Philanthropy Forecast, 2018: Trends and Issues To Watch

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When I first started following philanthropy over 20 years ago, it was a pretty sleepy sector. The big legacy foundations were the dominant players, and then, as now, they tended to move slowly—often taking a year or more to shift strategies in drawn-out planning processes. 

But the pace of change started to accelerate in the early 2000s as a billionaire class minted by a second Gilded Age turned to large-scale giving. And, in just the past few years, things have speeded up sharply, with a host of new mega-givers embarking on ambitious philanthropy. Other trends like impact investing, rising racial tensions, and the election of Donald Trump have also brought change and disruption. There’s a lot going on.

We recently took a look back at 2017 with our annual Philanthropy Awards, which chronicled the year’s highs, along with a few lows. Now, we cast an eye forward to what 2018 may bring with a set of predictions for the year. Follow the links to IP articles to dig deeper into key trends. And keep reading after the predictions to see how on-target we were with last year’s forecast and also to watch a video of me discussing the 2018 predictions with philanthropy scholar Ben Soskis. 

PHILANTHROPY FORECAST, 2018

Charitable Giving Doesn’t Drop—Not Yet

It’s been estimated that the new tax law will reduce charitable giving by as much as $20 billion a year. But in 2018 at least, my hunch is that net giving holds steady or even rises as the wealthy—buoyed by record stock market gains—continue to ramp up their philanthropy.

The Giving Gap Widens Further

Since most income gains in recent years have gone to the top 1 percent, it’s not surprising that this flush group has been giving more—even as donations by most Americans have fallen since 2000. This gap will widen further, thanks to the new tax law.

New Mega-Givers Emerge

Over 170 billionaires have now signed the Giving Pledge, and this year, as in the past few years, expect at least one of them to unveil their philanthropic game plan, along with big new commitments.

Existing Mega-Givers Gain Steam

This year will be see more growth by the Chan Zuckerberg Initiative, the Ballmer Group, Bloomberg Philanthropies, Good Ventures, and the foundations of other top givers that have set a steep upward trajectory in recent years.

Jeff and MacKenzie Bezos Make Their Move

Last year, Jeff Bezos—now the richest person in the world—issued an open call for ideas for his philanthropy. This year, look for him and MacKenzie to take a major step with their giving.

Bill and Melinda Gates Surprise Us

Gates philanthropy has been pretty predictable for years, with the couple’s foundation focused on a handful of big challenges. But with a $90 billion private fortune remaining, expect them to take on something new—sooner, rather than later.  

Most Likely Surprise: New Work on U.S. Poverty

Since early 2016, the Gates Foundation, in partnership with the Urban Institute, has been engaged in a deep dive into U.S. poverty issues. Given this legwork and the inescapable link between poverty and K-12 outcomes, we expect the foundation to make a move, here.   

Legacy Foundations Continue to Decline in Relative Size and Importance

A majority of the largest U.S. foundations, as measured by annual giving, are now piloted by living donors, and this tilt will become even more pronounced in 2018. The newer foundations, more nimble and with deeper pockets, will increasingly influence the sector.

But Living Donors and Legacy Foundations Forge Closer Ties

Newcomers and institutional grantmakers need each other: The former brings new money to the table and fresh eyes; the latter has deep knowledge of the social sector. Keep your eyes peeled for more alliances akin to Blue Meridian Partners that unite the two camps.

Funders Step Up the Push for Equity

New anti-poverty grantmaking by the Ballmer Group, CZI, key top Wall Street donors, and (possibly) Gates is likely to draw additional big funders to this space in 2018, some working in concert with legacy foundations.

Racial Justice Funding Cools

Expect the spurt of philanthropic attention to race since Ferguson to wane somewhat as a (still overwhelmingly white) funding world decides that new grantmaking it’s done here lately is plenty and starts to move on.

Except in the Arts, Where Diversity Giving Grows

The end of the year found Ford and the Walton Family Foundation joining forces to boost diversity across the curatorial field. Meanwhile, "legacy institutions" continued to roll out initiatives to reach underserved demographics. The year ahead will see more moves like this.  

#MeToo Makes Its Mark on the Fundraising World

While sexual harassment is common in the fundraising world, #MeToo has had little impact here, so far. The odds seem good that this will change in 2018.

New Money Flows for Climate Change

Last year saw several big new pledges for climate change. Expect more in 2018 as living donors and legacy foundations alike step up their response to the existential threat of our time.

“Big Bets” Keep Coming

Thanks to MacArthur’s 100&Change competition and Bridgespan’s work, there are now plenty of shovel-ready proposals for big bets. With lots of donors eager to ramp up, we'll see a rising tempo of mega-grants.

