Giving Compass' Take:

• Alison Powell, Willa Seldon, and Nidhi Sahni explore how the growth of global wealth and the emergence of new philanthropists threatens the dominance of institutional foundations.

• What does the decline of institutional philanthropies mean for the greater nonprofit sector? How can funders best encourage the development of diverse conversations in philanthropy?

• Learn why philanthropists must invest in social movement ecology.

As a consequence of unprecedented worldwide wealth accumulation and the rise of new philanthropists over the last two decades, the largest US institutional foundations (by which we mean independent foundations where the original donor is no longer alive, or, if the donor is living, where there is a substantial staff and other infrastructure to manage the giving) no longer dominate the philanthropic marketplace.

The share of giving that belonged to the largest institutional foundations in the late 20th century has declined precipitously. Consider how much the landscape has changed: The top 10 foundations in 1993, which together accounted for 15 percent of foundation giving, by 2014 accounted for only 4 percent. Moreover, of the top 10 US-based philanthropies in 1993, only two remained among the top 10 in 2014. More capital is also flowing through other structures, such as LLCs and donor-advised funds, meaning that the decline is even steeper than these statistics indicate.

This decline in market share is compounded by a sense that institutional foundations are not living up to the full potential of the assets and influence they do have. A recent study by the Center for Effective Philanthropy (CEP) indicates a wide gap between aspirations and impact: 67 percent of foundation CEOs surveyed believe that philanthropy has the potential to make a significant difference in society, yet only 17 percent believe it is doing so. Most of these leaders report that the problem has a lot to do with how philanthropies are operating.

Read the full article about institutional philanthropy by Alison Powell, Willa Seldon, and Nidhi Sahni at Stanford Social Innovation Review.