What’s Next for Philanthropy in the 2023 Period?
According to a recent report by Citibank, asset-giving could be the next big thing in philanthropy. The bank’s ‘Philanthropy and the Global Economy’ report states that digital assets can be a huge funding opportunity, as they are not taxed, a feature of blockchain technology and can offer donors a degree of transparency when it comes to their donations.
The report says this means that philanthropic organizations should look to these donors and utilize their wealth, which could be worth as much as $2.4 trillion in the future. Amy Thompson, the report’s author, believes this will help boost annual philanthropic donations in the wake of the cost of living crisis.
For high-net-worth investors, the top reasons for giving are to express their deep values and partner with charities that make a difference. Among wealthy people, charitable giving is often a family affair, with close to half of HNW and UHNW investors working together with their families to develop a charitable strategy.
Funders are embracing trust-based philanthropy as they become more aware of the challenges facing their communities and seek new ways to create impact. This approach encourages more power-sharing between funders and grantees, building strong relationships in which both sides are accountable to each other.
This power shift will reach mainstream adoption as more foundations, large donors and even everyday donors embrace it. This includes larger unrestricted grants and fewer restrictions on nonprofits.
It also means ensuring foundation staff, or philanthropic advisors, represent the communities they seek to support. This will help cultivate authentic relationships that empower community organizations to do their work effectively and confidently.
As a result, trust-based practices help dismantle the structures of bias and inequity entrenched in philanthropy over the years. The approach helps build a more equitable nonprofit-funder ecosystem through a rigorous approach that values relationship-building and power-sharing over transaction and control. Trust-based philanthropy can foster a healthier social sector by giving nonprofits the freedom to plan, grow, and innovate around emergent needs.
Donors are risk-averse because they want to ensure that their giving has some impact. They do not want to spend money on a high-risk “long-shot” bet.
They also want to maximize their expected value for a given amount of money donated. This means they should donate only to charities that accomplish exactly what is expected for every dollar they donate.
These donors are also more willing to give to broad-based causes, such as a new group or solution that is not yet proven. This is especially true among donors who are deeply involved with their faith tradition.
Behavioural economics suggests that people make decisions based on perceived value and may be more risk-averse than gain-averse. This is reflected in their tendency to favour capital preservation over capital gains and seek more conservative investments than risk-seeking individuals.
Fundraising is an ever-evolving field that requires nonprofits to be flexible. In 2023, they will need to understand and adapt to various new trends, such as online giving, recurring giving, and marketing technology.
Nonprofits that can offer various giving options, including monthly and yearly donations, will be better positioned to retain and attract donors in 2023. They also may be able to increase revenue in the future as more donors choose to give regularly.
For starters, recurring giving is a great way to keep donors engaged and support organizations they care about. In addition, it’s an easier and more cost-effective fundraising strategy to use than one-off donations.
Another important area for nonprofits to focus on is their community. They must stay connected to the people they are serving and determine their priorities. By understanding their community, nonprofits can tailor their outreach to the people most likely to respond to a particular cause or issue.
