I’m on vacation this week. This was my very first post when I started Tactical Philanthropy. It originally appeared on October 12, 2006.
The Second Great Wave
Welcome to the Second Great Wave of Philanthropy. We are in the midst of a major cultural shift in the way Americans participate in the world of Giving. Over 100 years ago, Andrew Carnegie launched the First Great Wave of Philanthropy with the publication of Wealth, his 1889 essay on the importance of philanthropy. With his urging, many of his peers began to think about organized philanthropy in a new way and set up large private foundations to execute their vision.
Today we are in the early stages of The Second Great Wave. The First Great Wave was led by a small group of ultra-wealth individuals who created enormous bureaucratic entities that supported government efforts to build such infrastructure as libraries and hospitals. The leaders of The Second Great will be you. You and your neighbors, and the family down the block. Entrepreneurs, middle managers and millions of retiring Baby Boomers will lead the Second Great Wave. Rather than supporting status quo projects, the donors of the Second Great Wave will primarily be concerned with funding entities which promise to bring new approaches to solving social problems.
This blog will be a chronicle of The Second Great Wave. It will delve into the people, trends, technologies, strategies and tactics that are shaping the new definition of philanthropy. The Second Great Wave is happening now. You and I are not just along for the ride, we are shaping the way that the wave unfolds and how deeply its effects are felt across the nation. As someone who cares about Giving, you know how profound the experience of giving back to your community can be. At its core, this blog will be about you.
What’s Different This Time?
During the last 100+ years, much has changed in the world of philanthropy, but the dynamics of giving have been simply an extension of the First Wave. The First Wave followed a hierarchical structure of a few concentrated pools of wealth making grants to a large base of needy causes. Philanthropy wasn’t the only discipline to follow this model. Corporate organization charts, information distribution systems and political systems all followed this model.
However, as we embark on the 21st century the traditional hierarchical system structure is collapsing. While the traditional top-down hierarchical system describes the way Rockefeller’s foundation distributed grants to charities, which then provided services for the public, a flat hierarchy is the model of the Second Great Wave.
This shift acknowledges that no one person or entity has all the answers and instead leads to a virtuous cycle of information feedback. The philanthropists of the 21st century will be smaller in size, but much larger in numbers than the philanthropists of the last century.
Strategy concerns itself with big picture concepts, tactics are about how to get things done. One of the defining characteristics of the new donors, who are driving the Second Great Wave, is their desire for effectiveness. From researching what organizations to give to, to demanding accountability from the nonprofits they support, to utilizing sophisticated giving methods, the new donors want to make sure their giving is having the most impact it can.
To practice Tactical Philanthropy is to organize, optimize, and transfer philanthropic capital in ways that maximize the impact of the donor’s strategic plan. It is the practice of transforming philanthropic strategy into reality.
Philanthropy is at its core a series of financial transactions. Just as a well-designed financial plan is valuable only if the correct savings vehicles are selected, created, and funded, a great Strategic Philanthropy plan is valuable only if the right tactics are discovered or created and finally implemented. Tactical Philanthropy concerns itself with structuring these transactions in ways that are efficient and mutually advantageous to donors and nonprofits.