The last two years have had no shortage of challenges to overcome and worthy causes to support. Through it all, donors, nonprofits, and business leaders have come together to learn, pool resources, collaborate, and most importantly innovate to make the greatest possible impact on the most critical needs.
During this unprecedented time in our history, we’ve also experienced a significant shift in the “logistics” of how we give, such as gifting cryptocurrencies and direct giving through GoFundMe and Venmo, for example.
Take it all together and philanthropy is evolving rapidly, with many exciting developments for families who want to give back as impactfully, directly, and efficiently as possible.
Cresset recently hosted a virtual panel of four experts in the philanthropic sector who discussed the new world of philanthropy and the trends they are seeing. Below is a summary of what they had to share:
1. Acting with an even greater sense of urgency
There has always been a sense of urgency when it comes to philanthropy. After all, we want to help the causes we care about as quickly as possible. But according to Nick Tedesco of the National Center of Family Philanthropy, the pace of giving has accelerating meaningfully in the last year. An estimated
$471.44 billion was donated to U.S. charities in 2020,
the highest amount on record. At Cresset, we have seen this trend firsthand as our client families have significantly increased their foundation assets and are setting higher yearly targets for gifting down their donor-advised funds. We’ve even seen teenagers earmarking up to 30 percent of their monthly allowance toward causes they care about. That is truly inspiring.
Take Action. Aren’t yet clear on your philanthropic mission or don’t have time to dig into vetting philanthropies? Take a look at websites like GiveWell, Open Philanthropy, and The Center for Disaster Philanthropy to donate directly to vetted and effective organizations.
2. Take note of tax considerations
Tax considerations play into the sense of urgency as well. Several pandemic-related tax relief measures are due to expire at the end of the year unless they are extended by Congress. They include: (a) the “universal” deduction allowing people who don’t itemize their taxes to deduct donations to charity; (b) the increase of the cap on deductions from 60 percent to 100 percent of adjusted gross income (AGI); and (c) the increase of the amount corporations can deduct for charitable giving from 10 percent to 25 percent of their AGI.
Take Action. Explore taking advantage of your expanded charitable contribution options now in case Congress chooses not to act before they expire.
3. Measuring … and experiencing … impact
Donors are increasingly demanding evidence of the impact of their giving. Many are driven by data, and a growing number are also seeking experiential philanthropy – in other words seeing the actual results of their giving. For example, one of Cresset’s client’s young adult children, a musician, recently created her own service-learning project by running music composition classes for low-income students in her area. By doing so, she experienced firsthand the unique challenges facing this particular community.
As Rena Greifinger, Managing Director of the Maverick Collective, explains, “Experiential philanthropy results in triple impact: impact on the population donors are seeking to serve, impact on the donors themselves, and impact on philanthropy at large.”
Take Action. Learn more about experiential philanthropy by checking out Maverick Collective. Explore data-driven philanthropy and access assessments and research at the Center for Effective Philanthropy.
4. Collaboration and the “democratization” of philanthropy
Philanthropy is experiencing a “democratization” of sorts. Young givers are bringing new ideas, new techniques, and new energy to the field. According to Rachel Gerrol, Co-Founder and CEO of NEXUS, the giving networks created by young philanthropists are broad, strong, and critical spaces for peer-to-peer exchanges and learning. This is a truly exciting development.
For example, the murder of George Floyd resulted in an immediate outpouring of money and attention from individuals and philanthropists into social justice initiatives (more than 1 million people gave an average of $33 each to the Black Lives Matter Global Network, totaling roughly $36 million). According to Yvonne Moore, Founder and Managing Director at Moore Philanthropy, individual funders and funder collaboratives are not just putting more time and money into social justice initiatives, many of them are digging deeper by asking serious questions around equitable philanthropy. This democratization of giving and the coming together of funders, activists, entrepreneurs, and educators is clearly bringing about overdue change.
Take Action. To learn more about next-gen philanthropists, activists, and social entrepreneurs, check out Nexus Global, which is a global community founded to bridge communities of wealth and social entrepreneurship. To learn more about giving circles, a growing movement of donor networks focused on a specific cause and working together to leverage their resources and voices, check out Philanthropy Together.
5. The evolution of giving vehicles
Individual donations made up 69 percent of the $470 billon+ donated in the United States in 2020. Private foundations, endowments, and corporate giving make up the rest of the pie. This does not take into account the growth in non-traditional philanthropy, such as GoFundMe and direct payments through Venmo.
Roughly 32 percent of people say they donate to a crowdfunding effort each year, according to a September 2020 survey of 1,535 adults by the Lilly Family School of Philanthropy at Indiana University. Cryptocurrency is also changing the face of giving as hundreds of nonprofits have added options on their websites to accept crypto gifts. For example, donors have already contributed $158 million in cryptocurrency assets to their donor-advised funds at Fidelity Charitable this year, a 464% increase from 2020.
The growth of crypto philanthropy is only expected to rise in the coming years as donors value the transparency it provides and that they don’t have to pay capital gains on what they give.
Take Action. Check out GoFundMe if you’d like to explore direct giving. Learn more about the trends and opportunities of crypto philanthropy, from tax incentives to utilizing blockchain for increased transparency, by visiting Philanthropy.com.
View the full recording of Cresset’s recent webinar, “The philanthropy playbook: How to engage meaningfully in giving back”. To learn more about how Cresset’s team can support you on your philanthropic journey, please contact Cresset’s Head of Family Governance and Education, Whitney Webb.