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« Meet a Wealthy Family That Cares About Cybersecurity | Main | Can a $4 Million Gift Bring More MBAs to the Nonprofit and Public Sectors? »
Thursday
Jan282016

Is There a Philanthropy Establishment? And, If So, Who’s In It?

Who’s in charge here?

That’s a question an outsider might well ask about the curious world of philanthropy. Is there a clear group of leaders who are setting the direction of all this giving? Are there key institutions that knit these leaders together? Is there a shared set of norms and expectations that govern behavior? And is there rough agreement on where philanthropy should go?

The short answer to these questions is “no.” There is not a single philanthropy establishment. Rather, the philanthrosphere is becoming more fragmented all the time, with distinctive groupings of funders who operate in different ways with different goals and connect through different institutions. Nobody is in charge, and that’s mostly a good thing.

Twenty years ago, philanthropy was far more cohesive. In the mid-1990s, when I first started following this sector, you really could talk about a philanthropy establishment. It was centered in New York, with outposts in places like Chicago and Boston, and very much shaped by the top legacy foundations such as Ford, Rockefeller and Carnegie. There were almost no big foundations on the West Coast or in the Southwest, and many fewer individual mega-donors. The Council of Foundations and several other institutions played an important role in framing shared conversations across the sector and helping set philanthropy’s agenda.

Then all hell broke loose. First came the rise of West Coast philanthropy in the late 1990s, with the establishment or scaling up of the Hewlett, Packard, Moore and Gates foundations—all of which were bigger than many of the top East Coast foundations. (In Gates’ case, a lot bigger.) Pierre Omidyar’s operation emerged during this period, too.

Next, and related, we saw ever-growing numbers of living mega-donors arrive on the scene, loaded with cash from the new Gilded Age booms in tech, finance, energy, retail and more. Many did things their own way—sometimes creating professional foundations, other times not. Walter Annenberg’s massive education gift in 1993 and Ted Turner’s $1 billion gift to the U.N. in 1997 presaged a new era in which huge sums of money were increasingly deployed by the super rich for very specific purposes.

Just to take one area: In the early 2000s, several wealthy LGBT funders, most notably Tim Gill and Jon Stryker, emerged with a laser focus on advancing LGBT rights. While these funders would eventually work closely with more established foundations, they initially were quite isolated, collaborating mainly with each other and doing their own thing.

Even more dramatically, the area of education saw an influx of major new donors like Gates, Eli Broad, the Walton family, Julian Robertson, and Doris and Donald Fisher, who largely rejected the ed agenda of established philanthropy, charting their own reform course. These funders created their own mini-establishment, with its own institutions, like the Charter School Growth Fund.

The fragmentation has only accelerated. The number of mega-donors entering the philanthrosphere has risen sharply in just the past few years, many with little attachment to existing philanthropy circles—and some with clear contempt for the old order. Sean Parker is a case in point.

Along the way, though, various groups of new donors have become well organized among themselves. I’ve already mentioned the distinctive ecosystems that LGBT and ed funders created. But there are others. In New York City, the Robin Hood Foundation emerged as the hub of a new and supercharged Wall Street philanthropy. That group has pulled any number of wealthy finance people into philanthropy, hooking them up with more experienced donors, and guiding their giving. A significant thing about Robin Hood is that while it’s become a hugely important philanthropic community in New York, its top donors seem to have little connection with the many legacy foundations that also operate in the city.

The Silicon Valley Community Foundation has played a role similar to Robin Hood's, but for tech donors. Its assets have swelled dramatically as it’s served as an intake center for emerging givers in Silicon Valley—a group that’s come to have its own distinctive worldview, as I’ve described elsewhere. The tech philanthropic community is still taking shape, but it’s already quite cohesive in some respects because so many donors here have long known each other through business. Meanwhile, the doings of, say, the Rockefeller Foundation barely register on these folks. “West Coast philanthropy is not influenced by East Coast pronouncements,” Emmett Carson, the president of SVCF, told the New York Times last year.

The emergence of much more robust local philanthropic ecosystems has been another striking trend of late. The great wealth boom of recent decades has spawned new philanthropy everywhere, with an ever proliferating number of foundations in many cities that have bolstered local philanthropy scenes that once were pretty dormant. Southern California is a great example, and I wrote recently about how the emergence of many new funders in this region has created new opportunities to unite people within a more cohesive community. The Southwest is another region where a lot of new funding has been happening lately, and is starting to gel into a larger, more mature philanthropic ecosystem than existed before. (See our Southwest coverage.)

All told, funders are becoming more organized—but in a very decentralized way, with donors turning more to peers for cues—within in their industries, issue areas or regions—as opposed to knitting themselves into whatever remains of a national philanthropic establishment.

So what does remain of such an establishment? That’s hard to say. Last year, I went to the annual conference of the Council of Foundations, and I thought the organization put on a really nice event. But others talk about the declining relevance of COF, and I was struck by how many of the newer funders that we regularly write about at Inside Philanthropy were not at the conference. Maybe that’s unsurprising, since a growing number of new donors don’t even have foundations, and operate instead through donor-advised funds. The Center for Effective Philanthropy did an impressive job of connecting up some of the different worlds in philanthropy at its biennial conference last year, and CEP also plays an important role in shaping the sector. The Foundation Center is another key outfit helping set standards and norms, for instance, through its work on transparency. A few other groups, like the Independent Sector, NCRP, and Exponent Philanthropy, also knit together various ideas or people. Large intermediaries like NEO and consulting firms like Bridgespan are other places where different roads meet.

But none of this in total adds up to a philanthropy establishment. It’s hard to speak of an establishment with any real sway if many of the biggest new players in philanthropy don’t belong to it.

All this is part of a larger story of fragmenting U.S. elites. The wealth boom of recent decades, spread across different industries and regions, has created more centers of power than existed in the past. Also, nearly all mainstream institutions have been losing influence. Just look at media, where digital newcomers have disrupted a pecking order that once revolved around the top newspapers and networks. Or look at politics, where the two parties have lost sway amid an influx of mega donors, Super PACs, and rogue candidates.

We live in the age of the triumphant outsider. It isn’t just that there’s no establishment in philanthropy. There aren’t many establishments anywhere in society.

Is this kind of free-for-all good or bad? Well, I can’t speak for other sectors, but philanthropy is definitely benefitting from fragmentation, with a flourishing of diverse ideas and approaches. Just to take one example: It’s been fascinating to see some of the newer donors characterize the idea of perpetuity as totally lame and embark on urgent efforts to deploy as much capital as is needed to solve problems. The rise of impact investing is another example of how norms are being challenged by newcomers.

It’s hard to say where all this will lead, but it is sure fun to watch.

David Callahan is founder and editor of Inside Philanthropy (davidc@insidephilanthropy.com)

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