PhilanTopic is a great new philanthropy blog. Authored by Mitch Nauffts, the publisher of Philanthropy News Digest, PhilanTopic has been posting regularly and insightfully about a variety of issues and even posted live from the Clinton Global Initiative.
Recently Mitch discussed my theory of a Second Great Wave of Philanthropy. He agreed with some of it, but questioned my statement that, “The philanthropists of the 21st century will be smaller in size, but much larger in numbers than the philanthropists of the last century.”
[I] have yet to see much evidence to support [this argument]. Indeed, just as the rich are getting richer, big organizations, of all kinds, are getting bigger. I think this has a lot to do with network effects, the compounding "returns" that accrue to reputation in an attention-based economy, and other externalities.
I responded via a comment on PhilanTopic that I repost here:
Regarding evidence that "The philanthropists of the 21st century will be smaller in size, but much larger in numbers than the philanthropists of the last century." I think that the two areas of evidence come from the fact that foundations with assets under $1 mil are the fastest growing asset segment and the explosive growth of the Fidelity and Schwab Gift Funds and Foundation Source (catering to smaller foundations). We’re also seeing mainstream publications like the Financial Times, Wall Street Journal and New York Times focusing more and more on philanthropy so they must believe that this subject is of interest to their mainstream readership (ie. smaller donors). Also , "charitable planning" is becoming a hot area for financial planners who cater to the less than ultra-wealthy, so we’re seeing the demand from smaller donors there as well.
But all of that being said, I think that the big influence is still with the big philanthropists. "The Second Great Wave" is still in its early stages and we’ll have to see if my prediction comes to fruition or not.
Today I ran across an article titled Foundation Trend: Less is More in the San Francisco Examiner:
Though large and small have their place in the nonprofit sector, smaller foundations are effecting change greater than their size and numbers suggest. It is the smaller, often family foundations that many believe are the wave of philanthropy’s future.
Next, I next I found a great collection of articles about the importance of small foundations on the Association of Small Foundations’ website.
The 1980’s and 90’s showed a consistent trend of wealth being concentrated in the hands of the ultra wealthy. Nevertheless, that did not stop the major macro trend impacting the financial markets from being the emergence of the individual investor. The big story of the next two decades is going to be the emergence of the “individual philanthropist” and the development of the infrastructure to serve their needs.