Seven new trends shaping philanthropy

The stark poverty in England’s industrial revolution: In historical terms, philanthropy was a response to these inequalities. By philanthropy, we mean a strategic, long-term approach to giving for social and environmental issues.

Today, social and environmental concerns remain at the heart of philanthropic endeavours. But new fields of activity are becoming more important, and in many areas, the practice of philanthropy is becoming ever more sophisticated. Wealthy families are recognizing the advantages of having professional philanthropy advisors to help guide them through the myriad choices they face, and ensure they can maximise the positive impact of their wealth.

An evolving sector with shifting trends

Philanthropy isn't static. It is growing and evolving as the range of areas in focus expands in line with social and environmental changes. Based on their extensive combined expertise of over 65 years and their connections across the globe, the LGT team advising on philanthropy expects the following seven trends to shape the future of giving.    

1. Growth, but not in a straight line: While philanthropy is growing globally, the Covid-19 pandemic did not create a permanent uptick in giving. Although there was a significant increase in 2020, the year of the global health crisis, initial reports for 2021 and 2022 suggest that the growth rate seen in 2020 has not continued. After an abundant 2020, there seems to have been a “hangover” effect and giving has returned to pre-pandemic levels.

2. Increased collaboration: Collaborative philanthropy is on the rise, especially co-funding and pooled funds. Collaboration, and the synergies that come with it, allows for greater impact and shared accountability among funders. Since more than half the world’s foundations hold less than USD 1 million in assets, collaboration is an attractive way to increase effectiveness – although it requires time and effort, and needs to be resourced accordingly.

   

3. Blurred boundaries: The lines separating traditional philanthropy, impact investing, venture philanthropy, and philanthropic investment are being blurred. Philanthropic and business practices are increasingly converging, potentially redefining the expectations of donors regarding the returns on their contributions.
    
4. Systems, not symptoms: So-called systems-changing philanthropy is gaining prominence. This is an approach that advocates tackling the root causes of problems rather than just fighting the symptoms. This trend is supporting greater understanding that even relatively small-scale philanthropic capital can sometimes help to influence other forms of capital from governments and businesses.
    
5. Racial and gender equality: Philanthropy is also undergoing a reckoning with the power dynamics inherent in giving. Themes including racial and gender equality, trust-based philanthropy, and the trend towards localization are gaining traction. However, the extent to which these concepts are practised varies and continues to evolve.
    
6. Next-generation and women funders: Next-generation donors and women funders are emerging as pivotal players. Their greater focus on purpose-driven businesses and impact investing is likely to reshape the philanthropic paradigm.
    
7. Climate lens in focus: Only a few foundations focused on the climate a decade ago. Today, climate change is a major concern for many. Similar to the evolution of the so-called gender lens, a "climate lens" is increasingly being applied not just to philanthropy but also to investments.

Look out for systems-changing philanthropy

Commenting on the trend towards systems-changing philanthropy, Katherine Milligan, a Director at the Collective Change Lab, added that she sees this as one of the most important trends for the next decade. “There are many more discussions now about systems change philanthropy, and generally it’s not about whether or not we should, but rather about where we can have the greatest leverage.” 

A social entrepreneurship expert with a distinguished career in foundation and non-profit executive management, she has published several articles and publications on social innovation, impact investing, and systems change, advocating for more transformational ways of working together for systemic solutions to social problems.

Bringing families together

While philanthropy has traditionally been seen as a unidirectional endeavour, it’s increasingly recognised that philanthropy can have an impact not just on the recipients, but also on the donors who want to be part of the solution. A philanthropic project involving several generations can be a real asset, bringing families together and offering a blueprint for other family matters, such as succession planning.

While the nuances of philanthropy keep evolving, the intrinsic benefit it bestows on those who engage in it remains a constant. So whatever industry trends may come and go, it's comforting to know that some things will always stay the same. 
 

About the authors

Nina Hoas and Silvia Bastante are global philanthropy experts with close to 25 years of experience. They are advisors at LGT Philanthropy Advisory since 2021.

Nina Hoas

Silvia Bastante