The global economy is still recovering from the pandemic, and in the United States, the “unprecedented times” have shifted the mindset of donors and the landscape of philanthropic giving. In 2020 and 2021, Americans were more generous than ever before, stepping up to fight racial inequality in the aftermath of the murder of George Floyd in 2020, and more recently, directing funds toward climate change mitigation and support for the victims of the war in Ukraine.
The U.S. continues to be the largest source of charity in the world, and without the social safety net that other countries offer, philanthropy is critical to provide support at all levels of society. In 2021 total charitable giving, according to Giving USA, was nearly $485 billion, with about two-thirds coming from individuals, 20% from foundations and 4% from corporations. For European organizations looking to enter the U.S. market, there are a few key trends to understand as you decide where to direct your efforts.
1. A prioritization of diversity, equity and inclusion
A 2021 survey of foundation professionals conducted by the Hewlett Foundation found that diversity, equity and inclusion (DEI) has emerged as the top issue for U.S. funders. When the study was administered in 2016, DEI did not even make the list of top issues of interest among foundation staff. A shift in national attention to social justice issues combined with internal and external pressure to change practices has brought DEI to the forefront for funders among a concern that they are seen as lagging in their commitment to equity. Funders are intentionally seeking out knowledge from BIPOC leaders internally and on the ground and turning to implementation partners for resources on how to be more equitable, both in their own organizational leadership and in their grantmaking. It is an opportunity for nonprofits to influence funders to create change and one that organizations entering the U.S. market should be prepared to discuss with foundations, corporations and individual donors . For global nonprofits, DEI may look different in your country, but the concept of inclusion is universal, which will be important to keep in mind when you translate your work and programs to communities in the United States.
2. A focus on transformational gifts
MacKenzie Scott’s name seems to be at the top of every organization’s prospect list. It is no doubt that she has changed the philanthropy sector since she signed on to The Giving Pledge in 2019. Scott and other megadonors, like Jack Dorsey and Michael Bloomberg, are giving away billions of dollars outside of the traditional grantmaking model. They are bypassing the bureaucracy and traditional processes that have been in place for decades in favor of direct payments to the charities of their choice. The gifts are transformational to the organizations that receive them, and better yet, the recipients did not have to endure arduous grant applications and years of networking to be awarded the funds. Megadonors like Scott and Dorsey are putting their money directly into the hands of organizations who are aligned with their personal values. For organizations looking to draw attention from high net worth donors to receive transformational gifts, they should position themselves to be visible by making sure your organization’s website is innovative and up to date, and all financial documents are easily accessible.
3. A shift toward trust-based philanthropy
As organizations contemplate entering the U.S. market, it is useful to know that grantmakers in the U.S. have become increasingly cognizant of the power dynamics in philanthropy. Many foundations are adopting trust-based philanthropy, a method of addressing and changing power imbalances between foundations and nonprofits, to increase transparency, guide their giving and understand the nonprofit landscape. This structure, which empowers nonprofits to be the experts in their issue areas, allows for more giving that is responsive and accountable to the communities it serves. A few examples of the grantmaking principles of trust-based philanthropy that foundations should adopt include giving multi-year grants, streamlining or simplifying grantee paperwork or providing support to a grantee beyond just sending a check. This change in perspective reflects on traditional power relationships and moves to center social, political and economic equity as the fundamental framework for open dialogue and building trust in relationships between funders and grantees.
So, what next?
The philanthropy sector is more sophisticated than ever, which means organizations need a more sophisticated office to succeed. There are 1.8 million nonprofit organizations in the U.S., and if your organization is not structurally sound or set up well, you might not be able to keep up with competitors. In Washington, D.C., alone, there is one nonprofit for every 86 residents. Your organization may deliver services that are beneficial to society, but great programs and service delivery are not enough to predict success.
The U.S. market, as the largest source of philanthropy in the world, presents a chance for global nonprofits to expand both their partnership base and revenue. While entering the U.S. market might be daunting, Global Impact offers many products and services that can help make inroads into the U.S. market including fiscal sponsorship and fundraising advisory support. In 2021, Global Impact raised $18.7 million for our Charity Alliance partners in public and private sector campaigns. Whether you are just getting started or your organization is already set up to receive donations in the U.S., our team can help – Global Impact’s robust services make it easy to maximize sources of giving and provide philanthropic insight for your organization. We can’t wait to see what your organization can accomplish.