Environmental Scan: Drivers of philanthropy

December 9, 2019|CHEST Physician

Philanthropy is a driving force supporting and promoting pioneering research and programs in many fields of medicine. Charitable giving, foundation support, and grants touch the lives of millions of patients and also have an impact across all fields of practice of medical practice. But philanthropy is being transformed by changing technology, interests of the giving public, and demands for accountability and transparency. Understanding where these trends are going will give physicians insights into what they can expect from philanthropy and what it might mean for their own institutions and interests.

Four factors stand out as most likely to have a significant influence on philanthropy decisions in the coming years include advancements in technology, ability to make an impact, accountability, and the recent tax reform laws. Donors want more information and more options for giving. They want to know how their dollars are being used and the impact of their donation. Individuals donate to causes and organizations that are important to them and reflect their values. In addition, what motivates Baby Boomers and Gen Xers to give frequently differs from what factors into the decision of Millennials.

In 2019, Charity Navigator reported total giving to charitable organizations was $427.1 billion, 0.7% measured in current dollars over the revised total of $424.74 billion contributed in 2017. Yet adjusted for inflation, overall giving declined 1.7%, primarily because individual giving declined. Foundation giving increased by an estimated 7.3% over 2017, to $75.86 billion in 2018 (an increase of 4.7%, adjusted for inflation). Giving by corporations is estimated to have increased by 5.4% in 2018, totaling $20.05 billion (an increase of 2.9%, adjusted for inflation).¹

Impact investing, transparency, and trust

The demand for increased accountability in philanthropy is growing. Today’s donors want to know their contributions will have a real impact in causes they believe in. As donors become more focused on results, organizations will need to demonstrate their ability to achieve short-term goals that bring them closer to accomplishing their mission and vision. This sentiment may be strongest among Millennials. Nonprofit organizations should expect an increased level of due diligence and a higher level of personal involvement by donors. At least 41% of donors have changed their giving because of increased knowledge about nonprofit effectiveness. Foundations and corporations donate to medical centers and research institutions, but recipients are have an expectation of close involvement of donors, the need for detailed accounts of how funds are spent, and a responsibility to show progress or measurable outcomes.²

Health care–related issues

Two of the top three issues identified by donors as a challenge to be addressed are related to health care, according to Fidelity Charitable. Thirty-nine percent identified “developing treatment or cures for a disease” and 33% cited “access to basic health services” as priority issues. A study by Giving USA estimated that charitable giving to health care organizations rose a strong 7.3% (5.5% adjusted for inflation) in 2017, but giving that year was fueled by a booming stock market and a favorable tax environment. Charitable donations to hospitals tend to reflect the economic health of the community in which the institution is located. Donations to rural hospitals in depressed communities are likely to be far less than to urban institutions in economically strong areas.³