The New Philanthropists

By staff September 1, 2006

Warren Buffett’s announcement last summer that he would donate three-quarters of his fortune, some $31 billion, to the Bill & Melinda Gates Foundation—already by far the wealthiest foundation in the United States—made headlines around the world.

But it didn’t surprise most philanthropy experts, who say it fits the new pattern of ultra-wealthy donors who are unwilling to leave everything to their heirs and who approach philanthropy with a businesslike disposition.

Like the Gateses, who saw a need to eradicate malaria and other widespread diseases in developing nations and created a foundation to tackle the problem, donors today have both the wealth and the will to participate “more directly and intensely” in philanthropy than their predecessors, says Dr. Paul Schervish, director of the Boston College Center on Wealth and Philanthropy, and a leading expert on philanthropic trends.

Sarasota last May to speak at its annual luncheon and to talk to nonprofit leaders about new trends in philanthropy. Named to the NonProfit Times list of the "Power and Influence Top 50” four out of the last six years, Schervish is widely published in the areas of philanthropy and the sociology of money and wealth.

In his Sarasota talks, Schervish emphasized that donors today want to get more out of life than accumulating wealth. “People are finding that philanthropy is a way they achieve self-fulfillment,” he says. “Philanthropy is not a selfless act, but selfish in the best sense, because it makes them happier and creates more happiness in the world.”

And many of today’s new donors want more control over their charitable dollars, he says—or they won’t give at all. “More people, at a younger age, for a longer period of their lives, with more energy, are seeing the entrepreneurial dimension of philanthropy as a way of doing the majority of their philanthropy, and wouldn’t be that active in philanthropy if they couldn’t do it otherwise,” says Schervish.

The effect is being felt in Sarasota, long regarded as a community of generous givers. “The older generation was happy to give money to institutions,” says Stewart Stearns, president and CEO of the Community Foundation. “Now, donors want to make a change, see that change. They want to make sure that, by golly, they are making a difference and get to touch and feel that difference.” As an example, Stearns cites one Community Foundation donor who visits daily the project he is funding.

Of course, that kind of close involvement can be both a blessing and a challenge. Schervish says the key for any donor is keeping the true needs of the organization and its beneficiaries front and center. “The new philanthropy can be demanding and domineering and stultifying; at the same time it can be lifeblood,” he says. “Money and great wealth is like fire; it can burn your socks off, or it can warm your toes.”

Today’s donors can also take advantage of innovative new ways to give that are funneling millions into philanthropy, says Daria Teutonico, director of new ventures in philanthropy for the Forum of Regional Associations of Grantmakers. Internet portals are one good example. With a click of the mouse, donors can access a number of different charities through single Web sites.

Giving circles are another innovation. A group of people with charitable inclinations gets together; each contributes the same amount of money, then they choose a recipient and award a grant. These circles can be as simple as 10 neighbors getting together for potlucks with $20 a month or a group of 400 that’s large enough to register as a 501(3)c nonprofit.

“[Giving circles are] a very attractive vehicle for women because of the sense of community, the impact, the educational aspect and the fact that the recipient is local,” says Teutonico. She adds that young people often prefer this approach to “giving to a bureaucratic organization.”

And then there’s SVPI, Social Venture Partners International, a Seattle-based organization that Teutonico calls “a giving circle on steroids.” It has affiliates around the country, and members give money, participate in workshops and training, and are matched with nonprofits that can suit their interests.

International giving is another important aspect of today’s philanthropy, says Teutonico. This country of immigrants remits $3 billion annually to family and causes abroad. After the tsunami of 2004, for example, a group of Venice Golf & Country Club families formed a company to rebuild an entire village in Sri Lanka. So far, 15 houses, a library and a community center have been built. While there’s not much research on the subject yet, there is talk in the philanthropic community about finding ways to harness those assets.

“Mainstream philanthropy often ignores [this component],” says Teutonico. “It seems like it’s growing. There’s debate about what’s happening, who’s giving.” Charitable organizations may need to change themselves to keep up with the changing motivations and approaches of their donors, but the experts agree that despite the challenges, the assets and enthusiasm of this new generation of givers is re-energizing the world of philanthropy and represents an immense power for good.

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