own life, providing multiple pathways for change and improvement. From this standpoint, the roles of philanthropy, as defined in Chapter 1 and illustrated in Figure 6.1, are generally considered to be: reducing human suffering; enhancing human potential; promoting equity and justice; building community; providing human fulfillment; supporting experimentation and change; and fostering pluralism (Tempel 2003). These seven roles of philanthropy can be seen as interconnected pieces, at the heart of which is community.
FIGURE 6.1. SEVEN ROLES OF PHILANTHROPY
Source: Tempel 2003.
The Contemporary Challenges Philanthropy Faces
Philanthropy is not without challenges, critiques, and failures. The scale of philanthropy continues to increase in overall donations, in the number of registered nonprofit organizations, and in volunteer hours served (AmeriCorps 2018a, 2018b; Giving USA 2021; Urban Institute 2020). However, the percentage of Americans giving and volunteering is declining. Just over 50 percent of Americans give to charities, and rural and suburban areas are experiencing noticeable declines in volunteering (Grimm, Jr. and Dietz 2018; Zarins and Osili 2018). Fundraisers can keep abreast of these trends and new developments by consulting valuable references and contemporary reviews (see Powell and Bromley 2020, The Chronicle of Philanthropy, the HistPhil Blog).
American understanding of the sector as “nonprofit,” “voluntary,” “independent,” “third,” or “philanthropic” is relatively new. The sector was studied by the Commission on Private Philanthropy and Public Needs, which produced the Filer Commission report in 1975. The nonprofit sector was recognized as a powerful economic and social force with a close, yet sometimes adversarial, relationship to government.
Research reveals a long record of societal improvements through voluntary action, the numerous advances in health, education, civil rights, and the like (e.g., see reporting from Inside Philanthropy, The Conversation, Nonprofit Quarterly, and Philanthropy Roundtable's blog). It also has brought to light the reoccurring challenges philanthropy faces in the political choices of public and private approaches to addressing persistent social issues and inequalities. Challenges also occur when outcomes fall short of promises. Some critiques of philanthropy derive from the continued debate of the proper role of philanthropy in addressing the public good. Tensions are evident in the relation between wealth and power; in the balance between philanthropy's personal and public benefits; and in the power difference between donor and recipient. In addition, philanthropic action is challenged by desires for organizational and individual freedom and the public demand for transparency and accountability. Finally, perspectives vary as to whether philanthropic activity enhances or undermines democracy (Franks 2020).
These tensions are a reminder that philanthropic organizations themselves encounter difficulties. Although most organizations are genuinely focused on the social well‐being of many, some organizations experience teleopathy or the disease of purpose or mission (Payton and Moody 2008, 120). They may lose sight of their mission and focus on maintaining their existence, rationalizing and practicing in a corrupt manner, and finally, involving themselves in morally corrupt activities such as those of the Ku Klux Klan and contemporary hate groups.
The current context of increasing disparity in wealth, racial justice, devastating environmental disasters, and political division intensifies these longstanding questions around philanthropy and highlights hazards and failures. Fundraisers benefit from understanding the possibilities and the limitations of philanthropy in order to help their organizations navigate important philosophical and practical dilemmas. Before addressing the big questions facing philanthropy, it is important to understand the size and scope of philanthropy and the available data that will inform fundraisers' daily activity.
Size and Scope
Philanthropy and nonprofit organizations play a significant role in American society. The nonprofit sector grew in both numbers and finances from 2006–2016. According to the National Center for Charitable Statistics at the Urban Institute (NCCS Project Team 2020), approximately 1.54 million nonprofits were registered with the Internal Revenue Service in 2016, an increase of 4.5 percent since 2006. This number, however, understates the sector's size by not including nonregistered groups – namely, religious organizations and churches, which are not required to register, as well as small, mostly informal groups. Between 2006 and 2016, the number of registered public charities (501(c)(3) organizations) grew by approximately 20 percent to 1.08 million of the total. Among them, human services comprise the largest subsector (35 percent), followed by education (17 percent), and health (12 percent). Among the smaller subsectors, international/foreign affairs and environment/animals saw the largest growth rates in the number of organizations, increasing by 16 and 10 percent, respectively, during the same period.
Formal and informal volunteering helps nonprofits operate while furthering community building. In 2017, 30.3 percent of adults volunteered through an organization (AmeriCorps 2018b). Volunteers donate to charity double the rate of nonvolunteers, engage in their communities, talk more frequently to neighbors, and vote more often in local elections among other civic activities.
Volunteerism acts at the intersection of instrumental and expressive values of nonprofits. Volunteers provide program delivery and help with fundraising (instrumental); and they embody values like care, hope, and equity (expressive). These values represent a shared articulation of the community values of which the nonprofit organization is a part. Fundraisers have a particular responsibility to ensure that both the instrumental and expressive contributions of volunteers are recognized and remain central to the mission of the organization (Lu Knustsen and Bower 2010).
Turning from volunteerism to donating, Giving USA (2021) estimates 2020 total giving to be $471.44 billion, or 2.3 percent of GDP, a 5.1 percent increase in current dollars (3.8 percent increase in inflation adjusted dollars) over 2019 giving. Since the end of the Great Recession in 2009, the total growth in inflation‐adjusted giving is 37 percent for the 2011–2020 decade. In 2020, three of four sources of giving (individual, foundation, bequest) were at an all‐time high in inflation‐adjusted terms. These data reveal that giving by individuals is the largest share, nearly 70 percent. In 2020, individuals gave $324.10 billion. Individual giving and bequests when combined totaled 78 percent in 2020. Chapter 8 provides additional information about giving trends by subsector.
Finally, it is important to pay attention to donor‐advised fund giving (see Chapter 37) and online giving, including crowdfunding (see Chapter 24). Despite the global crisis, #GivingTuesday (2020) reported a 29 percent increase in participants (34.8 million people) and a 25 percent total giving increase ($2.47 billion compared with $1.97 billion in 2019). Multiple charitable crowdfunding platforms attract both individual and institutional donors including foundations and corporations (Bernholz, Reich, and Saunders‐Hastings 2015; Weinger 2016).
Giving USA and other specialized data sources on volunteerism, nonprofits, donor‐advised funds, online giving, and crowdfunding can empower fundraisers' work. Understanding national data can help fundraisers engage in meaningful conversations with staff and board members about key trends and assist in tracking, comparing, and contextualizing the organization's progress.
Technological and Educational Advances in Philanthropy Infrastructure
The nonprofit sector has grown significantly since the Filer Commission's report, in the United States and globally. Growth of the sector has occurred alongside the