What is Giving Compass?
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The last two-plus years of pandemic life have been an exercise in dodging curve balls, and adjusting and re-adjusting, with calls on philanthropy to step up to meet the social and economic challenges at hand. Now with inflation at record highs and threats of recession looming, those calls are once again getting louder, and philanthropic capital has become more important than ever.
While philanthropic giving spiked at the onset of COVID-19, charitable giving levels for individuals have not meaningfully increased in a sustained way. In fact, when adjusted for inflation, giving levels actually fell by .7 percent, according to recently released data from Giving USA. This is troubling because data also show that the world’s wealthiest have expanded their personal fortunes. Data also tells us that there are more ultra-high-net-worth individuals (UHNWI) than ever before.
From our work with philanthropic families and our 2020 research report, Stepping Off the Sidelines: The Unrealized Potential of Ultra-High-Net-Worth Philanthropy, we know that the low rate of UHNWI giving is in part because individuals with charitable aims don’t know where to start, and the overwhelming number of options and requests can lead to the paralysis of indecision. Many questions come to the fore when considering a giving plan. What causes should I champion? What organizations are addressing the issue at hand effectively? Does my contribution matter?
One question that could provide direction and reassurance is “who else is doing what I hope to do?”
This is why the Center for Strategic Philanthropy set out to explore and highlight the ways in which experienced philanthropists are putting their capital to work. Our latest report, Stepping Up: Strategic Ultra-High-Net-Worth Philanthropy in Action — is a series of case studies that provide concrete examples of what strategic philanthropy looks like in practice, complete with practical guidance and lessons learned from the funders themselves.
Truly strategic philanthropists have a few approaches in common.
They take on systems change and make big bets.
To create positive and lasting social change, strategic philanthropists are looking to make major improvements at the systems level of an issue area. By targeting the root causes of problems with the larger ecosystem in mind, philanthropy has the potential to catalyze enduring, transformational changes.
They are not afraid to be innovative and take risks.
Philanthropy is an inherently personal endeavor. Each donor has their own areas of interest, and they also have unique definitions of, and appetites for risk. Individuals who are willing to assume more risk can venture beyond philanthropic safe bets, and invest in organizations and in causes that are creating transformational change.
They listen to their constituents.
No matter the issue area, elevating and incorporating the voices of local constituencies and beneficiaries is an important practice in any social impact effort. By intentionally and thoughtfully understanding the lived experiences of individuals who endure entrenched problems, philanthropists can glean insights that will help them achieve the impact they seek.
Their philanthropy and business investments are aligned.
Any financial activity is an opportunity to demonstrate one’s values. To this end, investing can integrate the pursuit of purpose and profit and take steps that do not contribute to societal hardship. Mission-aligned investing can include divesting from companies that cause harm, or applying an ESG lens, which assesses a business’s financial standing while considering its sustainability and societal impact.
As inflation causes small donors to tighten their spending, UHNWI philanthropy — who is giving and who isn’t — will once again come under scrutiny. The good news is that despite the rollercoaster of the stock market, the funds for philanthropy are already there. Much of it is sitting in donor-advised funds, waiting to be put to work. With a little guidance, these funds can be applied to meet the needs of the social sector. Stepping Up is a resource for learning how it’s done, equipping philanthropists with the knowledge and tools necessary to channel their resources for good.