Philanthropic trends for 2023 – abroad and at home
By Sue McCabe, Chief Executive, Philanthropy New Zealand | Tōpūtanga Tuku Aroha o Aotearoa.
The 11 Trends in Philanthropy for 2023 report, produced by the Dorothy A. Johnson Center, is insightful reading for those interested in the changing field of funding. While American focussed (and often using distinctly American terminology!), many of the themes will be familiar to philanthropists, grantmakers and the community and voluntary sector in Aotearoa New Zealand.
The report is presented as 11 separate chapters, so this article provides an overview, dipping into each of the trends and making brief comment on relevance to our country.
Given the almighty effort underway to respond to devastation wrought by the recent storms and cyclone, it seems fitting to kick off with the global trend that disaster philanthropy is transitioning for the long haul as events occur more often and with greater impact. Traditional philanthropy has focussed on the response, but this no longer cuts it. Globally the philanthropic infrastructure is adapting to have a greater focus on preparedness, resilience and emergency partnership, with a recognition that low income communities disproportionately suffer greater impact.
One tip in the report is to support community leadership as a way to enhance resilience. Another is to recognise the important role of place-based funders, like community trusts and community foundations – that are there for the long haul. In Aotearoa New Zealand Iwi also play a critical role in preparedness and response. Our country has gained significant experience in disasters in recent years, which has been fed into this guide for funders. Given the repeated weather events on communities like Tairāwhiti and the Coromandel, and the scale of impact of the current storms, we can expect there to be significant discussion and action this year to evolve philanthropy’s role in disasters.
There is rapid growth in collaborative funding, which funds differently to traditional philanthropy. The increasing number of collaborative funding ventures in America has been a trend for some time. Data now shows that collaborations have a greater focus on funding indigenous leadership and people of colour, and redefining expertise, risk and impact so that power shifts from the funder to the community. Anecdotally we are seeing the same trend around increased collaboration in Aotearoa New Zealand’s funding sector – with the groupings ranging from formal structures through to greater information sharing and co-funding. It’s evident that when funders come together to cooperate, there are foundational discussions around ‘how’ to work together which are generally informed by best practice and fresh thinking rather than necessarily how funding has always been done.
Another trend is rethinking capability building support. Funding capability building has been around for a while, but there’s a trend to relook at the approach. The report points out that multi-year funding that isn’t tightly tagged IS capability building by its very nature. It also highlights that capability building models are often based on white dominant culture, and as a result funders are rethinking what capability looks like. It cites that a simple definition of capability building has been anything that improves an organisation’s effectiveness. Vibrant Communities grounds its definition in equity, calling capability building the “process of building and strengthening the systems, structures, cultures, skills, resources and power that orgs need to serve their communities.” There’s also a strong call from the community and voluntary sector in Aotearoa New Zealand that there is insufficient support for capability building compared to service delivery work; and requests for unrestricted and multi-year funding. There is an ongoing discussion in New Zealand’s philanthropic sector on who defines what effectiveness and impact looks like, and a growing awareness of centring care, wellness and rest in capability building, particularly for communities and leaders working to progress equity.
Philanthropic support for journalism is growing in America, and there are more for-profit news outlets exploring non-profit models. This is occurring as journalism’s traditional advertising and circulation focussed revenue model crumbles. As well as non-profit models, there are more non-profit ownership structures overseeing full-profit models and philanthropic partnerships supporting for profit journalism. There has been a trend in Aotearoa New Zealand to recognise the importance of story-telling as part of systems change that will improve community wellbeing. The media are an important part of the story-telling landscape, so we expect this trend will pick up here. The rise in disinformation and societal fragmentation have highlighted the need for a strong media. As the report says: “A free and independent press is widely acknowledged to be a pillar of a functioning democracy”.
