As technology has disrupted and reinvented one field after another, it often follows a familiar playbook: Simplifying transactions and cutting out interactions. Shopping, ordering food, calling a cab – all have been replaced with swipes, taps and clicks.
In a similar way, technology is making philanthropy easier. We discover and research causes online and donate using digital transactions. But our hope is that technology can go further to help humanize and improve giving by helping donors better understand their impact, save time and effort on the non-profit side so more can go to their mission, and rally their communities around causes.
We also believe that new solutions and new models for giving will allow philanthropy to become a part of our everyday lives. In the same way that digital wealth management tools and employer-backed retirement accounts brought investing into the mainstream, we hope philanthropic giving will become more available through financial advisors and workplaces.
At the same time, we believe things like family giving and values-based investing, once limited to the high-net-worth market, will become accessible to millions more Americans thanks to new technology. It all adds up to a potential major shift in the ways Americans will give.
Trends in Philanthropy: What Has Changed and What Hasn’t
The baseline for giving in the United States has remained remarkably steady over the years: roughly 2% of GDP. At the same time, giving in terms of total dollars is rising dramatically, from $221 billion in 2000 to over $550 billion in 2023. Much giving continues to be personally connected, such as to an alma mater, to fight a disease, or to support a passion for the arts, education or other cause.
Even the giving vehicles and tools we use aren’t necessarily new. Crowdfunding sites are direct descendants of public solicitations; family, corporate and community foundations continue to be major players; and while donor-advised funds (DAFs) are exploding in popularity (almost doubling in number since 2018, to almost 2 million accounts) they have been around for decades.
Still, there is real change happening in how Americans give. We have found that today’s donors are more globally aware, want to give more sooner, expect greater transparency about how their money is used, and have a more sophisticated view of how money, giving, and values intersect.
How Technology can Engage New Generations and New Ways of Giving
Technology can help meet the needs and expectations of today’s donors and, we hope, create a better philanthropic experience for donors and better outcomes for non-profits. Here’s how:
- Better research: Today it is easier than ever to review a non-profit’s finances, one factor often cited in determining a non-profit’s quality (the less spent on overhead, the better, many people believe but even this can be misleading and requires context). But better research can go deeper. A non-profit’s investments in technology might raise costs but expand impact, for example. Smart research and better, more nuanced reporting can make this information available to donors.
- Mission discovery: Globally-minded and mission-focused donors can find non-profits that resonate with their values around the world or next door. Technology can make this kind of philanthropic match-making much easier.
- Understanding impact: Social media and digital storytelling can help non-profits show their impact in new ways. On the donor side, technology can aggregate and quantify impact, compiling statistics from a full year of giving, for example, and painting a fuller picture of a donor’s reach, which many donors lack when their giving is done across platforms or structures.
- Rallying community: New tools help enable collective giving. For example, TIFIN Give recently launched a DAF-based solution that lets a donor set up a campaign, solicit donations from their circle and beyond, and realize all the benefits of a DAF, plus those traditionally not part of DAFs.
- Financial efficiency for donors and non-profits: Traditional DAF benefits include instant tax benefit for donors; investment earnings of funds within the DAF that can amplify the donation; directed investments that can reflect the mission of the DAF; and offloading the tax reporting burden from the receiving non-profit. These are among the reasons DAFs are expected to grow rapidly; the amount of funds held in DAFs is expected to quadruple by 2029, to over $1 trillion.
Bringing Philanthropy Home Through New Channels
The challenge with any new technology is achieving scale and adoption. TIFIN Give has positioned itself to maximize the chances of making philanthropy a bigger part of people’s lives. We believe giving at scale will happen when we can engage with two hugely influential markets: Wealth managers and employers.
Many of our solutions are optimized to be adopted and offered by RIAs, advisors, and wealth management firms as part of holistic financial planning. If people want to incorporate giving into their ongoing finances, set up a family DAF, or factor donations into their tax planning, it makes sense to work with the experts who have the perspective and skills to manage money.
Another channel is through employer benefit programs. Allowing people to set up a giving account through their employer, make automatic contributions or contribute corporate stock, and manage investments within that account would be a low-friction way to make this kind of philanthropy mainstream – just like employer-offered 401ks made retirement investing commonplace.
Combining these kinds of tools that expand the philanthropy playing field, coupled with high-touch and personalized insights into the impact of contributions, have the potential to take charitable giving to the next level. From our perspective, we are just scratching the surface of how giving can change for the better – for nonprofits, those they serve, and donors themselves.