Nonprofits continued to be under enormous stress in 2021 as the pandemic continued and national and global crises — from attacks on democracy to climate change — only deepened. Amid what has seemed at times like unrelenting bleakness, there are signs of change that will position nonprofits and the broader philanthropic sector for deeper impact in the years ahead.
Philanthropy, and especially foundation philanthropy, which has often been seen as impervious to calls to reform, has changed for the better. Foundation leaders streamlined processes, made more unrestricted grants, and in many cases, engaged – or at least started to engage – in the work of dismantling systemic racism in new ways. Most foundations leaders plan to sustain at least some of the changes they made. Those are among the findings of research conducted this year by the Center for Effective Philanthropy (CEP) — the organization I lead — and they make me hopeful.
Nonprofits – and, most importantly, those they serve – stand to benefit from these shifts. There is much work yet to be done, and my observations are not an argument that all is well or that there isn’t a huge amount of room for improvement. But we’ve seen more change in how foundation leaders approach their work in the past two years than in the previous two decades combined.
Building on this change, here are five of my hopes for philanthropy and nonprofits in the coming years. I am not qualified to make predictions, but these developments are within reach if leaders in philanthropy and the nonprofit sector make the commitment.
* Hope Number One: Building on the shifts that have already taken place since 2020, unrestricted support becomes the default. Donors and foundation leaders, recognizing that nonprofit managers need the flexibility to adapt and that good programs reside within strong organizations, flip the current pattern and make general support the rule and program support the exception. Increasingly, they make that support multi-year – reducing transaction costs on both sides and allowing nonprofit leaders to plan.
* Hope Number Two: The role of systemic racism in disparate outcomes in the U.S. is finally recognized and acted on in a way that is embedded in strategies at both foundation and nonprofits. My hope is that it’s no longer the case that strategies to improve public education or address poverty or environmental issues are devised without contemplating, and addressing, the role of race and racism. Moreover, I hope that we’ll finally reject the zero-sum thinking and fear-mongering that some, such as Philanthropy Roundtable, are promoting, in which a focus on racial equity is portrayed as coming at the expense of a focus on, say, rural whites. Instead, my hope is that we see the kind of alliances that are possible when we recognize the reality that everyone benefits when we dismantle systemic racism.
* Hope Number Three: There is, finally, a broad societal recognition of the role nonprofits play in this country – and the imperative to give in support of these organizations. Nonprofits, after all, are the organizations often taking on the toughest challenges – and the work is distinct from business in crucial ways. Performance cannot be summed up in financial statements and strategies must be shared across entities in a dynamic that is collaborative rather than competitive. The result of the broad recognition of nonprofits that I hope for should be greater trust in — and giving to — nonprofits, especially small, vital community-based organizations that are more likely to have diverse leaders and to be overlooked.
* Hope Number Four: Governance at nonprofits and foundations is reimagined. Board members should heed the words of Anne Wallestad, CEO of BoardSource, and put purpose at the core of their work — even before the organization they govern. This new approach to governance, which Wallestad described in a landmark article “The Four Principles of Purpose-Driven Board Leadership” (https://bit.ly/3GJ8wgB) earlier this year, leads boards to operate with greater respect for the ecosystem in which their organizations operate, a commitment to equity, and a greater empowerment of those impacted by the organization’s work.
* Hope Number Five: Foundation leaders prioritize the climate crisis as the existential threat that it is. After receiving a tiny fraction of foundation grant dollars in the past, funders finally commit massive support to regional, national, and global efforts to curb carbon emissions and reduce global warming. Nonprofits, whether focused on climate explicitly or not, seek every opportunity they can to influence the issue.
Are my hopes fanciful? Not necessarily. There already is some momentum for each. For all the suffering and loss it brought, the pandemic has shown that deep change, even at institutions often derided as insulated and slow to evolve, is possible when it’s necessary. And, even as COVID-19 becomes, I hope, less of a pressing threat, it is clear that much more change is indeed necessary.
Phil Buchanan is president of the Center for Effective Philanthropy, author of Giving Done Right (https://amzn.to/3EEY3Rk), published in 2019 by PublicAffairs, and co-host of the podcast by the same name (https://givingdoneright.org). Follow him on Twitter at @philxbuchanan.