With Arabella’s 10th birthday just a few months away, we paused to think about philanthropy’s big-picture future—about key trends propelling the world and our field forward, about innovative work that’s delivering impact in new ways, and about how that work is being organized and implemented. Those reflections led us to a few conclusions:
1. Philanthropy is now in a period of profound transition and innovation, and it has begun to move well beyond the realm of traditional grant making in its efforts to drive change.
Enterprising philanthropists now play a wider variety of roles and employ more diverse resources than ever before. No longer merely funders or donors, they are also impact-minded investors, networkers and influencers, conveners and community leaders, advocates, social entrepreneurs, and more. They are moving from making grants to inspiring, empowering, and enabling impact—not only through their grant making but beyond it. At the same time, new actors are arriving on the field of social change, and they are bringing with them new ideas, tools, and skill sets—at least some of which are inspiring traditional actors to adapt their approaches.
We believe this transition points to a shift in philanthropy’s fundamental paradigm, a critical movement toward new models for achieving social change. At stake is not only the future of philanthropy as a field, but the future of every issue philanthropy touches: education, health, poverty, human rights, arts, climate, you name it. We have already begun to see this change begin to play out through our work supporting clients in engagements related to health, education, global development, and climate change.
2. While grant making remains philanthropy’s single most powerful tool, it won’t be enough on its own.
Done well, grant making achieves remarkable impact: it builds schools, cures diseases, alleviates suffering, and much more. Yet it faces limitations, as all approaches do. Statistics show that, adjusting for inflation, total giving has remained basically constant over the last 40 years. A key focus of strategic philanthropy has been, and remains, to use those dollars more effectively and efficiently. But those dollars will only ever go so far.
Recognizing that fact, innovative foundations, families, and individual philanthropists increasingly seek to go beyond grant making—to mine other assets and core competencies, including their:
- Investment capital
- Intellectual capital
- Networks and influence
- Voice and convening power
- Position as community leaders
- Capacity to take risks, test, and learn
In many cases, the new approaches they employ dovetail or overlap with traditional grant-making efforts. In fact, our experience suggests that the number of possible ways to combine approaches in pursuit of social change is nearly infinite. Sometimes the right solution is to use your voice and grants to pursue investment capital—or sometimes it’s to use investment capital to support your grants and voice. In any case, the real point is to reach the desired outcome. The varied approaches are all means to an end: broader, more transformational impact.
3. Among the possible approaches, we see four as especially common and promising.
None of these approaches is new, but viewed together they help to define the sea change philanthropy is undergoing. They include:
- Using return-seeking investments to advance social and environmental causes: While the inflation-adjusted amount of giving in the United States has basically plateaued over the last 40 years, investment capital has risen significantly. At more than $300 billion, the giving market looks large—until you compare it to the investment market, which weighs in at around $60 trillion (or 200 times as big). By using their return-seeking investments to pursue solutions to social problems, philanthropists can make enormous strides.
- Incubating, piloting, and launching new ideas and initiatives: Promising ideas with the power to effect deep social change require capital, rapid prototyping, and a higher tolerance for risk than many traditional grant makers, both public and private, can stomach. Employing nimbler resources, social entrepreneurs and enterprising philanthropists are working with fiscal sponsors and nonprofit management experts to incubate, pilot, and look to scale ideas that work—without the limitations that big institutions often struggle against.
- Supporting and engaging in policy advocacy: In many cases, creating lasting change that accomplishes the goals funders seek will require fundamental policy shifts. Often, funders are uniquely positioned to have a say in policy-related processes, given their subject-matter expertise and high-level perspective on the field, voice in influential circles, and extensive networks, in addition to their financial capital.
- Collaborating with others: Having realized that the world’s wickedest problems cannot be solved by any one donor, foundations, impact investors, governments, and service practitioners are partnering in meaningful ways to achieve greater good. Changemakers are seeking to harness the power of collective voice both through collaboration among donors and through multi-stakeholder, cross-sector efforts that often include not only public agencies and funders, but also community leaders, grantees, and their beneficiaries.
Over the coming months, we will explore each of the four approaches in more depth, starting with a series of blog posts in January. We invite you to join us by signing up for our series, using our #beyondgrantmaking hashtag, or—best of all—sharing your own thoughts, ideas, and stories with us in the comments below.
Gwen Walden is a senior managing director in Arabella’s San Francisco office, where she leads the firm’s West Coast practice. In this capacity, she engages with a range of clients on strategy, evaluation, and impact investing work, implementing programs and projects, and managing donor collaboratives. She has expertise in the arts, health, early childhood, and education, and works to meet the needs of a range of philanthropic organizations, from small family foundations to large institutional donors. Follow Gwen on Twitter.
Lauren Marra is a director at Arabella. She provides guidance on strategy, evaluation, and implementation projects. She has worked on a broad range of institutional, family, and individual client engagements and has honed her expertise in launching large-scale initiatives, developing grant-making programs, and partnering with foundations to refine their strategic plans.