TL/DR –
The distribution of wealth in the United States is shifting, with a growing number of billionaires and high-wealth households. This is leading to an evolution in philanthropy, with collaborative funds increasing in prominence. Collaborative funds are expert-led entities that pool philanthropic resources from multiple donors; they can enhance effectiveness, improve efficiency, and encourage community engagement among donors, but are often underutilized due to strategic, relational, and tactical barriers.
Changing Dynamics in Wealth Distribution Impact Philanthropy
The landscape of wealth in the United States is rapidly shifting, with implications that significantly affect philanthropy. Today, the U.S. has nearly 1,000 billionaires out of a global count of around 3,500. The number of households with net assets exceeding $100 million and $30 million stands at around 74,000 and 430,000 respectively. Notably, an estimated $124 trillion is set to change hands, moving from older to younger generations within the next two decades.
Collaborative Funds: A Growing Trend in Philanthropy
Despite the complexities of this evolving wealth pattern, a common area of interest has emerged among practitioners – the potential of collaborative funds in the new era of philanthropy. Collaborative funds are expert-led entities that pool philanthropic resources from multiple donors. Their rising popularity could be attributed to several factors, such as the adoption of leaner staffing models, increased use of non-foundation vehicles like donor-advised funds, and the influence of philanthropic entities like the Gates Foundation, Bloomberg Philanthropies, Blue Meridian, and The Audacious Project. Furthermore, the COVID-19 pandemic may have accelerated this trend, with a significant increase noted in 2020. The Bridgespan Group survey data indicates that the majority of over 300 collaboratives were launched within the last decade; currently, there are over 500 collaboratives in existence.
Collaborative Funds: An Underexplored Asset
Despite their potential, collaborative funds still remain an under-tapped asset class in most donors’ portfolios, with large, institutional foundations predominantly providing support. A new report titled “Collaboratives as a Philanthropic Asset Class” argues that the time is ripe for every donor—from billionaire philanthropists to everyday givers—to utilize collaborative funds in their giving.
Collaborative funds at their optimal performance allow donors to progress further, faster. They enhance efficiency by enabling donors to delegate to established experts instead of building new in-house teams. With their specialized field knowledge, skills, and relationships, collaboratives boost effectiveness and deepen engagement by creating spaces for donors to learn together, build trust, foster mutual accountability, and cultivate community with peers and change agents.
However, donors face recurrent barriers in utilizing and adopting these funds. These barriers can be strategic, relating to gaps in understanding how collaboratives work and amplify impact. They can also be relational, rooted in trust and collective decision-making issues. Additionally, tactical barriers exist, including the difficulty in identifying, vetting, measuring the impact of, and distinguishing among existing funds.
The Future of Collaborative Philanthropy
It’s important to note that not all collaboratives achieve their potential. Alison Powell, in her 2019 report, “How Philanthropic Collaborations Succeed, and Why they Fail,” sheds light on how collaboratives can stumble if they fail to align their goals, translate those goals into time-bound milestones, and develop the right supporting infrastructure, among other challenges.
In the face of these challenges, the current moment offers an opportunity for philanthropy to extend and improve its collaborative work. Today, the issues we face are intricate and require multisectoral solutions. While wealth is accumulating among the ultra-wealthy, a diversity of approaches to philanthropy is emerging. Despite this, the idea persists that each philanthropist must figure out how to proceed alone.
Contrarily, collaboration is viable for every type and size of donor. The diversity of approaches and donor motivations is exactly why collaborative funds are viewed as a promising philanthropic asset class. The maturation of this marketplace requires self-aware donors, an evolved approach to diligence, and a functioning, comprehensive, friction-free marketplace for finding collaborative funds.
There’s no shortage of philanthropic collaboratives in existence where money is flowing and donor incentives are aligned towards specific and lasting impact. Nevertheless, if donors cannot find or easily differentiate among collaboratives, obliging funds to find donors individually, the old-fashioned way, this funding method will remain niche. Therefore, it is imperative to build the infrastructure to maximize the opportunity collaboratives provide.
The future of philanthropy is expected to be defined less by individual donors and more by networks of donors aligning capital, expertise, and learnings towards shared, bold goals. The next era of philanthropy could well be defined by the collaborative fund: groups of donors investing in groups of organizations driving impact. For funders standing at this junction, the invitation is clear: Step in, join forces, and help shape the future of giving together.
Kimberly Dasher Tripp is the founder and principal of Strategy for Scale, where she works with donors on strategy, specializing in activating donors new to philanthropy.
Alison Powell is a partner in Bridgespan’s San Francisco office, where she leads Bridgespan’s collaborative philanthropy practice.
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