While traditionally associated with giving money to 501(c)(3) organizations, philanthropy is increasingly understood as a broad spectrum that encompasses myriad ways for people to make the world a better place. As more donors think holistically about how giving can be intertwined in their daily lives, the definition of philanthropy is quickly extending to include charitable activities that bypass traditional nonprofits and modes of giving. More and more, donors are engaging in different models of creating social change and considering how to make giving back a central piece of how they live their lives.
1. Donors make personal financial decisions through the lens of social change.
For many donors, giving back is not just one act or decision. Social responsibility is a filter through which they make all of their everyday decisions. The products they buy or the funds they invest in is a direct reflection of the changes they wish to see in the world.
Two-thirds of Millennials have supported a socially responsible business. More than four-in-ten have engaged in impact investing—the practice of making purposeful investments that generate financial returns, while also helping to achieve social or environmental benefits. And a third have funded microloans, where the donor loans a small sum of money to a business or startup, often in a disadvantaged community.
Making financial choices charitable
Purchased products from socially responsible businesses
Engaged in impact investing
"People in the long-term will continue to give in countless “uncounted” ways. While fewer people might be donating directly to charities, they are still looking for ways to make the world better."
– Kelly Lannan, Vice President, Young Investors, Fidelity Investments
2. Employees increasingly want to align their career choices with their values by working for employers who give back.
The concept of workplace giving encompasses a wide range of employer-sponsored programs designed to support and encourage employees to give back, including organized volunteering opportunities, company matching of employee donations, paid time off for volunteer hours and corporate giving drives. Donors want to feel good about where they work—with the majority agreeing that a company’s social responsibility is an important consideration when evaluating it as a potential employer.
"When I consider a future employer, it’s important to me to work for a company that engages in corporate social responsibility."
3. Donors are merging the ideas of philanthropy and advocacy.
With the political landscape more divided than ever and Congress increasingly gridlocked, it is becoming more difficult to pass legislation related to social welfare problems. In response, more nonprofits are establishing 501(c)(4) entities to directly engage in partisan lobbying and public policy advocacy that will help further progress in their cause area. And charitable donors are picking up on the shift, with the majority of donors saying that activism and charitable giving are directly linked. Donors increasingly understand that philanthropy alone cannot solve our biggest challenges and that public sector support is often a key component to addressing systemic issues. Participating in activism and advocacy is just as important as financial support in achieving the outcomes they desire.
"For me, activism and charitable giving go hand in hand."
"There are so many seemingly intractable problems that [Millennials] care about—climate change, racial justice, gun violence. There needs to be a payoff to our engagement. There needs to be some sense of tangible progress. And that’s why I think we’re at this fulcrum of whether we have a generation of disillusionment or a generation with agency."
– Steven Olikara, Founder, Millennial Action Project
Charitable dollars could become fragmented across a variety of categories.
Traditional 501(c)(3) organizations will not disappear anytime soon, but the wider variety of ways that a donor can engage in giving could fragment their dollars available for charity across a variety of categories—with the result that traditional nonprofits could face increased competition for funding. Donors aren’t just deciding among nonprofits to support; they are deciding among different avenues and channels for creating change.
Corporations will increasingly seek to “do well by doing good.”
With an increasingly bright spotlight on corporate social responsibility, businesses will be further incentivized to engage in social good so they can attract and retain both customers and a talented workforce.
As nonprofits make advocacy a larger focus area, the philanthropic landscape could become polarized.
As donors increasingly link activism and charitable giving, they could take a closer look at the nonprofits they support to ensure they align with their political beliefs. And if the gap between sides on social and political issues continues to widen, donors could begin to mistrust organizations that they see as not aligning with their views—which makes it harder and harder for different organizations to partner up to tackle big issues.