Philanthropy in Flux Part II: How to Meet the Moment?

“As our case is new, so must we think anew and act anew.” Abraham Lincoln

Lincoln was right of course. And were he with us today, he might say something similar, not about an impending civil war, but about how family philanthropies can adjust positively to a new “case.”

As we reported in Part I of Philanthropy in Flux, the confluence of a new federalism approach and improved, cross cutting technologies is forcing both private markets and nonprofit sectors to re-invent and re-imagine everything. The philanthropic sector is no different; it must flex to address not only how it gives, but how it acts in support of aims and in fulfillment of mission. The serious work of philanthropy continues, but perhaps in new and different ways.

We are often asked at Grant Philanthropic Advisors to provide actionable ideas and suggestions for the “how” of this moment. Our work centers on helping families figure out change—changing influences, external landscapes, generational attitudes, and government dynamics. How your family and its philanthropy adjust to changing circumstances can mean the difference between more efficient deployment of resources and  more impactful outcomes, and  missing the moment or the target of your efforts.

We’ve outlined seven ways philanthropists can meet the moment:

1. Tap into and Convene “Soft Power”: Disruption of the sort we are seeing allows for the use of many different types of tools. Soft power, defined generally as the ability to persuade by informing, influencing and providing examples, is an under-used tool in the philanthropic kit. Tradition has often held that philanthropy should be generously and supportively quiet and in the background. We encourage families and philanthropic leaders to set up meetings with elected officials at all levels and with non-profit leaders. Listen to them speak to their most significant worries and fears, and then offer ways to demonstrate how the object of their concern can be approached differently or better. Fresh thinking in these times is powerful. And no idea should go unexplored.
   
   Taking that one step further, philanthropists can use their influence and network to convene government officials, business leaders, and nonprofit executives to discuss solutions to challenges created by federal changes. This “convening power” can lead to new collaborations and innovative solutions.

2. Accelerate Giving in Times of Crisis: A hallmark of strategic philanthropy is knowing when to act boldly. A majority of family philanthropies are structured with perpetuity in mind.  Extraordinary times call for extraordinary measures. Accelerated giving, either through temporarily exceeding the traditional 5% payout for a private foundation or even strategically sunsetting a philanthropic vehicle, can have a catalytic effect during times of systemic stress on the sector. We encourage families to rely on their values as they make decisions around accelerated giving, at what pace to give, to whom to direct the gifts and in what quantities.
   
   We are witnessing a moment when needs are urgent and compounding. Long-term funding horizons may not align with the immediacy of the moment. Strategic acceleration doesn’t mean abandoning thoughtful stewardship; it can mean aligning timing with need. For example:
   
   • Families can adopt a “spend-down” window to frontload impact in a particularly critical sector. 
   • Philanthropists can temporarily increase payout rates to address emergent needs, while still maintaining long-term reserves.
   • Families can create a one-time rapid response fund or make “out of cycle” grants to meet new needs while still honoring ongoing commitments.
   • Accelerated giving also sends a powerful signal to grantees: we see the urgency, and we’re moving accordingly. Now is the time to ask: If not now, then when?

3. Offer Unrestricted Operational and Multi-Year Support: Some would argue this isn’t necessarily a new approach, but ask any nonprofit leader what they need most from their donors right now and it is this. They would tell you that too often donations come with strings attached and with only the promise of one year of support. Simply put, giving operational support with a mulit-year commitment creates greater financial resilience for nonprofits to weather times like these. It allows leaders to:
   • Establish or grow an emergency fund that can cover operational costs during funding gaps. A coalition of private foundations, including the Knight Foundation , the Ford Foundation and Pivotal Ventures, started a Public Media Bridge Fund to stabilize stations most at risk of folding. They’ve pooled $26.5M in funds so far with a goal of $50M. 
   • Invest in Infrastructure for technology, staff training and sabbaticals, and data management systems to maximize efficiencies, streamline operations, and better demonstrate their impact to other donors. This can mean the difference between successful futures and failed attempts to simply “hang on” for a non-profit.
   • Build financial diversification: Nonprofits that rely heavily on government grants are particularly vulnerable to policy changes. You can support nonprofits in diversifying their revenue streams by funding efforts to increase individual giving, build corporate partnerships, or explore earned income strategies.
   • Explore a merger with or an acquisition of an existing nonprofit. As the funding streams dry up, nonprofits and their leaders will be forced to explore this option. Money will be needed for this process. Be willing to consider these types of grants over a period of years to create new operational pathways or make existing ones more efficient.

4. Collaborate and Engage in Collective Giving: Pooling resources with other donors can amplify impact and provide more significant support to nonprofits. Collaborative funds, or working with other grantmakers, can help fill funding gaps left by the government and support organizations working on urgent causes. The Chronicle of Philanthropy reports here how philanthropies are uniting to form funds to make emergency grants. These funding collaboratives are focused by issue (e.g., food insecurity, immigration) and by region.

5. Consider Use of Social Impact Investments and/or Program Related Investments: Beyond traditional grants, philanthropists can make low-interest loans or equity investments to nonprofits. For example, a philanthropist could provide a low-interest loan to a nonprofit affordable housing developer to acquire land or a building, an investment that would generate a financial return while advancing the organization’s mission. The Sapelo Foundation and Mary Babcock Reynolds Foundation are leaders with their PRI programs in the Southeast. 

6. Fund Research and Data: Philanthropists can provide grants to research organizations that analyze the impact of federal changes on a specific sector (e.g., healthcare, education, social services). This data can then be used by nonprofits to inform their own strategies and make a stronger case for support to other funders and the public.

7. Adapt Business Thinking: One of the great canards of the non-profit world is that these organizations are so inherently “different” in structure and service delivery that for-profit business principles don’t apply. There are many differences to be sure; however, the supposition is thick with irony. Many of the family philanthropies supporting non-profits today were built on, and succeeded with, long-term, sound business practices. This is a moment when these business practices and insights should be shared as a positive value to mutual effect.

So, what does this all mean for family philanthropies? It’s clear that we need to get creative. By using our influence, offering flexible funds and being flexible with our own assets, collaborating with others, investing for impact, and thinking like a business, we can navigate this version of new federalism and all of its changes. It’s time for fresh ideas and bold moves to make sure our giving truly makes a difference. We have many more thoughts to share on the current moment of philanthropy, and we look forward to sharing them with you, in service of deepening your work as you strengthen the work of others.

About Grant Philanthropic Advisors:
We’re an independent, Charleston-based firm helping clients to focus and maximize their philanthropy—in turn, strengthening the fabric of our communities. Founded in 2019, we help donors move from responsive patterns of giving by assisting clients to identify values and become more strategic in their philanthropy. Our goal is to help donors to become more effective as change-makers.

We work with foundations (large and small staff teams), donor advised fund holders, multi generational families, individuals, philanthropy supporting organizations and corporations to design philanthropic strategies. We work with philanthropies that grant $1 million to $40 million annually.