A Billionaire Takes on Opioids

With top funders largely ignoring a crisis that’s killing more than 1,000 Americans a week, this area is ripe for a big bet. Watch for a deep-pocketed donor to move into the vacuum.

Refugees Finally Get More Attention

MacArthur’s $100 million grant for refugees is the largest yet by a legacy foundation to address a heartbreaking global crisis that most grantmakers have tuned out. It should boost the visibility of this cause.

Participatory Grantmaking Gains Steam

With interest growing in allowing affected stakeholders to direct grant money, the stars seem to be aligning for a groundbreaking move on this front by a top funder, as well as other new initiatives.

Foundation Impact Investing Loses Steam

Even as funders like Ford, Kresge and McKnight have pushed forward on impact investing in big ways lately, most foundation CEOs remain skeptical. Look for less heat around this issue in 2018.

The Council of Foundations Faces Further Decline

COF’s problems are systemic. Its value proposition is less clear in an era of stronger funders’ affinity groups and regional associations of grantmakers. Expect talk of merging trade associations to resurface in 2018.

Record Giving Flows to Influence a Midterm Election

There are lots of ways for tax-deductible charitable giving to shape voting outcomes in 2018, and donors on both the left and right—but especially the left—are busy as never before.

Anti-Trump Giving Keeps Growing

The surge in progressive philanthropy to counter Trumpism and the GOP isn’t a passing post-election phenomenon. It gained steam through 2017. Look for more of the same in 2018, including from some surprising donors.

New Revelations About Dark Liberal Money

Some of the big donors and foundations mobilizing against Trump have done so anonymously, channeling cash through DAFs and other intermediaries. Expect some of that giving to come to light in 2018.

Howard Schultz Sends a Signal

If the founder of Starbucks plans to run for president, his philanthropy will offer a tip-off. If Schultz makes a big give this year that seems designed to impress moderates and progressives alike, he’s running.

Scandal Hits the Charitable Sector

Regulatory oversight has fallen even as more philanthropic dollars are funneled into politics, more donors push the envelope on tax avoidance, and online charity scams proliferate. Add it all up, and we’re overdue for a major scandal.

Wealthy Suburbs Fight the IRS Over Giving Rules

To offset the pain of the new tax law, municipalities with sky-high property taxes are desperately exploring ways to have residents pay for schools and other public goods with deductible charitable gifts instead of non-deductible taxes. These legally dubious efforts will provoke court battles in 2018. 

Another Corporate Funder Is Disgraced

A year rarely goes by without news of a corporation that’s used its philanthropy in appalling ways. We don’t expect 2018 to be any different.

Corporate Philanthropy Grows More Strategic

Meanwhile, though, corporate giving as a whole will keep getting more sophisticated this year, with an eye on greater impact, continuing an ongoing trend.

Community Foundations Up Their Game

Facing rising competition from an ever-growing array of DAF providers and funding intermediaries, look for these institutions to put more sizzle into their programs and brands to romance a new donor class. 

Higher Education Draws More Fire

Republican politicians, elected by constituents who’ve turned against college, will keep probing university endowments. Maybe they’ll also dig into suspect fundraising claims by some universities.

A Campus Gift Sets a New Record

In light of higher stock market winnings and several new record gifts to universities in recent years, the odds seem good for another historic milestone in 2018. The first $1 billion gift? Totally possible. 

Giving by Most Alumni Keeps Falling

Even as wealthy alumni are giving more, the rest are giving less. This cycle is reinforcing itself as fundraisers go where the money is. The new tax law will further widen the campus giving gap. 

The Conservative Media Finds New Nonprofit Targets

Look for Breitbart and other news outlets that have demonized George Soros and the ACLU to broaden their menu of targets, especially as awareness grows of the many millions now being given to fight Trump.

Tech Philanthropy Faces Blowback

Distrust of private mega-givers is rising at the same time that Silicon Valley firms face new criticism. These trends are likely to dovetail, with tech philanthropists taking more heat. Google's Eric Schmidt already has.

Giving for Medical Research Yields a Big Breakthrough

Last year saw at least one headline-making research breakthrough funded by private giving. Given how much money has been flowing in this space, we expect such news to keep coming in 2018 and beyond.

Grantmaking for STEM Slows Down

Giving for STEM education has been among the biggest stories in philanthropy in recent years. But how long can the surge last? Look for this locomotive to slow down in 2018.

Chinese Philanthropy Looms Larger

China now has as many billionaires as the U.S., quite a few of whom have strong ties to this country. Some have already been giving big to U.S. nonprofits. That trend will continue in 2018—and for decades to come.

HOW DID WE DO LAST YEAR?

Too often, predictions made at the start of a new year are quickly forgotten. But this year, and going forward, we're going to make a point of revisiting our prognostications to see what we got right and wrong. Below, I go over the 25 or so predictions in the Philanthropy Forecast, 2017.

