What Can We Learn From Thirty Articles on Philanthropy?

Ian King Los Angeles

February 2, 2023


In a world of growing inequality, philanthropy is an indispensable part of social change. It helps us solve problems that would otherwise go unsolved or worsen.

But if a philanthropist wants to achieve enduring change, she must apply her resources effectively. Our research shows that applying a framework of five elements can substantially increase the odds of success.

The role of corporations

Corporate philanthropy is one of the most important ways companies create social value. It generates a positive public image, enhances consumer relationships, and fosters employee engagement.

To maximize philanthropic value, companies must focus on four pillars of philanthropy:

  • Selecting the best grantees
  • Signaling other funders
  • Improving grantee performance
  • Advancing knowledge and practice

These strategies build on one another, generating more excellent social value as a company moves from selecting grantees to advancing knowledge and improving performance.

Using its specialized expertise and assets, a corporation can initiate social projects that benefit other players in the same cluster. DreamWorks SKG, for example, used its film production expertise to design a program that trains inner-city students in Los Angeles in the skills necessary for a job in the entertainment industry.

By combining its unique strategy with corporate philanthropy, a company can often create social value disproportionately higher than donations from other donors. In addition, by partnering with other players in the same cluster, a company can reduce its cost and mitigate the free rider problem.

The role of government

Philanthropy has a long and proud history of working with government, whether local, state, or federal. As a social innovation fuel, philanthropy can help government scale the best ideas to benefit all citizens in a democratic society.

When governments need to make real-time decisions, they can benefit from philanthropic investments in data infrastructure to help them answer crucial questions and drive change. For example, the Johns Hopkins Center for Government Excellence (GovEx) helps governments inventory their data assets, create visualization tools and analyze data to support better decision-making.

However, there are preconditions to meaningful involvement with the government:

  1. A foundation must invest a critical mass of resources in the target area and find compatible leaders in government who understand what philanthropy can contribute.
  2. A foundation must have a strategic vision for its involvement to achieve success.
  3. It must cultivate public managers who can implement the program effectively.

The role of individual donors

Throughout history, individual donors have played an important role in philanthropy. From giving monetary allowances to widows and orphans to donating one-tenth of their income to the poor, individuals have made it possible for charitable organizations to continue their work in communities.

Individual donors account for 68 percent of charitable giving in the United States. This is a significant amount of money nonprofits depend on for ongoing support.

However, a recent decline in giving from small- and medium-gift givers has created a greater need for significant donors. Therefore, it is essential to find ways to attract these donors and develop relationships with them.

As a result, philanthropic leaders have recognized that fostering closer donor relationships is critical for ensuring nonprofits’ long-term viability in challenging times. In April 2021, 90% of charities reported that their donors offered them greater flexibility, and half reported that they were better prepared for our next time of shared need.

The role of foundations

Foundations are private charitable institutions that wealthy individuals and families establish. They are typically created for the long-term benefit of their community.

Foundations provide a legal structure for philanthropy and give donors a wide range of opportunities to make a difference. They serve as umbrellas for several initiatives, including grants to nonprofit organizations, loaning equipment or facilities, and encouraging employee volunteerism.

In the United States, there are over a thousand active grantmaking foundations. Their assets total around $1.1 trillion.

In addition to distributing grants, they have expanded into advisory roles for their parent companies on topics such as sustainability, economic development, corporate ethics, minimizing operational harm, and being a good corporate citizen. They are also increasingly playing a proactive role in philanthropy by encouraging matching gifts, product donations, and other employee giving. As a result, they have become an essential part of the larger giving ecosystem.