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Trends in the Philanthropic Sector in 2023

After founding a nonprofit organization, serving as an executive director for over eight years, and working as a grantmaker at a community foundation, it is clear that the world of philanthropy is constantly changing. 2023 is no exception to this rule. There's a lot to be excited about in 2023, though. Here are a few top trends that I'm anticipating for this year.


Trust-based philanthropy will grow like never before.

Trust-based philanthropy is poised for a breakthrough. Trust-based philanthropy aims to shift the power dynamic between donors, nonprofits, and communities by rethinking their relationships and decision-making processes. While it's not a new concept, it persists as a topic of discussion in the philanthropic field.


Over the past several months, we have seen philanthropist MacKenzie Scott lead the way in trust-based philanthropic giving. She has made charitable gifts to $14 billion over 1,500 nonprofits. By leading the way for future donors to contribute based on organizational efficacy and mission alignment, Scott is breaking away from past practices that placed limitations on support. With fewer strings attached, this giving model enables charities to work towards their objectives, fueling transformative change without the interferences of restricted giving. This strategy is gaining momentum, as many other foundations and donors are following suit by embracing the trust-based philanthropy approach. As organizations prove their worth, they will flourish, opening up opportunities for exponential growth in the philanthropic sector. As such, I believe trust-based philanthropy will grow like never before, providing essential support that will make a difference in society.


We will see an increase in legacy giving.

There will likely be an acceleration in legacy giving due to the aging Baby Boomer population. With an estimated $30 trillion being passed down to the next generation, nonprofit organizations must take advantage of this opportunity to cultivate supporters and create an internal culture where legacy giving is celebrated. This is just the beginning, as the United States population older than 65 will expand significantly in the coming years. It is essential to recognize the significance of this demographic shift and take measures to encourage planned giving to support future generations.



Collaborative charity will continue to grow, as will giving circles.

Giving USA and GoFundMe reports show collaborative giving is on the rise, with more than 20% of Americans participating. The pandemic has increased the use of collaborative funding, especially by community foundations. Moreover, collaborative giving and partnerships can benefit both funders and grantees. By working together and diversifying funding sources, nonprofits can become more sustainable in the long term.


One way we see collaborative giving lived out is through giving circles. Giving circles are an innovative way of giving that has gained immense popularity recently. They offer a unique opportunity for individuals to collaborate with like-minded people, explore issues that matter to them, and collectively make a more significant impact in their local community. Giving circles encourage people to share their resources and knowledge, learn from each other, and create a sense of belonging and togetherness. They are particularly effective in democratizing and diversifying philanthropy, enabling new donors to get involved in giving, thus increasing local giving. They allow individuals to focus on their shared values, enjoy giving, and connect with their community. Overall, giving circles are a great way to meet local needs collaboratively, and they can create a considerable impact in transforming many people's lives.


Charitable giving vehicles will continue to diversify.

Charitable giving vehicles have evolved dramatically in recent years as vehicles like cryptocurrency and crowdfunding are becoming increasingly popular among philanthropists. A new global report explored emerging philanthropic giving vehicles worldwide and revealed cryptocurrency's growing impact on charitable donations. According to a study by Fidelity Charitable, cryptocurrency investors are a disproportionately generous group, which is a positive trend for the future of philanthropy. Furthermore, crowdfunding platforms connect nonprofit organizations with donors, allowing new audiences to make a social impact through charitable giving. These modernized giving vehicles are reshaping the nonprofit sector and creating new opportunities for charitable organizations to raise funds for their cause. It's exciting to see technology changing the way we give back, and charities are adapting to this new reality to maximize their impact on society. Despite this, we will likely continue to see the generations who have historically given through investment portfolio gifts and donor-advised funds do so using traditional funding vehicles.


Two organizations in my community that are leveraging these next-gen giving methodologies are my former employer, the Decatur County Community Foundation, which was the first community foundation in the State of Indiana to adopt a cryptocurrency gift acceptance policy. Shoutout to my DCCF family for their ingenuity and continued brilliance! Additionally, All for One Ministry leveraged a $50,000 matching grant from the State of Indiana to take on a significant capital improvement project in their facility. They secured $50,000 in local matching dollars, which the State of Indiana matched, to fill a $100,000 funding gap through crowdfunding.


Young people will be increasingly more involved in the work of philanthropy.

A 2020 report by the Indiana Philanthropy Alliance shared that 25 counties' community foundations in Indiana alone had a youth council of some type. These dedicated students were responsible for giving away nearly $140,000 in 175 grants, with assets of over $1.8MM in endowed funds.


Engaging youth in the work of philanthropy has numerous benefits for everyone involved. Not only does it allow for a diverse range of perspectives and ideas, but it also improves the equitable distribution of funds, outreach, communications, and program design. To achieve this, philanthropic organizations must provide training with context and utilize innovative strategies and promising practices for involving young people. It's vital to ensure that young board members are reasonably qualified for their roles and not selected solely based on age. When young people are allowed to participate in philanthropy, they are encouraged to become volunteers and nonprofit leaders and impact their community. We can create a more inclusive and effective philanthropic sector by actively engaging youth in this work.


It is great to see that today's youth are actively engaged in giving back to their communities, which can only bode well for the future. Young people are tomorrow's leaders, and their philanthropic experiences will undoubtedly encourage them to become community leaders as society continues to change and evolve.


While the philanthropic landscape across the nation is constantly evolving, I believe there is much to be encouraged by in 2023. If you'd like to grab coffee to talk about these topics in greater detail, let me know!



 

Meet the Author

Sefton Creative Co. is a marketing strategy and nonprofit consulting firm in southeastern Indiana that aims to equip entrepreneurs, nonprofits, and Gospel-centered churches to tell their story and advance their mission. It is owned by Alex Sefton, MPA, a faithful follower of Jesus, a husband and future dad, an entrepreneur, a nonprofit founder and executive, and a lover of laughter and coffee. Alex holds a Bachelor of Science in Business Administration and Entrepreneurship from Indiana University and a Master of Public Administration in Nonprofit Leadership from Indiana Wesleyan University. He is eager to help your organization grow!


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