If the past two years have taught us anything, it’s that black swan shocks are real and disruption is something most businesses and organizations continue to underestimate in their planning and strategy. Philanthropy is no exception—whether it’s the global pandemic or mass movements calling for racial justice reform, what otherwise seemed like a predictable and linear industry remains mired in continued, seismic shifts. This year is poised for more of the same but for newly disruptive reasons.

  1. Inflation will have a real (and negative) impact on giving. If macroeconomic forecasting holds, rising inflation this year will weaken the ability of everyday donors to contribute to their preferred causes and organizations. When the value of your dollar decreases due to inflation, your ability to “buy” philanthropic donations will shrink accordingly.
  2. Rising interest rates will also materially impact giving this year. To combat the forthcoming inflation, the Federal Reserve (and other central banks) have signaled their intent to raise interest rates. While this monetary orthodoxy is the natural antidote to curb inflation, it will generate pressure on businesses that rely on debt financing (as that debt becomes more expensive) and potentially tilt capital markets toward debt and away from equity (suggesting weaker stock market performance in 2022).
  3. The traditional business model of private foundations is under threat from new entrants. New mega-donors such as former Twitter CEO Jack Dorsey and MacKenzie Scott have generated headlines not only for their willingness to donate billions over short time horizons but also for the way they are doing it: without any of the trappings of a traditional private foundation that would come with full-time, expert staff. As one large private foundation president put it to me recently, “We talk all the time internally about what they’re doing, and we see it as a real threat to our business model.” If Dorsey, Scott, and others can give away billions per year without the machinery of professional staff, what need is there for the overhead and bureaucracy that most donors previously believed was necessary to “do philanthropy seriously?”

Read the full article about philanthropy trends 2022 by Nathaniel Heller at Fast Company.