How Philanthropy Might Surprise Us in 2023

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Even as many funders continue to portray their work as a site of innovative risk-taking and bold change-making, a gulf remains between that image and another equally deep-seated one — philanthropy as stodgy, risk-averse, even boring.

So which is it? The jury’s still out, but despite all the ways philanthropy lacks dynamism and fails to live up to its own best intentions, there’s still a lot happening right now. It wouldn’t be a stretch to say that philanthropy’s changing faster today than at any other point in living memory.

Much of that change tracks with the shifting contours of wealth in America. Rampant wealth inequality and a “new Gilded Age” have meant that mega-donors and mega-gifts are entering the scene at a faster pace than in the past, challenging the predominance of well-established private foundations. Meanwhile, evolving social justice critiques have led to a deeper acknowledgment of the power differential between funder and recipient — and to new giving practices aiming to address that imbalance.

We’ve also seen the rise of new giving vehicles like LLCs and donor-advised funds, along with more opaque giving and politics-adjacent funding on either side of the aisle — and in response, a chorus of calls to reform charitable tax law.

All of which is to say, the world of philanthropy still has a lot of surprises up its sleeve. Here are just a few ways — good and bad — philanthropy might surprise us in 2023.

Another company owner (or three) follows in Yvon Chouinard’s footsteps.

If the Patagonia founder had simply sold his company and made a big charitable pledge with the proceeds, he probably wouldn’t have been our Philanthropist of the Year for 2022. Chouinard clinched the title because he and his family did something truly risky and innovative with what they owned.

They decided to convert the company into a green funder by giving the for-profit vehicle a structural mandate to fund nonprofit causes. It’s a direct challenge to conventional wisdom about capitalist prerogatives and even, dare I say, to what it means to “earn to give.” While we won’t hold our breath, it would be a pleasant surprise to see some of our other corporate overlords take similar steps.

Another major mega-donor (or three) emerges.

This one is less of a surprise than an inevitability, at least over the long run. While MacKenzie Scott is the standout recent example, the ongoing accumulation of stupefying fortunes in the U.S. and abroad will mean an ongoing drumbeat of new mega-donor philanthropy to track.

More likely than not, any such emerging mega-givers won’t come out of the blue. Instead, most of them will have already dabbled with philanthropy and will decide to ramp things up. Michael Moritz and Harriet Heyman’s Crankstart Foundation is one example we’ve been tracking, as is Laurene Powell Jobs’ expanding giving. Especially in the case of a rocky stock market, it would be gratifying to see more such cases in 2023 as counterexamples to billionaires’ prevailing stinginess.

MacKenzie Scott engages more strongly with the structural challenges her grantees face.

There’s a reason we write so much about this one donor. What she’s accomplished so far is formidable, and her approach may very well influence how the entire sector evolves. In addition to the sheer scale of money moved, she has also boldly addressed her nonprofit recipients’ main challenge on the fundraising side — a lack of trust from funders.

But even as she strengthens her grantees, a case can be made that Scott hasn’t really tackled some of the key structural challenges making those grantees’ work so necessary in the first place. That is, she hasn’t given in a focused way to take on economic and political inequality, particularly in the U.S.

Scott may see that as requiring too much top-down, strategic positioning from the donor, which she seems determined to avoid. But given the fact that her fortune has dwindled substantially since 2020, it’s worth asking whether a more strategically focused approach might be warranted — if only to give the groups she’s already supported a more lasting leg up once she has spent down.

Another big scandal erodes the sector’s credibility.

And now for a negative one. It’s fair to say it surprised us all last year when former crypto wunderkind Sam Bankman-Fried lost his multibillion-dollar fortune and descended into ignominy in the space of a week. The FTX founder’s fall from grace made headlines for months, and so did what many cast as the downfall of the giving philosophy he espoused, effective altruism.

While EA will almost certainly survive SBF, the whole affair hasn’t been a great look for philanthropy, which already has a (sometimes well-deserved) reputation as a public relations tool for rapacious moneymen. Bankman-Fried may be an outlier for his sheer brazenness, but there’s enough shady dealing going on out there to give rise to another such scandal this year, and, fairly or not, indict philanthropy in the process.

More funders challenge the traditional dynamics of climate philanthropy.

Climate funders have long had trouble with risk-taking. That’s particularly problematic, given the fact that they’re taking on what’s likely to be humanity’s paramount challenge for the next century, if not centuries. Luckily, we’ve seen a year-by-year increase in philanthropic resources dedicated to the cause, a trend that seems set to continue as the global effects of climate change accumulate.

What we’d like to see, though, are more pointed efforts to challenge longstanding imbalances and inequities bedeviling the climate sector. For instance, organizations in the U.S., Canada and Europe continue to receive the lion’s share of foundation climate giving, even though the Global South is far worse positioned to endure the effects of climate change. And even as legislation like the Inflation Reduction Act underscores the centrality of policy and even political engagement, many funders remain unwilling to ruffle feathers in a field where urgency is of the essence.

More foundations embrace philanthropy’s risk-taking mantra.

Back in 2020, amid an escalating pandemic and sweeping calls for racial justice, many top foundations took the relatively unrisky risks of upping their payout rates, loosening grant restrictions, and generally thinking in a more expansive way about their role as civic sector actors. I say unrisky because, (1) everyone was doing it at the time, and (2) after a brief lockdown blip, a surging stock market meant these steps posed little threat to endowments.

It’s unclear now whether the 2020 moment was anything but a moment, both in terms of foundations’ long-term commitment to racial justice and their long-delayed journeys toward more equitable grantmaking procedures. As the philanthrosphere evolves, foundations’ continuing fealty to traditional “best practices” is looking more dubious by the day.

Especially given the fact that DAFs may be in the process of eclipsing them, it would be a nice surprise to see more foundations embrace that old “risk capital” mantra and buck the trend this year — be it on payout, trust-based giving, taking on difficult problems, you name it.