2018 is set to be a transformational year for philanthropy.

2018 is set to be a transformational year for philanthropy.

With the new year now well and truly underway, experts at a leading US fundraising and philanthropy school have issued their list of 11 major trends the sector can expect to see in 2018.

The report, [PDF] produced by the Dorothy A. Johnson Center for Philanthropy at Grand Valley State University in Allendale, Michigan, examines a range of challenges facing the sector in the US, including legislative changes, big data and social equity.

In the foreword the centre’s executive director Kyle Caldwell stressed that the aim of the document was “not to predict any outcomes, but rather to share insights and foresights on the contexts and facts that could determine the sector’s future challenges and opportunities”.

Here are the 11 trends that will shape the sector in 2018:

1. Giving more by giving together

In recent years giving circles, where a group of people pool their funds to collectively bring about social change, have become an increasingly popular model of philanthropy.

Jason Franklin, the W.K. Kellogg chair for Community Philanthropy at the Johnson Center, anticipates the trend is likely to accelerate in 2018.

According to Franklin, there are now more than 1,600 giving circles operating in the US, comprising of over 150,000 individual donors who have collaboratively gifted more than US$1.29 billion.

Last year alone, such groups in the US engaged over 46,000 people and granted a total of almost US$30 million.

“As this drive to give together continues to build, expect to see more experimentation with collaborative structures, efforts to develop best practices and manage the costs of collaboration, and push back against the power that collaborative funds can wield in their specific issue fields,” Franklin says.

2. Next gen donors and the “golden age of giving”

A new generation of philanthropists is emerging in the US, having earned vast fortunes as Silicon Valley tech entrepreneurs or Wall Street hedge fund managers.

According to Frey Foundation Chair for Family Philanthropy at the Johnson Center Michael Moody, this new generation of donors is looking to go about their grantmaking in a different way to previous generations, with “tremendous implications for everyone in the field”.

“The current cohort of new big donors – Gen Xers and Millennials with the capacity for major giving – are not just any emerging generation. All signs point to these donors becoming the most significant philanthropists in history,” Moody says.

“They want to be more focused, more metric-driven, more experimental – all in the hopes of expanding the impact of big giving. They want to do good through impact investing and other new tools, not just through traditional grantmaking.”

3. The globalisation of philanthropy

We are living in an increasingly globalised world, and this is likely to have big implications for the philanthropic sector.

Franklin and Moody argue that philanthropy around the world is adopting similar – often westernised – structures, policies, and strategies.

“We are seeing the creation of western-model charitable foundations in regions where such entities were previously uncommon or absent,” says Franklin and Moody.

“This development is often driven by a desire to learn and adopt best practices from places (like the US and Europe) where foundations have long been institutionalised.”

4. Defining progress with place-based philanthropy

While the world may be becoming more global, a growing number of US foundations and philanthropists are targeting their funding at addressing issues within a specific geographic area.

The director of the Johnson Center’s Institute for Foundation and Donor Learning, Teri Behrens, notes that scale of the geographic focus can vary depending on the funder and the issue, “from a single neighborhood to a whole city to a larger multi-state region”.

“This approach to philanthropy and, more broadly to economic and community development, seems to cut across ideologies, with something to recommend it to everyone from populists to environmentalists,” Behrens says.

5. Philanthropy’s quest for equity

The election of Donald Trump and the emergence of grassroots movements such as Black Lives Matter has led many foundations in the US to fund projects assisting historically marginalised groups.

Aquinas College president emeritus Juan Olivarez says that demographic shifts taking place in the US “necessitate the development of new tools and strategies that will allow the field to effectively address equity issues and impact change”.

“If philanthropy really wants to see the achievement of social justice by alleviating poverty and inequities for racial, ethnic, gender, gender orientation, religious, and ability groups, it must work collaboratively with others to address purposeful inclusion in structures of power,” Olivarez says.

6. Inclusivity means asking the right questions

The emergence of big data, where technologies such as machine learning are used to draw insights from large data sets, has profoundly reshaped how many foundations go about their work.

Franklin and Jodi Petersen, director of the Johnson Center’s Community Research Institute, note that the philanthropic sector is now paying increasing attention to data collection, analysis, and dissemination methods that promote inclusivity and take cultural differences into account.

“To meaningfully understand the needs of a population through data collection, surveying systems must accurately capture who the population is and be designed to best gather authentic information from them,” says Franklin and Petersen.

7. “Data to what end?”

A major factor in adoption of big data is to measure outcomes and to inform future funding decisions.

Petersen cautions, however, that at times the “push to collect data to inform decision making can be so central that the [reason for collecting] the data gets lost”.

“If the data will not change the way a service/activity is delivered, then collecting it may not be the best use of resources,” Franklin says.

8. New frameworks for evaluating impact

One of the most significant changes in philanthropy over the past 20 years, according to Behrens, has been the shift towards strategic philanthropy and its attendant focus on achieving explicit outcomes.

“As evaluation continues to grow as a profession, we expect to see continuing innovations in practice to match innovations in philanthropic giving approaches,” Behrens says.

9. A Growing commitment to building nonprofit capacity

An area of increasing focus for many funders is to assist nonprofits to secure infrastructure, such as new IT systems, that will allow them to increase their capacity and work more efficiently.

Behrens and Franklin note that driving this trend is “a desire for a more diverse and inclusive sector, the need for increased professionalisation, and an overall eagerness to create more understanding around the true costs of nonprofit work”.

“More funders are now including capacity building as a budget line within grants they make in the regular course of their program funding”.

10. Governments and nonprofits: New partnerships or paradigm shifts?

With governments at all levels in the US shifting their focus away from directly providing services and programs, there has also been a fundamental change in the relationship between government and philanthropy.

Caldwell says that as a result of this change, “philanthropy has undeniably taken on a larger role in meeting community needs and serving as an economic engine”.

“Nearly one-third of nonprofit sector revenues [now] come from public sources to fund vital services.”

11. How repealing the Johnson Amendment could change the game for nonprofits

As in Australia, there is currently a debate in the US around the degree to which nonprofits and foundations should advocate for particular government policies.

A recent proposal to repeal a key piece of legislation, known as the Johnson Amendment, has triggered a debate in the US around how policymakers and society at large view the role of nonprofits in policy debate.

Caldwell and the Johnson Center’s nonprofit services director, Matthew Downey, explain that under the Johnson Amendment, “since 1954, 501(c)(3) organisations have operated under a rule that prohibits any activity that expresses support for, or opposition to, a candidate running for political office”.

“Whether or not Congress at some point decides to repeal the Johnson Amendment, the conversation around the role of nonprofits and charities in politics is likely to continue.”

The Dorothy A. Johnson Center for Philanthropy at Grand Valley State University aims to be a global leader in helping individuals and organisations understand, strengthen, and advance philanthropy. The full report can be downloaded here.