Philanthropy is a common term these days, but do you know where the idea originated? The Greek playwright Aeschylus was the first to use the word, which means “love of humanity.” It has since come to be associated with donating to charity, especially charities that serve those in need.
Not long after the Industrial Revolution, the rise of manufacturing and new industrial processes allowed an unprecedented accumulation of wealth by merchants and other business people. Seeing many around them who had yet to benefit from this new dynamic, some of them took it upon themselves to help the people around them. They gave money to orphanages and soup kitchens and arts organizations and a variety of other causes.
One of the most famous of these newly wealthy individuals was a man named Andrew Carnegie. Carnegie is known for his success in the steel industry, but when he retired at 66 he began to donate generously to many causes. He began funding and establishing libraries throughout the United States, for a total of 2,000 in the course of his lifetime. Of the libraries constructed in America, a full 911 still serve as functioning libraries!
Philanthropy has continued to be a significant phenomenon throughout US History. In 2010, Bill and Melinda Gates joined with Warren Buffet to create The Giving Pledge, a commitment by wealthy individuals to give away at least half of their wealth to causes that matter. The pledge now boasts upwards of 170 billionaires from around the globe.
Why do foundations keep doing philanthropy?
So where does all of this goodwill and donation come from? Why do people, foundations, and even corporations give money to charity? It seems that many individuals and corporations who have come into some means feel a responsibility to their community. They want to leave a legacy of not just a successful business and all the positive impacts of that—jobs for people, good work that is done, the economic impact of successful business on a neighborhood and region—but also a legacy of benefiting the people around them.
In 2018, charitable giving by foundations rose to record levels, even when adjusted for inflation, for a total of over $75 billion dollars. Various sectors of charitable work receive different amounts of that giving, with environmental and international affairs causes seeing the largest growth in that year. This giving, joined by corporate and personal dollars, supports the 1.5 million nonprofit organizations in the United States.
Charitable organizations provide many services to society in a variety of areas. Environmental groups help preserve natural spaces and clean air & water. Education groups help bring students who are struggling up to grade level and give them the resources to be successful. Human services organizations feed, clothe, shelter, and train individuals who are hard hit by poverty and other difficulties. Arts organizations beautify cities and towns, draw tourism and outside interest, and connect people to their humanity.
This just scratches the surface of the impact that philanthropy has through the nonprofits it supports. That work is impossible without the contributions of thousands of foundations, corporations, and everyday people.
How is Philanthropy Done?
For many foundations, their philanthropic work will revolve around a few key issues. Most foundations and corporations pick several themes or categories that they contribute toward, such as education. These help direct the decision-makers and narrow their focus. Foundations have mission statements, and every dollar they contribute is intended to further that mission. Decisions are usually made by a foundation’s board of directors, assisted by grant management staff at the organization. Philanthropy involves multiple layers of accountability to make sure that funds are used for good.
Most foundations have a sophisticated grant management system. Nonprofits apply, certify that they are an official 501c3 organization, and provide information about their mission and programming. Foundation officials review applications and select the top candidates to present to the board of directors.
In recent years, the rise of Corporate Social Responsibility programs has demonstrated a change in the way philanthropy is talked about. Once only done by billionaires or their foundations, CSR programs have become a consistent way that corporations give back to their communities. Many corporations have formed their own foundations that function similarly to foundations created by wealthy individuals.
What is the impact on nonprofits?
Foundation and corporate support are some of the most important sources of funding for nonprofits. It allows them to do their work effectively, to expand their impact, and to fund staff time. For many nonprofits, foundation and corporate support are more efficient ways to get the support they need—one large grant request can go a long way while soliciting that amount in individual donations can take a significant amount of time.
Philanthropy form foundations and corporations can include monetary donations, volunteering, and even advocacy. Volunteering helps nonprofits expand their impact without costing more money, while advocacy and sharing the nonprofit’s message helps build awareness and expand the pool of potential donors. Most nonprofits have limited staff and money for marketing and awareness campaigns—helping with this is an often overlooked way to make a difference in your community.
Most of all, however, nonprofits rely on financial support. This pays for their programs, keeps their staff fed, and helps them to increase their impact through strategic planning. Of that funding, foundations and corporations only make up 29%—the rest comes from individual donations.
For nonprofits, corporate and foundation dollars can mean the difference between a growing impact and scraping by.
What is a philanthropy platform? Like many other areas, philanthropy and grant management weren’t the first to benefit from technological innovation. However, newer software options are available to help automate and streamline philanthropy and grant distribution. It’s important to find a solution that looks professional, is easy for nonprofit applicants to use, and that integrates easily with other tools you use at your organization. Here are eight of the best philanthropy platforms and some of what they offer:
Pros: DonationXchange allows for multiple user roles to streamline your administration and evaluation of applications, migration of past data into the platform to encapsulate all the information in one place, and direct ACH depositing of grants. On top of this, the platform allows instant 501c3 status verification, supports international grants, embedded application forms, and many other features. And don’t forget—DonationXchange offers employee engagement solutions as part of its platform. Allow your team to track their giving and volunteering, incentivize them to engage more, and see the impact on their engagement at work.
Cons: As one of the most customizable and versatile solutions on the market, DonationXchange really only has one flaw—you’re not using it yet.
Pros: One of the best-known solutions, Cybergrants allows you to integrate with your website, instantly verify a nonprofit’s 501c3 status, and create unlimited custom fields.
Cons: Unfortunately, with large name recognition also comes a significant investment—this solution involves both implementation costs and ongoing fees.
Pros: Flux allows grant payment scheduling, compliance checks, and an open API system if you have a developer on staff to integrate with other tools.
Cons: Unfortunately, Flux is not the most aesthetically pleasing solution and lacks some other communication and management features.
Pros: API ability allows you to integrate with tools like Salesforce and Quickbooks, along with easily customizable forms.
Cons: Some users have noted that Submittable does not allow multiple user types to review grants.
Pros: WizeHive is consistently praised as a simple solution with easy-to-build forms and customization options.
Cons: Each year of applications and grants is separated, which means separate logins and reporting every year a grant-seeker submits.
Smart Simple Grants Management
Pros: Smart Simple allows you to build workflows to automate your communication about reporting or other concerns after awarding a grant. The tool has a robust list of features and automation capabilities.
Cons: Some users have noted a steep learning curve and a need to have a developer on staff to implement most of the automated features.
Pros: SurveyMonkey Apply is very customizable with lots of training available. Users can even assume the role of someone applying to help troubleshoot and understand the process.Very customizable with lots of training available. Users can also assume the role of someone applying to help troubleshoot.
Cons: Users note that SurveyMonkey apply requires quite a bit of lead time to implement effectively. Quite a bit of lead time to implement effectively.
Pros: Fondant integrates with GuideStar to allow download of a nonprofit’s public profile into the application. You can set up access codes for some applications and assign specific evaluators, as well as allowing grant-seekers to copy answers from past applications.
Cons: Some users have found struggled with Foundant’s learning curve.
Corporate and foundation giving is vital to a healthy nonprofit sector in your community, which in turn helps the community be healthier, happier, and more successful. Find a platform that helps your philanthropy go even further!