It comes as no surprise that philanthropy has taken a leading role as we navigate the unpredictable challenges that come with a global pandemic and climate change. In fact, the one thing that grows with certainty every year is the opportunity that comes with increasingly generous and purpose driven philanthropists looking to make an impact in a world that needs their help.
But how do philanthropists focus their efforts when there is so much to be done?
Over the last decade, philanthropists have rightly become more impact-driven, looking to set clear objectives and gather proof of impact. Collaboration has increased – and we have seen the rise of public-private partnerships. Influenced by the UN Sustainable Development Goals (SDGs), people have been focusing more on issues rather than location, and we have seen the rise of big-ticket-donors. At the same time, we have seen philanthropy become more accessible to the greater public and with growing interest in topics related to climate change and biodiversity
We believe philanthropy is entering a whole new era and we are excited about the new year ahead. So, what will 2022 bring? Which trends will shape the philanthropic landscape? And, what else will it take to reach the SDGs?
Let us share the trends that we believe our clients and philanthropists will be focusing on:
Trust-based philanthropy is rooted in values that help build mutually accountable relationships – similar to the way management teams often work towards shared objectives. The pandemic has accelerated the way philanthropists operate. Working within the context of a crisis, they have had to demonstrate more flexibility and trust vis-à-vis the implementing-partners – giving partners more leeway in how they are spending their grants. Thanks to high-profile philanthropists like MacKenzie Scott trailblazing the way, we believe that this trend is here to stay and that we will see more philanthropists following this movement.
How can philanthropists unpack the myriad of issues they are concerned about and make the choices about where to focus their efforts? Given the interconnectivity between many of the issues, philanthropists can choose to add an extra lens to their giving without losing the focus for the issue they care most about – addressing several issues at the same time. Adding lenses, like gender equality for example, allows philanthropists to improve educational outcome and address gender-related issues topics like menstrual health, prevention of violence against girls, forced early marriage in the context of their education intervention. Think of a gender lens as putting on spectacles. Out of one lens of the spectacles, you consider access to education as necessary to improve lives of marginalized children. Out of the other lens, you recognize that unless you also tackle the socio-economic challenges faced by girls and women you cannot achieve this. Your vision is optimum only when it is the combination of what each eye sees.
Adding a lens not only means tailoring the intervention, but also setting up specific key performance indicators to measure how impactful their programs are on both education and interconnected issues within that setting, such as girls, people with disabilities or climate for example.
The world’s issues are too big and too complex for one person to address alone. In the last few years, we have seen different groups of stakeholders coming together to build strategic partnerships, address issues jointly or pool their resources. One way to do this is through collective giving circles, which allow like-minded individuals to pool their time, resources and knowledge to focus on a topic that jointly concerns them. We expect that this type of philanthropy will continue to grow as the big numbers are mobilized, important connections made and proven successes are realized – inspiring others to put their egos aside and team up.
While it is crucial to attract more capital to address social and environmental issues, deploying it effectively and more sustainably is equally essential. This has led to the development of blended finance approaches where the borders between the investment and the philanthropy worlds are blurred. Social finance, for example, is an approach to investment that focuses explicitly on generating (social) impact. It incentivizes and rewards the delivery of results, thereby putting impact first. Its rise is driven by the growing recognition that in order to solve the world’s most complex and intractable social and environmental challenges, a stronger focus on impact is required from investors. This requires tackling root causes, putting the benefit to the individual at the center of solutions, focusing on a rigorous and transparent measurement of results, and helping impactful local models become financially sustainable. For even greater impact, social finance can foster new partnerships with private investors to grow the funding pool available to scale and catalyze impact-oriented innovations.
Philanthropy has seen an acceleration towards more diversity, equity and inclusion. We've seen more diversity among professionals in the philanthropic sector between 2018 and 20201 – including more women leading important philanthropic efforts and talent from minority groups and overlooked communities being better represented at the table where grants are being made. This effort towards more inclusiveness is changing power and interpersonal dynamics, and is calling for more self-reflection by the organizations, their boards and management about how they do their work, where and with whom. Ultimately, we can expect more people to confront their biases and make sure innovation in problem-solving is maximized through diverse talent applying their experiences and perspectives in tackling philanthropic issues.
