The Evolving Model of Philanthropy
Since its inception, the technological industry has transformed various aspects of society, ranging from shopping to media, and now philanthropy. A new generation of philanthropists have emerged from the technology and software industry, who, with their new money, are quickly changing the way charity is utilized in America. The growth of Silicon Valley has subsequently led to a growth in charitable giving — a new model of philanthropy. Speed, efficiency, and innovation are traits that startup culture prizes, all of which are reflected in this new philanthropic model. The Chronicle of Philanthropy approximates that out of the $33.4 billion donated to philanthropic organizations or causes in 2021, three-fourths of that came from the technology industry. As more tech giants continue to donate, urgency is created, and entrepreneurs continue to simplify and promote charitable foundations, positively reshaping the way charity is viewed.
Previously, industrialists Andrew Carnegie, Henry Ford, and John D. Rockefeller had built up modern day philanthropy by creating long lasting foundations. In contrast, the new wave philanthropists prize quick and efficient donations over meticulous planning and thought, unique compared to their older counterparts who were raised in a different America. This is why the donor-advised funds (DAFs) have grown to be increasingly prevalent over prestigious, paperwork-heavy foundations. DAFs — which serve as a savings account for donations — provide a quick and easy answer to the issue of inefficient charity. When donating to a DAF, donors essentially give up control over their money, but receive advice and help with the paperwork aspect of donations. This provides a straightforward alternative to foundation donations, which require detailed tax reports, and often a large staff to provide these reports. The National Philanthropic Trust estimated that from 2016 to 2021, assets in DAFs rose to $234 billion — a 170% increase.
Limited liability corporations (LLCs) provide another alternative for donors with a sense of urgency, despite not sharing the same tax benefits as DAFs and foundations. LLCs allow donors freedom to spend money on both charity and for-profit pursuits. Pierre Omidyar, founder of eBay, and Laurene Powell Jobs, Steve Jobs’ widow, use LLCs in their charitable giving. Jobs’s group, the Emerson Collective funds artistic projects, but also venture capitalist investments, such as in the Atlantic.
Additionally, technological developments have also allowed easier ways for the public to donate — no matter their income. Apps created by fintech firms allow individuals to intermittently set aside money to donate — microphilanthropy. This focuses on people who feel they do not have enough money to donate by making the donation process more gradual and small. Since the pandemic hit, online giving to nonprofits increased by 42%, according to the Blackbaud Institute. Through encouraging small, consistent donations, philanthropy has appealed to a new crowd of individuals, and is establishing itself as do-gooding for all.
This variety of simpler, quicker methods of giving provide donors with a multitude of options when donating money and have the potential to completely reshape our current philanthropic model. Not only are donations becoming quicker and easier, but charitable giving has appealed to a new crowd of people, and has the potential to grow even further.
