The Unintended Consequences of Major Donations and the Case for Matching

Every year, without fail, we see a stream of headlines that chronicle the latest billion-dollar donations or endowments bestowed on organizations or causes. In fact, earlier this year, a list of our nation’s 25 top philanthropic givers was released that included some of our country’s wealthiest citizens, such as Warren Buffett, Jeff Bezos, MacKenzie Scott, Bill Gates and Melinda French Gates, along with the causes they supported and the amounts they donated.

From health to education to climate change, these gifts are meant to spur positive change, and they can truly help arm our society with knowledge, tools and programs that can impact the future. However, what if I told you these donations had unintended consequences on the broader philanthropic ecosystem?

Although large gifts like these are significant, they only account for a small percentage of what is actually donated each year. According to Giving USA’s 2021 report, Americans gave more than $470 billion to charity in 2020 — driven primarily by everyday donors rather than foundations, bequests or corporations. To put it in perspective, the lifetime giving of our top 25 donors is estimated at approximately $169 billion. That’s only slightly more than one-third of what was donated in 2020 alone. Everyday donors are critical to our philanthropic ecosystem.

Large donors and large individual gifts have the potential to reinforce misconceptions about the impact of everyday givers. Large donations to a single organization can make the everyday donor who gives $50, $100 or even $1,000 feel as if their gifts don’t matter or aren’t big enough to make a real difference. This, ultimately, can discourage individuals from giving altogether, and is something we should be concerned about in philanthropy. In addition, large-sum donations can make organizations too dependent on their wealthy donors. It is much better and more sustainable for charitable organizations to be able to draw from a large cohort of givers who are committed to the mission on a day-to-day basis.

Having worked in philanthropy for more than a decade, I have gained valuable insight into the benefits and challenges of big philanthropy. I learned most of this knowledge and understanding from my late friend and mentor, Gerry Lenfest.

Gerry, along with his wife Marguerite, could be considered the Philadelphia region’s greatest philanthropists of all time. The couple made the Giving Pledge in 2010 alongside a number of the individuals included in our nation’s list of top philanthropic givers, committing their entire billion-dollar fortune to causes. But what set the Lenfests apart was their belief in the responsibility of the wealthy to consider the long-term impacts of their gifts, the collective power of all givers, and the importance of building community to solve societal issues — all of which are critical concepts to consider as we enter into a new era of philanthropy.

Gerry believed the true power of philanthropists came from unlocking the potential of others to give. He believed in bringing individuals together to collectively support causes and solve challenges. The future of philanthropy should take this long-term, collaborative, community-building approach.

Philanthropy should break down the barriers that currently exist in our charitable ecosystem and be inclusive for all types of donors, and the notoriety and influence of wealthy donors should be leveraged to empower everyday givers. What that means is donors like Buffett, Bezos, Scott, Gates and French Gates should use their power and money to activate individual donors rather than deactivate them. This can be accomplished through matching.

Gerry Lenfest was a major proponent of matching, having leveraged a large portion of his fortune for matching gift programs. His many matching contributions included programs to support metropolitan journalism in Philadelphia and endow five professor positions at Columbia University.

Gerry planned his giving and he took seriously the responsibility of having the greatest impact as a philanthropist as he could. Planning for how his gifts would have an impact long into the future was just as important to him as planning for the future in business and he approached it with that mindset.

By allocating large donations to be used to match smaller gifts, Gerry believed that wealthier givers could encourage more individual donations of all sizes and amplify the impact of those contributions. Even allocating a small percentage of a large single donation could inspire individual donors and create a lasting impact by building a community of everyday givers that will live long past the original gift.

That’s why as major benefactors begin to plan for the causes they are going to support this year and in the years to come, I implore them to use those funds for matching programs. These funds have the power to encourage others to get involved, break down barriers, build community, make a difference and have a lasting impact. The future of philanthropy depends on thoughtful planning about how big philanthropy can encourage an organization's community of everyday donors for the long term.

Dr. Keith Leaphart is founder and CEO of Philanthropi and board chair of the Lenfest Foundation, where he has long served as the foundation’s primary liaison to the Giving Pledge and helped lead the foundation’s work to support disadvantaged youth in Philadelphia in the areas of early learning, out-of-school care, and career pathways.

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