Social justice and climate philanthropy focuses on addressing the root causes of social, economic and environmental injustices. In an era where we see social justice movements blossom, in the image of #BlackLivesMatter, there is a growing awareness and interest in addressing inequalities at its root cause – including tackling systemic racism. In philanthropy, this translates into the emergence of funder affinity groups, which promote movement building and the idea that different forms of disadvantage and discrimination combine or overlap (intersectionality) and focus on power to influence a deep change in our society.
Likewise in the environmental space, we predict the momentum created by big ticket philanthropists and the commitment of new organizations such as the Bezos Earth Fund will continue to grow sharply. According to ClimateWorks, funding toward climate change mitigation in 2020 was estimated to be around 2% of global giving ($6 billion to $10 billion out of $750 billion in total philanthropic giving). While overall philanthropic giving grew at 3%, climate funding grew by 14%1. Unexpected pledges from the private sector in the image of the Glasgow Financial Alliance for Net Zero (GFANZ) group, which announced over $130 trillion commitment towards net zero from financial sector will further accelerate these figures.
With the rise of inequalities and the current social unrest, and the scale and urgency of climate issues, we expect more engagement in these spaces as a crucial lever to meet the SDGs. These topics will require a close collaboration between government and the private sector – but also for philanthropists to collaborate and deploy catalytic funding for the private sector to scale it further.
Whether we like it or not the world is evolving fast and the advancement of technologies, like Artificial Intelligence (AI), will have an impact on the philanthropic sector. It will surely bring positive solutions like helping leverage the massive proliferation of data for more effective programs and grant making. But it will also bring challenges, like answering ethical and regulatory questions or addressing concerns on cyber security. A recent study showed that AI can enable the accomplishment of 134 targets across all the SDGs, but at the same time it may also inhibit 59 other targets2. It is important that the non-profit sector gets a grip on this growing field, takes a seat at the table, and explores how technology could enhance its impact. With the new generation of tech entrepreneurs and companies getting engaged in philanthropy, we can expect an acceleration of the developments in this space.
New generations are very keen to become active agents of change – through the way they consume, the work they do and how they give and invest. Increasingly, our work with Next Gen clients shows a strong demand towards demonstrating their impact by gathering evidence, leveraging the power of their networks to raise awareness – including using social media, and further aligning their investments and lifestyle with their purpose. Ultimately, we see a much more holistic approach to impact – and we believe this is here to stay.
Money can often divide families. Creating harmony is an essential component of successful and enduring systems. More and more wealthy families leverage their philanthropic engagement to bring and keep the family together, gathering members around a common project, or letting different family members take an active role in the family system. Family philanthropy engagements are also used for educational purposes to prepare the next generation for greater responsibilities and to transmit core family values. With an estimated $30 trillion expected to be passed down from baby boomers to Generation X to Millennials over the next 30 years3 carried by the next generation, we expect family philanthropy to continue to strengthen over the next years.
Philanthropy has always been associated with the notion of legacy. In the past, it was mostly about making money, giving some away during their lifetimes, with the bulk being left to build perpetual philanthropic structures through inheritance. Today, we see that people prefer to give from a ‘warm hand’ and try to actively solve some of the world’s issues in their lifetimes – leading also to the rise of ‘super-donors’ and ‘big-ticket' philanthropy. With the urgency to find solutions to some of the biggest problems of our times, we can expect more radical and well-resourced philanthropy in the coming years.
At UBS we have been working with philanthropists for the last 20 years – enabling our clients to find their purpose and drive positive change.
1 CHANGE Philanthropy (2021) The 2020 Diversity Among Philanthropic Professionals Report
2 Vinuesa, R., Azizpour, H., Leite, I. et al. The role of artificial intelligence in achieving the Sustainable Development Goals. Nat Commun 11, 233 (2020). https://doi.org/10.1038/s41467-019-14108-y
3 1 Skinner, Liz. “The great wealth transfer is coming, putting advisers at risk.“InvestmentNews. July 13, 2015. Web. https://www.investmentnews.com/article/20150713/FEATURE/150719999/the-great-wealth-transfer-is-coming-putting-advisers-at-risk. Date of Access: 10/10/2017.
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