Worth Knowing: From Best Practices To Next Practices

In Search of Long-Term and Sustained Philanthropic Impact

This past decade has seen much public attention on philanthropy due, in part, to significant gifts by some well-known philanthropists — such as Warren Buffett — and some notable scandals. Even after the most significant economic downturn since the Great Depression, the U.S. "is still home to the most generous people who care and remain committed to supporting nonprofit organizations and the philanthropic world." In fact, in 2015, giving in the U.S. was estimated at $373 billion.1

While challenges over the years caused the field to focus on practices to improve the efficiency and effectiveness of philanthropy, current challenges require an even deeper demand of philanthropy's ability to address the most pressing problems of our time, amid continued economic uncertainty, government budget reductions and an increase in demand for services. Given these concomitant forces, it has been said that we are entering into a "new normal" that will force all of society to "manage more aggressively against scarcity," including philanthropy.2

This article addresses key practices that foundations would do well to focus on and incorporate in order to increase impact in the context of today's and the future's challenges.

AN AMERICAN TRADITION

Philanthropy has its roots in religious beliefs, and in values and principles of civic participation. Throughout history, civilizations have used personal resources to assist those who were less fortunate. Philosophies supporting civic participation and shared approaches to problem solving were readily embraced by early settlers of the New World — government was distant and weak, which forced settlers to join together and help each other to build community and support the public good. In 1630, John Winthrop preached "A Model of Christian Charity" to Puritans bound for New England, emphasizing the obligation of the rich to care for the poor, and the obligation of the poor to do the best they could.3

John Harvard's gift to the institution that now bears his name is considered one of the earliest philanthropic gifts in America. Harvard bequeathed £779, half of his estate, and his library of around 400 volumes to the new college in Cambridge, Massachusetts, upon his death in 1638. In 1639, the school was renamed Harvard College in honor of its first benefactor.

Fast-forward 150 years to 1789 when Benjamin Franklin set up a charitable fund with "a thousand pounds of sterling" (about $4,400 at the time) to benefit worthy young Philadelphia apprentices and to support worthy projects in Boston. The fund, a precursor to the current-day private foundation, terminated 200 years later, awarding over $2 million to charity.

In addition to wealthy individuals, persons with relatively little worth also shared their resources with others. In 1887, Denver religious leaders founded the Charity Organizations Society, the first United Way organization, which planned and coordinated local services and conducted a single fundraising campaign for 22 agencies. The first campaign raised $21,700. However, it was not until the Industrial Revolution, when many Americans amassed great wealth, that organized philanthropy had a significant presence. In 1911, Andrew Carnegie set aside $350 million in a fund to benefit charity; in 1913, John D. Rockefeller set aside $580 million, creating the first private foundation. These foundations, which were created before personal income tax deductions for charitable gifts were allowed in 1921, are still at the forefront of philanthropy.

1 Giving USA Foundation™ | Giving USA 2016. The Annual Report on Philanthropy for the Year 2015.

2 Rip Rapson, "What's Next: Philanthropy in an Age of Government Retrenchment," from Remarks at the Memphis Alliance for Nonprofit Excellence and the Minnesota Council of Nonprofits,
June 2011.

3 John Beardsley, "A Model of Christian Charity," by John Winthrop, 1630.

Institutional Investments & Philanthropic Solutions (Philanthropic Solutions) is part of U.S. Trust, Bank of America Private Wealth Management (U.S. Trust). U.S. Trust operates through Bank of America, N.A. and other subsidiaries of Bank of America Corporation (BofA Corp.). Bank of America, N.A., Member FDIC. Trust and fiduciary services and other banking products are provided by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A.

AR-ARYCKSQN-EXP-2018.03.23

42286FFD (JCF*******803)