Holistic Philanthropy: An Integration Model For Giving

By John Burnett

“Wealth is not new. Neither is charity. But the idea of using private wealth imaginatively, constructively, and systematically to attack the problems of mankind is new.” John Gardner

“Unless someone like you cares a whole lot, nothing is going to get better. It’s not.” Dr. Seuss

It is generally agreed that the word Philanthropy was coined 2500 years ago in ancient Greece by the playwright Aeschylus. Etymologically, the term means “the love of what is to be human.” Aggregating modern interpretations of philanthropy produces the modern definition, “private initiatives for public good, focusing on quality of life.”

Although the names of philanthropists have changed, the confusion as to the appropriate purpose of philanthropy is still being debated. Some posit that philanthropy is about helping the poor. Others contend that philanthropy is about acts of altruism resolving social needs that are not served, or are underserved. A third approach is about community building via aggregating funds in order to make a significant impact. Finally, and I hope least prevalent, philanthropy is about self-aggrandizement and receiving recognition.

While all these approaches contain some truth, there is an overriding acceptance that philanthropy necessitates large donations and financial support sustained over time. There is also a noted distinction between philanthropy and charitable giving. The latter term refers to individuals who are willing to give of their money, time, and talent to charitable causes. There is typically no strategic plan behind their giving decisions. Further, their individual efforts alone are seldom recognized as instigating significant change.

For the most part, the word philanthropy applies mainly to wealthy persons, and sometimes a trust created by a wealthy person with a particular social cause in mind. Because of the amount of support provided, philanthropists often make a significant impact on the cause being supported, i.e., think Bill Gates and Warren Buffet. Because of their greater capacities, philanthropists can address both short-term and long-term needs. They can also respond to emergencies.

Although this perspective on philanthropy has remained constant, much of the context has changed. Several factors affecting philanthropy have emerged in the last decade.

Most notably, the importance and evolution of the Internet and supportive technologies have changed the face of charities in the U.S. and worldwide. Every nonprofit now has the capability/requirement to create a website that delivers their “story” and a mechanism for collecting donations. It means that the competition for these dollars is worldwide. It means that transparency and accuracy of information is vital and required by donors. It means that head-to-head comparisons can be made. In addition, social media that directly connects through the Internet creates a personal process for sharing facts and opinions. All these technological advances allow philanthropists to employ the same investment model they might use to determine a possible for-profit investment and/or purchase.

A second factor that has greatly impacted philanthropy has been the degeneration of the world economy starting in 2008. It is reported by economists that this is the first time since the Great Depression of the 1930s that the affluent class has been impacted. As a result, donations by the wealthy has declined by up to 30% in some sectors, and 9% overall. Keep in mind that only 6% of donations are made by individuals or trusts, with incomes over $1 million. Still, fewer assets have produced philanthropists who are more careful, and insist on transparency and accountability. Once again, the traditional investment model is considered as the preferred framework for decision-making.

A third factor is the greater challenges faced by nonprofits in 2011. Virtually all nonprofits are facing tremendous financial stress. Keep in mind that although U.S, donations were approximately $335 billion in 2010, the costs of these nonprofits was over $ 1 trillion. As a result, employees have been fired, salaries reduced, and responsibilities have increased. There is also the double-headed coin of nonprofits. The causes have increased by 34% but the funding has decreased by 11%. In addition, the first Baby Boomers reached retirement age in January 2011, with almost 40% expecting to live on Social Security.

All these changes require adjustments if philanthropy is to remain a viable part of our society, or become an even more effective solver of societal problems. Here are some suggestions:

• Philanthropists need a multiplier effect – an approach that delivers many dollars’ worth of impact for each dollar invested i.e., an investment model.
• Philanthropists must understand the methods of change that breakthrough results require, e.g., scaling back, policy changes, and partnerships.
• Philanthropists must carefully determine how they can best support these efforts – through the roles they play, the resources they devote, and the relationships they develop -- and how these interface with their personal objectives.
• Philanthropists must avoid adding to the costs of the nonprofit through unreasonable requests, convoluted processing, and imposing their personal agenda.
• Philanthropists should focus on their investment model and avoid meddling in programs and organization management.
• Philanthropists can contribute to a better understanding of optimum capacity building, but must do their homework to do this effectively.
• The best contribution a philanthropist might make is influencing public will and government policies, along with supporting research and developing solutions.
• Philanthropists should adopt a 3.0 model of holistic giving, which means going beyond dealing with solving the specific cause, 1.0, through the consideration of the various stakeholders affected, 2.0, to a perspective that takes all societal elements into consideration, e.g., how the success of my nonprofit impacts the effectiveness of other nonprofits, 3.0.

If these suggestions are followed I believe that your philanthropic efforts will be more personally satisfying. It will also mean that the long-range impact of your resources will be more effective to both the nonprofits you support, and society- at- large.

I conclude with an observation. An organization I am currently affiliated with, San Diego Social Venture Partners, exhibits many of the guidelines I just listed. It reflects the new face of philanthropy.

Dr. John Burnett is President of John Burnett Marketing and author of “Nonprofit Marketing Best Practices.”