.

Billionaires doing too much

We don’t have to like it, but the fact is that with each passing year, the super-rich wield increasing influence over the future of philanthropy. The biggest reason for that is their outsized fortunes, which will likely continue to balloon over the long term despite occasional stock market setbacks.

It’s still a safe bet that bulging billionaire pocketbooks will mean more money for philanthropy in the end. That doesn’t mean a large percentage of any given billionaire’s wealth will go toward philanthropy (it’s called wealth accumulation for a reason, after all.) But add to that the vast power of billionaire super-citizens to promote their interests in a political system tilted in their favor, and we have near-ideal conditions for the next generation of Rockefellers and Carnegies to spring up.

The problem is that however talented these folks may be at accumulating wealth, it doesn’t imply an aptitude for making the world a better place. As the obscenely wealthy deploy their fortunes and suck up fundraiser attention, we’ll likely see an ever-expanding series of bad bets, vanity projects and gifts to already well-heeled organizations.

As billionaire philanthropy surges, we’ll see private individuals reshaping entire corners of the nonprofit sector to their will. In fact, through public-private partnerships, blurred lines between finance and philanthropy, and political donations made in tandem with charitable giving, we could see a bumper crop of Gateses and Bloombergs pulling strings and setting agendas. Combined with a weakened democracy, the endgame — whether you agree with the goals of individual donors or not — might well be a literal plutocracy.

Billionaires doing too little

Though we focus on the exceptions, the super-rich as a class are actually far more prone to another scary tendency, the polar opposite of ill-advised giving. Wealth hoarding remains the order of the day for much of the nation’s stratosphere, including the vast majority of billionaires who give little to charity.

For much of the nation’s far upper class, charitable giving remains a tax avoidance strategy, at least in part, or something to put off until some undefined later date. The common practice of shunting minimum annual foundation payouts into donor-advised funds to satisfy the requirement is one manifestation of that. So are DAFs themselves, as they’re often used by the ultra-rich and their money managers to claim tax benefits without actually putting money in grantees’ coffers.

And among billionaires who do give at scale, only a handful prioritize philanthropic force multipliers like policy advocacy and democracy giving. The majority continue to favor conventional causes. Meanwhile, any number of urgent, arguably existential needs receive a relative pittance. To give just one example, trillions are needed to decarbonize the global economy, and on a pressing timeframe. For the so-called winners of society to sit atop trillions of their own while wildfires burn and sea levels rise would be a true nightmare.

Philanthropy becomes a black box (more than it already is)

Imagine a frightening future — or maybe that future is already here — in which what we know about philanthropy is just the tip of an iceberg floating in a pitch-black sea.

The social sector has never been particularly transparent, despite limited charitable tax laws nominally mandating it. Whether it’s protecting donor privacy — a longstanding refrain — or the weak legal requirements to disclose information, it’s hard to get good data on most individual grantmakers, let alone philanthropy at large. What data does exist suffers from a lot of gaps and is often several years out of date: unthinkable for other sectors in the digital age.

The danger going forward is that as more funders move their money through even less transparent mechanisms like DAFs, LLCs and 501(c)(4) entities, the funding world will morph into an even more opaque black box than it already is. The irony here is that institutional philanthropy, comprising the Fords and MacArthurs of the world, has actually become much better in this regard over the years. Time was, few foundations had grants databases; now, it’s practically expected for big foundations.

Meanwhile, though, a parallel universe of opaque charitable giving has gained explosive momentum. The largest charitable entities in the country, such as Fidelity Charitable and the Silicon Valley Community Foundation, now serve largely as sponsors for donor-advised funds, revealing few details about what major individual donors are actually doing, or even who they are.

If this continues, one outcome is a severe lack of accountability, both to outside observers as well as funders’ own grantees. Another is that by operating in the dark, funders contribute to the erosion of public faith in philanthropy and the nonprofit sector at large. In a world where dark money rules, it’s easy for partisans and ideologues to conjure up philanthropic phantasms and vast conspiracies, when the reality may be far more banal. But how are we to know?

Politicization runs rampant

One of the main reasons so many funders are keen to avoid transparency is that they’re terrified of political sensitivity. On both the right and the left, donor privacy advocates have cited reputational and even safety concerns as justifications for keeping their philanthropy away from the light.

