According to the Chronicle of Philanthropy, 75% of the $33.4 billion donated to charity in 2021 by the wealthiest donors came from the tech industry. How that money is being managed and pushed out for greater good is changing as fast as the tech world itself.
According to a recent article in The Economist (“Giving 3.0-How a Tide of Tech Money is Transforming Charity” 2023/02/09), the culture and worldview of giving is evolving. In the past, foundations were created to distribute funds for decades to come based on the funding priorities of the founding individual or family. Tech-minded philanthropists want to be nimble and make an impact that cycles in seconds, sometimes pledging monies in “giving circles” that eliminates the typical governing structure of a charitable foundation or trust.
“This sense of urgency is bolstered by peer pressure and competition. Silicon Valley is brimming with ‘giving circles’ and educational programmes (sic) that get would-be donors together. Public declarations are popular, and evangelists are not shy about recruitment. David Goldberg, the chief executive of Founders Pledge, says he physically walks entrepreneurs into the corner of the room at parties, registration papers in hand.” (The Economist)
This model is the foundation of Trust Based Philanthropy, in which philanthropists trust that organizations are great at what they do, and subsequently get their money in the right hands sooner rather than later. The elimination of lengthy processes and procedures is appealing to “techies” who exist in a world built on nanosecond life cycles.
Setting up an LLC whose sole purpose is to move money into philanthropic projects is another model that, though without the tax benefits, allows for the freedom to invest or spend, combining for-profit projects with charitable ones. Referenced in the Economist article is Laurene Powell Jobs, the widow of Steve Jobs, whose Emerson Collective has a number of art installations as well as a venture capital arm.
So, how do nonprofits react to these changing donor behaviors? First, pay attention to what is happening outside of traditional foundation philanthropy circles, Second, don’t overlook the impact new tech talent can bring to board membership and fundraising.