Connecting Family Philanthropy With Social Giving

A couple months ago, PhilanthroGeek founder Nathaniel James, ioby co-founder Erin Barnes, and I set out on a small adventure to answer two questions:

• How do we describe the new trends in social giving to the family philanthropy world?
• What do family foundations make of the opportunities and challenges in these trends?

I’m describing some results of our adventure in this post. Nathaniel and Erin will be adding their thoughts in future posts at PhilanthroGeek and elsewhere. For ease of writing, I’ll use the term “family foundations” to be inclusive of foundations, donor-advised funds, trusts and other forms of family philanthropy.

Framing “Social Giving” (vsn 1)

We started our adventure with the rapid rise of crowdfunding sites and grassroots giving circles. Both tools help donors of any means directly connect with and support ideas, projects, and organizations. Both tools allow donors and requesters to bypass traditional intermediaries ranging from record companies to community foundations. Not all raise money for traditional charitable purposes and very few crowdfunding sites are sponsored by charitable organizations.

The term “social giving” is sometimes narrowly used to discuss online fundraising. We purposely used a broader definition that emphasized the “social” aspect, as not all giving circles are online and both tools truly succeed when people reach out to their offline and online social networks to make great things happen.

Our overview of the field of social giving showed that the tools share three common traits and have at least four trends driving their growth.

Erin created a matrix of a larger variety of tools for giving, showing how they compare in the proximity of donors to recipients and how driven the tools are by technology.

Family Philanthropy’s Reaction (vsn 1)

Forty or more people attended our session at the 2013 Family Philanthropy Conference. They represented different generations and roles in family philanthropy. Few had direct experience with crowdfunding sites or giving circles.

After our overview of social giving and some quick case studies, we asked small groups of attendees to discuss how social giving trends and tools might complement or distract from their family philanthropy work. Discussion topics came from the National Center for Family Philanthropy’s Pursuit of Excellence framework for assessing family foundations:  legacy, vision, and mission; governance; family roles; program development and grantmaking; and finance, administration, and responsibility. You can download notes from their responses at the end of this post, but I wanted to comment on four reactions from the small groups.

“[We would] need assurance about proper due diligence and legal issues. This adds a layer of complexity to grants.”

Grantmaking – Every small group brought up challenges with supporting crowdfunded projects and giving circle award recipients that aren’t IRS-approved charitable organizations. Many projects provide community benefit, but create the burden of exercising expenditure responsibility. Crowdfunded support for small businesses, even socially-minded ones, likely don’t qualify as Mission-Related Investments, but this could change over time.  In the meantime, organizations such as ioby, Donors Choose, Global Giving, and Social Venture Partners’ chapters are public charities, providing easy testing grounds for grantmaking.

“[Social giving] can be a glue that brings family together – a family foundation exists for more than just grantmaking.”

Family giving culture – Most founders of family foundations want them to be tools that bind family together over time. Family foundations already use storytelling, family legacy documents, and other tools beyond grantmaking to build cultures of giving. Family offices and some family foundations will assist family members with giving beyond grants made by the foundation. Social giving tools can be a terrific means of family members discovering and acting on their philanthropic passions, either individually or in groups. And, because many social giving projects are short-term in nature, families can learn quickly from the experience and decide what did and didn’t work for their culture.

“[Social giving tools] meet Next Generation members ‘where they are’…They add new dimensions of giving from younger trustees.”

Trustee preparation – Attendees easily linked social giving tools to the interests and behaviors of young philanthropists described in the recent #Nextgendonors report. Family foundations often struggle with finding meaningful ways to involve teens and Millennials in foundation grantmaking processes. Involvement in a giving circle or crowdfunding campaign can be a valuable experiential learning opportunity. In a giving circle, a family member can learn about evaluating ideas, projects, and organizations without the pressure of conforming to foundation processes or parental expectations. Often, participants in giving circles lend expertise to grant or award recipients – another chance a for family member to practice volunteering or learn leadership skills. Foundations could encourage trustees to pitch their favorite giving circle or crowdfunding projects to other family members in an environment that would likely have lower stakes than pitching an official grant proposal.

“[Social giving is] a great way to bring family foundation work to the people, to make it understandable.”

Community relations – Welcome to the magic of crowdsourcing ideas. Nathaniel, Erin, and I hadn’t thought of this in our session preparation. A few years ago, the Philanthropy Awareness Initiative reported that 60% of people in community leadership roles felt they didn’t understand how and why foundations work. Only 15% could describe a foundation’s impact in their community. Everyday people presumably knew even less. In this era of government budget cuts and tax reform conversations, I think this lack of understanding can only hurt traditional foundations. (See my previous post on the topic). Family foundations could use social giving tools to learn about community opportunities, solve community problems, and provide financial support alongside everyday members of their communities. Family foundations have already been providing matching grants to encourage support of projects through ioby and DonorsChoose. And, the Geraldine R. Dodge Foundation seems to be the first foundation to have a curated page on the crowdfunding site Kickstarter.

Your Thoughts?

You can download our session handout (including the graphics above) here and a summary of the small group notes here. Erin, Nathaniel, and I would welcome your feedback:

• What do you think of our first stabs at condensing the key concepts into a couple graphics?
• How do you see social giving trends and tools complementing or distracting from your family’s philanthropy?
• Who do you think will be the first foundations savvy enough to include social giving tools as part of their family engagement and grantmaking work?

Feel free to reply to this post, email me, or reach us on Twitter at @tonymacklin1, @erinargyle, and @Pg33k.