New organisational structure models are toppling the staff pyramid. There is a move to co-leadership at both the management and governance levels. We are seeing this trend in Aotearoa New Zealand in the philanthropic and not for profit sector, often with a bicultural lens (tangata tiriti and tangata whenua). The report talks about the rise in worker ownership models; worker self-direction and fiscal sponsorship. We have seen the growth in fiscal sponsorship in Aotearoa, where a community organisation or movement chooses to be supported or umbrellaed by a registered charity rather than establish an organisational structure or seek registration itself. This reduces the administration burden. The Gift Collective has established a New Zealand operation offering fiscal sponsorship, a great option for groups. The report cites benefits of co-leadership as disrupting the cycle of leadership burnout; advancing diversity, equity and inclusion; and supporting succession planning and gradual leadership transitions.
Policymakers are paying increasing attention to moving money faster. The report focussed on Government moving money faster but also says American foundations have been mirroring Government. There is greater support for spend-down approaches in addition to the models that give into perpetuity. In Aotearoa New Zealand we saw Government and philanthropy moving money faster after Covid hit and we are seeing it again currently with the North Island flooding and cyclone impacts. Spending down and moving more money faster makes particular sense in the climate action space given the urgency of effort required. This trend also covers off the pressure to give more, for example: the Giving Pledge that millionaires have signed up to; discussion around wealth taxes; and distributing a sufficient percentage of assets regularly.
An American trend is that the backlash against Environmental, Social and Governance (ESG) investing will affect the future of philanthropy and impact investing. ESG has led to an upswing in practices like impact investing, conscious consumerism and corporate social responsibility. It’s being scrutinised for instances of greenwashing, manipulation of ESG performance and is being criticised for amounting to ‘woke capitalism’. This is a learning space for all in Aotearoa New Zealand and having watchdogs to call out behaviour that doesn’t match the marketing is critical. We’re seeing more and more funders assessing the impact of their capital - ensuring that at the very least it’s not harming the planet and further considering how they can invest it for positive social or environmental outcomes.
Will philanthropy stay focussed on racial equity is a question the report asks given the sector’s agility and responsiveness to emerging needs. The downside of philanthropy being able to move quickly to meet new needs is that it can move on before sufficient gains in an area needing focus have been made. However the report is hopeful that the commitment to supporting racial equity is increasingly baked into the funding strategies of philanthropists and grantmakers. In Aotearoa New Zealand there is growing understanding of the need to fund the aspirations of Māori, Pasifika and other ethnic communities. There is growing action which needs to continue. Race is part of the wider equity lens being used to inform funding decisions.
The public is holding non-profits accountable to living their mission and values. In Aotearoa New Zealand this is supported by registered charities needing to publish data on the Charities Register. Complaints to the Charities Register are often reported in the media. Some could argue that charities are held to a higher standard than other types of organisations and are unfairly focussed on. While the report talks about community organisations, most institutional givers here are also registered charities and produce public annual returns and/or they publish information about their mission, values and implementation on their website.
More non-profits are moving to unionise. In America, the move to unionise amongst Starbucks and Amazon is being shadowed by a similar trend in the not for profit sector. Here we are seeing a focus on pay parity for workers in the not for profit sector versus Government, including the recent win for community-based social workers. We are also seeing a greater call for Government and non-government funders to adequately fund indirect costs - often called overhead or general operating costs – to ensure community workers have sufficient pay, support and good working conditions.
In America a negative trend is the lack of publicly available data about not-for-profits and funders. A lack of data is a huge issue here, with our official statistics system falling short of providing the required information, for example around levels of household giving or bequests. J B Were produces reports that provide statistical snapshots of the community and funding sector, but face data source issues. Deep pockets are needed to mine, analyse, and often produce estimates based on the available data, such as that produced through charity reporting mechanisms.
Philanthropy and grantmaking will always be dynamic in order to respond to a changing society and learnings around what works. 2023 will be no different as funders seek to make the greatest contribution they can to our country’s social, economic and environmental wellbeing.
We welcome those interested in keeping up with funding trends and how they are playing out in Aotearoa New Zealand to inquire about membership of PNZ. All types of membership provide access to the latest local and global research and thought leadership, while we also bring funder members together to share their experiences and learnings.
This year the theme for the Philanthropy Conference is Uniquely Aotearoa New Zealand. This event, the biggest get together of funders here, will discuss the relevant trends and hot issues this September 13th-14th at Te Papa. Visit www.philanthropy.org.nz or email info@philanthropy.org.nz.