Many philanthropists want a more hands on approach to their generosity today than they did in the past, according to Henry Berman, CEO of Exponent Philanthropy.
That desire is fueling a trend called “venture philanthropy,” which looks like venture capitalism but with a philanthropic bent, he said.
“Venture philanthropists want a seat on the board, or they want to help direct the organizations in exchange for the donations they are making,” Berman added. “They want to see the impact their money is having and help in delivering it.”
Exponent Philanthropy is a 23-year-old membership organization that supports foundations that have little or no staff of their own, and supports funders, including individuals and families. Headquarted in Washington, D.C., Exponent Philanthropy helps foundations evaluate their own performance and that of the organizations they are making donations to. It also has the ability to bring like-minded funders together to make a larger impact and bring recipients together who have similar missions.
“We help foundation trustees with everything from learning how to run a meeting to minimizing their infrastructure,” he said. The firm provides education on how to make grants that carry out the donors’ goals. With nearly 2,000 members, the foundations range from those with a few million to a billion in assets. In the U.S. Ninety-eight percent of private foundations have less than $50 million in assets.
Some of the causes that are going to dominate the landscape in the future will be those aimed at improving diversity and addressing other social equality issues. Eighty percent of foundations make grants to support children and 70 percent aim to help individuals who are economically disadvantage, Exponent Philanthropy said. Nearly half (48 percent) gave grants to help people with disabilities and 44 percent made grants to organizations benefiting women and girls.
Reflecting those causes, 79 percent of grants went to education in 2018 and 68 percent to human services causes, according to Exponent Philanthropy’s 2019 Foundation Operations and Management Report.
Philanthropists increasingly do not want to just write a check to build a homeless shelter; they want to help the homeless person find meaningful employment and improve his or her life.
“People want to be advocates are thinking of these things in ways they have not thought about them before,” Berman said. “They want to help develop new leaders in these areas through educational programs. To help do this, they may want to use a women-owned or minority-owned investment firm for their investments.”
Many reports concluded charitable donations were down in 2018 because of changes in the tax laws that doubled the standard deduction and eliminated the tax advantage for those making smaller contributions.