It’s been 32 years since then president Ronald Reagan officially recognized November 15 as National Philanthropy Day in the United States. In that time, charitable giving has transformed as much as any industry or profession. A new generation with a global perspective in the workforce, the growth in world economies creating more individual wealth than ever before, and catastrophic events like the global financial crisis have changed the view of philanthropy from raising money for a cause to investing for impact and sustainability.
“Donors today want to know what is the return on investment in terms of measurable impact,” says Divina Gamble, a senior client partner and co-leader of Korn Ferry’s Nonprofit practice. In practice, that means instead of writing a check for a cause and then getting a tax deduction, the trend now is toward investing in companies, buying products, supporting directors, and even voting for causes that reflect their values.
Gamble cites the Robert Wood Johnson Foundation as emblematic of this new ethos. The foundation’s mission to “build a national Culture of Health” extends beyond doctors and healthcare to include helping communities with school programs, transportation, and safety. Kids can’t be healthy without good nutrition, and people can’t walk for exercise if the streets aren’t safe, for instance.
Kate Shattuck, co-leader of Korn Ferry’s Impact Investing practice, says nonprofits, family foundations, and even individuals are looking at investments in a more integrated way than ever before. “If you really care about women in leadership, for instance, you are not just buying products that support women, but also thinking about women leaders when voting and looking at financial investment in women-led companies,” says Shattuck. “It’s no longer about a dinner gala or naming a building, and now about alignment and outcomes.”
Though it seems counterintuitive, the roots of this evolution were planted during the global financial crisis a decade ago. The older millennials who experienced—and the younger ones who witnessed—the destruction of wealth changed their attitudes toward both work and money. They want to work in places that have purpose and jobs that have meaning, and they want to use their money for good. The result has been the rise in responsible and sustainable environmental, social, and governance practices as a business imperative.
The United States is the largest source of charitable giving—American individuals, foundations, and corporations gave $410 billion to US charities in 2017, breaking $400 billion for the first time, according to Giving USA. But, as economies in Asia, the Middle East, and elsewhere move from emerging to developed, so too has charitable giving and impact investing. Annual charitable giving in China is up by two-thirds since 2011, for instance.
In total, on this National Philanthropy Day, the takeaway is that, as investments or gifts, more people, organizations, and foundations around the world are using their assets for good. And that’s not bad.