It has become a Spring tradition to make the trek out to San Diego for the ASU+GSV Summit. This year, as we confabbed with 7,100 of our colleagues, the focus for most of the conference was on the potential and risks of generative AI in education as Bill Gates, Sheryl Sandberg, and Sam Altman took center stage. But I was struck more by the non-AI driven trends I’m seeing in philanthropy as I spoke with foundation and nonprofit leaders across these three days, and how those promise to increase the impact philanthropy through an evolution in funding practices. Three themes stood out to me:
- The philanthropic push for systems change is increasing, and with it, philanthropic innovation.
- Foundations are trying to make things easier for grantees, thus changing the way philanthropy works.
- Nonprofits are looking for sustainable revenue streams, both to attain greater stability and because funders are looking for it.
The push for systems change is driving philanthropic innovation
For some time now, systems change has been part of the zeitgeist of philanthropy. There is a growing recognition that, as an Ashoka report put it in 2021, “current practices need to evolve to better support systems change leaders.”
In multiple conversations with philanthropic funders at ASU+GSV, I heard not just variations on this theme, but also how foundations are innovating on their practices to seek those opportunities where they can most help to make systems change happen. Funders are increasingly recognizing the power of their influence, thus leaning in more strongly to affect the direction the field is taking through both the design of their grant programs and their framing of the problems they seek to help address.
Funders are thus increasingly looking at innovative funding programs that can catalyze change. This includes prize philanthropy, as well as other catalytic grants aimed at field building. These trends are concrete, and we have seen them in some of the work we have supported with our clients, such as the Thrive Grant.
Nonprofits are overburdened, funders are trying to help, and not just through grants
McKenzie Scott is engaged in the largest philanthropic experiment in a generation, if not multiple generations. One of the more revolutionary perspectives she has taken is to do away with grant applications, instead taking on the task of identifying grantees.
While other funders have not gone so far, I spoke with multiple grant makers who are looking at ways to decrease the burden that grantees face in applying to grants. For example, one organization is telling applicants to submit materials they already have and having program officers build the case.
Such changes hold lots of promise for more equitable grant-making, as it is usually the most strapped and newest nonprofits that struggle the most to apply to multiple foundation grants.
The trend toward sustainable business models for nonprofits is surging ahead
While certainly not new, I spoke with multiple nonprofit leaders at ASU+GSV who said the push to find a sustainable business model that’s less dependent on philanthropic giving was increasing. This is because of two things. The first is external pressure – that is, funders are looking for organizations that can build a flywheel and thus, better leverage their philanthropic dollars. The second is because of internal pressure – nonprofit leaders want to be less dependent on the ups and downs of the philanthropic market and have greater visibility into their revenues year-over-year.
Business model innovation, however, requires evolutions both to product and go-to-market strategies. The nonprofit leaders I spoke with were saying that such a change takes time, especially as many of them have limited resources to experiment with new models on the fly.
These trends speak positively to the future of philanthropy
While an unrepresentative sample – after all, these are conversations with a few handfuls of colleagues – I found the three themes above to be highly optimistic. The intersection of funding innovations on the one hand with nonprofit business model innovations on the other promises to release more funding to organizations that have a positive impact on our education and workforce systems, and for those organizations to do more good with those dollars. I’m looking forward to ASU+GSV 2024 to see how these trends have evolved.