In the US, there has always been a strong tradition of place-based giving and philanthropy playing a prominent role in the life of cities. This may be a reflection of the fact that wealth and industry in America is more distributed than in the UK (where London exerts a gravitational pull that distorts the entire economy), and thus individual cities are more likely to have sufficient associated industry and a pool of wealth from which to attract philanthropy. Or it may be down to a whole host of other factors that mean people’s sense of civic identity and responsibility to give back is greater.

Historically, the bulk of civic philanthropy has been aimed at supporting particular causes or institutions which play an important role in the life of cities — such as parks and greenspaces, higher education institutions, or museums and art galleries. However, recent years have seen the rise of a phenomenon in which entire cities look to philanthropy as a main source of funding for all their financial needs. This is usually in the context of those places having run into severe financial trouble and needing to find a way out.

Most famously, the city of Detroit, Michigan went bankrupt in 2013 and a coalition of 14 philanthropic foundations stepped in to provide funding to keep the city’s infrastructure going. More recently, the city of Kalamazoo (also in Michigan) and Stockton in California have attracted media attention for their efforts to woo philanthropists in a bid to deal with financial difficulties. Each of these examples highlights some of the challenges and controversies that can result when civic philanthropy is done against the backdrop of problems with local government funding.

Read the full article about the challenges of civic philanthropy by Rhodri Davies at Charities Aid Foundation.