Legitimate or not, those fears reflect one of the scariest — and most exciting — trends upending the funding world as we know it. Politicized philanthropy, as well as nonprofit funding conducted through 501(c)(4)s, LLCs and the like, have gained wide traction in recent years, especially as progressive funders stepped up to challenge Trumpism, pitting their money against politicized funding that conservative givers had been bringing to the table for decades.

We’re actually quite torn on politicization. The devil, as always, lies in the details of what we mean by political giving, and through what channels it flows. On one hand, when politics-shy grantmakers take the plunge into (perfectly legal) advocacy giving and more overt expressions of their political values, they can magnify their impact. Liberal grantmakers’ failure to do so over the past several decades has arguably contributed to current backsliding on civil rights and democracy, and to inaction on climate and poverty. 

On the other hand, though, political giving run rampant isn’t just a recipe for an even less transparent sector. It’s also a potential dagger in the heart of democratic governance. With politicized philanthropy as one weapon in their arsenal, uber-rich super-citizens can set the terms of public debate — and by dint of what they don’t fund, diminish causes they dislike. What can average citizens do if they disagree? Not much.

Talk forestalls action on social justice

In the aftermath of 2020’s racial justice wellspring, I wrote with tentative hope about the prospect of talk translating into philanthropic action. While some of that era’s more optimistic appraisals of philanthropy were, well, overly optimistic, sentiment in the sector remains pretty fully behind doing more. In our recent survey of philanthropy professionals, nearly two-thirds of respondents said that efforts to center racial justice are “essential and need to go much further.”

The danger going forward is that, as in the past, talk and sentiment alone won’t be enough to propel philanthropy down the path so many clearly want it to travel. There’s definitely precedent in this sector for well-meaning talk — in the form of endless research, convenings, strategizing — crowding out such reforms as actually putting money and decision-making power in the hands of those to whom they’ve been denied.

A future in which nothing changes on that front might not sound so bleak — people will be saying the right things, after all — but that’ll mean little to the communities that might otherwise have benefited. And rest assured, reactionary wealthy donors will not be guilty of the same hesitation and hedging as they fund the ever-present backlash to demands for racial justice.

Philanthropy reform gets beaten back

Here’s another finding from our survey, and it’s a doozy. Over 70% of respondents indicated that they favor mandatory payouts by donor-advised funds, while nearly the same percentage support increasing required foundation payout. By that measure at least, anti-reform positions are clearly getting more than their share of representation in coverage of measures like the Accelerating Charitable Efforts (ACE) Act, and in the policy planks of major sector trade groups, which largely oppose charitable reform.

In a future where the anti-reform camp gets its way and these efforts die on the vine, philanthropy’s un-democratic id will have won out once again. And worse than that, an unwillingness to embrace even modest reforms will exacerbate pretty much all the dangers outlined above.

The reality is that as the contours of the philanthropic world change, we need to be open to updating the laws and norms that govern that world. Failure to do so, even in a moderate way, will entrench trends that, in addition to being pernicious, are also simply unpopular. Can a sector whose name literally means the “love of humankind” be effective when that love is unrequited? Perhaps, but I wouldn’t count on it.

Reform is weaponized

As much as we like the idea of greater oversight of philanthropy, this is also an area where we should be careful what we wish for. When authoritarian leaders move to suppress dissent, targeting civil society is usually high on their to-do list. Unfortunately, it has become easier to imagine something like that happening in the U.S. amidst a constant stream of right-wing populist attacks on “elites.” It wasn’t so long ago that Ohio senate candidate J.D. Vance said on Fox News: “Why don’t we seize the assets of the Ford Foundation, tax their assets, and give it to the people who’ve had their lives destroyed by their radical open-borders agenda?”

In January, Vance will likely be in the U.S. Senate and a MAGA-infused GOP may control both that chamber and the House of Representatives, with wide powers to investigate whatever they want — including the progressive foundations and nonprofits they now view as their sworn enemies. There are plenty of lines of attack they could pursue, starting with how the c3 and c4 work of many liberal groups has become increasingly entwined. All it would take is one hard-charging committee chair to unleash a witch hunt that deeply rattles the sector — and, perhaps, has its intended effect of getting funders like Ford to back away from pro-democracy work.