Philanthropy officially started in the US around the time of the Civil War, when the concept of charity evolved from being a disconnected effort by religious groups into a more structured, modern business like the way it is today. This change occurred largely because of the metamorphosis of charities’ objectives. Where they once focused solely on solving the immediate problems of the urbanized poor, they evolved into a more visionary, global outlook. This had a huge impact on the types of donors, as well as their methods of giving.
Modern grantmaking was founded on the large-scale donations of a few wealthy individuals and families who made their wealth during the late 19th and early 20th centuries. Their money came from the steel, oil, railroad, telegraph, and automobile industries. Americans, in general, contributed $400 million in gifts and dues to the Red Cross throughout the duration of World War I. This massive effort was the birth of peer-to-peer grassroots fundraising, as well as the beginning signs of the democratization of giving. The 20th century brought with it collective giving by citizens and communities instead of just large corporations. It was no longer just the wealthy aristocracy who took part in philanthropy – the ordinary person now had that right. The 1917 law that decreed charitable gifts to be tax deductible was another incentive to get people on board.
Nowadays, the way we give is also evolving because of several factors. Technology makes it easier than ever to launch social campaigns to friends or family, and they have the instant option to donate online with the push of a button.
People who feel strongly about making a difference in the world are participating in impact investing. They are the perfect demographic for companies with a progressive mission. Millennials, in particular, are a current donor base abiding by this methodology. They want to see a viable return on their investment, both financially and socially. In addition, the due diligence being undertaken by prospective donors is now commonplace. People want to not only be more intimately involved with a cause, but they also want to ensure that their money will be dispensed in the most appropriate way. The advent of technology has made it relatively easy for any citizen to investigate any organization.
Changes in tax laws have created new potential drifts in annual giving. One trend to watch for is called bunching, which means donors combining multiple years’ worth of giving into one bundle in order to benefit the most from updated tax deduction laws.
Ultra-philanthropists, or Mega-donors, are also on the rise. Approximately 30% of all charitable donations will be given but the top half of the top 1% of our population in years to come. The areas that will benefit the most from this sort of philanthropy will be education and health care.