Funders Fight Trump—Right. This one was obvious. 

New Donors MobilizeRight. We correctly predicted that “presidents with strong agendas tend to mobilize new oppositional donors.” Through last year, we reported on a number of new anti-Trump givers.

Philanthropy Comes Under Attack—Partly Right. While we were wrong in our prediction that “Trumpists might directly target those foundations and philanthropists who challenge the administration's agenda,” we were more on-target in predicting that “the charitable tax deduction could face new challenges as Congress finally gets serious about tax reform… [and] efforts to regulate university endowments—the biggest pots of elite private money—will continue to gain traction.” The new tax law undermines the charitable deduction and slaps a new tax on endowments.

Another Record Year of Giving... Right. Another obvious one. While giving data for 2017 isn’t yet in, all signs suggest the year’s total will set another record.  

…Before a Falloff LoomsWrong. We imagined that by the fourth quarter of 2017, the bull market would have run its course or donors would be spooked by other bad economic news. That didn’t happen.  

The DAF Express Gains Speed, With Curves AheadHalf-Right. More money poured into donor-advised funds—but Congress never really looked at reforming DAFs as part of its tax overhaul.

Intermediaries Ride High—Right. No surprises, here. The expansion of the middlemen helping new donors find their way is an ongoing trend that continued in 2017.  

Impact Investing GrowsRight. Ford’s major move here was big news.

Big Bets Get Even BiggerRight. MacArthur and the Ballmer Group were among those in the lead, along with lower-profile donors like Charles Butt.

Tech Philanthropy Keeps ExplodingRight. Ex-Microsoft CEO Steve Ballmer and his wife Connie made tens of millions in new grant commitments, while Mark Zuckerberg began selling billions of dollars of Facebook stock to fund the Chan Zuckerberg Initiative. WhatsApp co-founder Brian Acton announced big plans. Jack and Laura Dangermond made a historic land gift

Women Donors Move Further to the FrontRight. The growing prominence of women in philanthropy is an ongoing trend that continued in 2017, e.g., with Priscilla Chan at the helm of CZI, the most important new philanthropic entity to emerge in years.

Defenders of Reason and Civility Step Up—Mostly Right. Lots of grant money flowed in 2017 to fund independent journalism, fight fake news and counter hate. But we’re still waiting to see the major new funding for “civic education and national dialogue” we predicted.

White Rural America Finally Gets AttentionMildly Right. We did see new grantmaking in 2017 “to boost places like Appalachia and the Rust Belt.” But it hasn’t been a major surge.

Automation Fears RiseMildly Right. With robots on the march, 2017 saw funders continue to put new money into “AI watchdogs” and “the once-radical idea of a universal basic income.” But the amounts have been modest, and most funders, even those in the workforce field, have yet to tune into this issue. 

Global Security ReturnsWrong. We predicted that international events “might get scary enough to vault global security giving back into the top tier of funder concerns.” But while the situation on the Korean peninsula is plenty scary, there’s been no big influx of funding into the peace and security field.

New Climate Mega-Donors EmergeWrong. While existing climate funders made big new commitments, no new mega-donors entered this space, although Paul Allen sent an important signal of his strong interest here.

Immigration Giving Surges—Right. Many funders made new commitments in 2017 to counter Trump’s immigration policies, especially in California

Criminal Justice Funding on ProbationMixed. We predicted that some funders would have second thoughts about investing in this area after Trump’s election, even as others doubled down on local reform. We didn’t see any second thoughts, but did see new funding for local efforts.

Federalism Turns Fashionable—Right. As we predicted, funders looked to states and cities to lead on the issues they care about, with Mike Bloomberg the most explicit advocate of countering Trump this way.

Health Funders Stop Heading Upstream... And Fight to Save ObamacareWrong. We expected to see reduced focus on the social determinants of health as grantmakers pivoted “back to bread-and-butter concerns,” starting with a robust defense of the ACA. No such pivot happened. 

Campus Gifts Keep Getting BiggerRight. In fact, 2017 saw some of the largest gifts ever to higher ed, including the Helen Diller Foundation’s $500 million gift to the University of California, San Francisco and at least two campus gifts over $200 million.   

But Donors Worry More About the Plight of StudentsWrong. We imagined that some alumni donors might “lean hard on schools to control the tuition costs that saddle students with heavy debt.” There were no signs of such pressure.

Basic Science Research Draws Reinforcements—Wrong. We didn’t see “new donors coming into basic science in 2017."  

New Art Museums Are BornRight. Several new museums backed by major donors opened in 2017 and plans for several more were announced.

WATCH THE VIDEO!

David Callahan discusses some of the 2018 predictions with philanthropy scholar Ben Soskis.