William E. Burckart | Georgia Nonprofit NOW, Spring 2012
There is a revolution emerging in philanthropy—a subtle revolution involving new actors and tools that is underway on the frontiers of traditional philanthropy.
Driven by mounting social, economic and environmental problems; declining government funding; and barely growing philanthropic resources, this revolution is poised to usher in a new era of social purpose finance that differs from 20th century philanthropy in at least four ways.
21st century philanthropy is more entrepreneurial, morediverse, more global, and more collaborative.
However, these new approaches to philanthropy and social investing remain nascent and largely uncharted: if they are to make the jump to a broader network of participants and achieve the impact of which they are capable, they will need to be studied, explained and promoted.
The New Frontiers of Philanthropy Project underway at Johns Hopkins University is designed to answer this need by providing a clear and accessible roadmap to this emerging field. The project focuses on two major sets of activities: first, production of an authoritative book, New Frontiers of Philanthropy, which will deepen the knowledge base; and second, an aggressive initiative to bring the material in this book to a larger audience in a variety of formats. The ultimate goal of this work is to bring more players into the field and encourage current players to reach beyond their specializations for new collaborations and greater impact.
Nonprofit executives should have a special interest in these materials and the new opportunities they will unveil. In particular, the potential for the entry of significant private investment capital into the nonprofit space promises to improve organizational performance, leverage far more resources, and profoundly enhance the mission-based impact of nonprofit organizations.
It is exciting to peer into the new frontiers of philanthropy, but it is important that we not wander blindly.
However, an important caveat is that, by their very nature, these new developments also hold the potential to favor nonprofit subsectors. For example, nonprofits working in fields where tangible assets are less likely to be present and metrics for quantifying the social impact of investments are more difficult to define—such as advocacy and community development—may find themselves at a competitive disadvantage to organizations in fields such as housing, economic development and education. It will be critical for executives, strategists and advocates for nonprofit organizations in all fields to understand what these new tools and actors require, and how they can best position their field, cause or organization to ensure their competitiveness in this emerging environment.
Moreover, nonprofit executives must be aware of the role that public policy can play in encouraging, or impeding, the development of this emerging private social-investment market. A number of key barriers now in place hamper its growth, and a number of policy steps could be taken to remove those barriers. These include: broadening tax credits for investments in social or environmental activities; enlarging the public social innovation fund; establishing new legal forms such as the (L)(c)(3) legal status that can help facilitate affordable financing to social enterprises; broadening the use of social impact bonds/ pay-for-success programs and capacity-building funds to help nonprofits transition into this new investment orientation. The potential for public-sector encouragement of these new innovations are considerable, but it will take an engaged social sector to help promote them.
It is exciting to peer into the new frontiers of philanthropy, but it is important that we not wander blindly into them. The Johns Hopkins New Frontiers of Philanthropy Project is working to provide a map and a guide to nonprofit executives as they begin to explore, and seek to master, these new tools and actors for financing their important work.
William E. Burckart is Special Initiatives Manager of the Johns Hopkins Center for Civil Society Studies.