This post was originally published by PhilanthroFiles, the Association of Small Foundations blog, on June 13,2013
Recently, I began thinking about major trends that will affect philanthropy in upcoming years. I concluded that the following five are likely to occur, and, if they do, they will change the face of American philanthropy forever. In fact, the fifth trend alone—the emergence of social issue-specific Super PACs—has the power to forever change the flow of philanthropic funds within America.
Briefly stated, the trends are:
1. Perpetuity and spending policies
More foundations will address, and many will liberalize, their perpetuity and spending policies. This will be caused by grantees’ greater current needs in light of reduced government spending.
Also, perpetuity is based on a blatantly false assumption: that the current U.S. tax laws—including foundations’ annual 5% payout requirement—will last forever. There is no question that these tax laws will change sometime in the future. We don’t know how or when, but we do know that they will.
2. Alternatives to grants
More foundations will move from just making grants to using their funds in new and potentially more effective ways, including engaging in for-profit activities that serve their goals (e.g., social enterprises, impact investing) and devoting substantially greater funds to advocacy activities, which can often have a far greater payoff than grants alone.
3. Corporate giving
The near future will see new and expanded roles for corporate foundations and corporate philanthropy. The Council on Foundations has recognized this and issued a comprehensive report on corporate activities and involvement. All philanthropic groups should address this major trend within their unique strategic frameworks.
There are amazing philanthropic projects occurring throughout the nation. Yet, organized philanthropy is still well behind the curve in its processes for the acknowledgment and ready replication of such projects, a step that is both cost-effective and essential for impact.
5. High net worth individuals and “SISPACs”—the most important trend of all
In the same manner that foundation trustees will use more non-traditional methods to effectuate social values, so will high net worth individuals and families. One driver may be the limits on charitable deductions proposed by some politicians. Another may be the potential for impact.
To start, these individuals may copy foundations and invest in social enterprises, use impact investing, and use traditional advocacy. In addition, and more importantly, high net worth individuals and families may create well- funded social issue-specific Super PACs (SISPACs) to further their goals.
The use of a SISPAC has not yet occurred to any significant degree, but is a logical evolution of the Super PAC trend. A SISPAC would be created under IRS Code Section 501(c)(4); thus, money given to a SISPAC would not be deductible. Yet, there are many other reasons why SISPACs are likely to arise.
For example, a SISPAC could be created to further preschool education, to address child abuse, or to champion specific environmental issues. Another SISPAC could be created to fight obesity and encourage healthy eating. Can you imagine a watchdog group—well funded and ready to flood the media with political ads—insisting that a certain Congressperson or Senator take action to fight obesity? Such a SISPAC could possibly change the world—or at least have greater impact than simply making a donation to an anti-obesity charity.
In the last election, a Super PAC allegedly donated millions to political campaigns based on one issue: Iran’s nuclear program. Certainly, many other social issues are worthy of such political concern.
In short, SISPACs could have an astounding effect on philanthropy, national discourse, and, ultimately, national and state policies on many major issues.
To best serve our nation, philanthropy must appropriately consider and address all major trends, including those noted here. Whether my predictions are right or wrong, it will be very interesting to see how philanthropy progresses in the next few years.
ASF member Floyd Keene is president and founder of The Triple EEE Foundation in Deerfield, IL, and secretary of ASF’s board of directors. He received his bachelor’s and law degrees from the University of Wisconsin and, before leaving the business world, was a senior executive at Ameritech, a Fortune 500 company. He is a strong advocate of impact investing, and his foundation’s assets are currently 100% impact invested. Follow Floyd on Twitter @EEEFoundation.