Institutional vs. Individual Philanthropy

This is my newest column from the Chronicle of Philanthropy. You can find an archive of past columns here.

Charities Should Nurture Donors’ Passion for Giving
By Sean Stannard-Stockton|Link to Chronicle of Philanthropy
May 21, 2009

In a quest to make philanthropy more efficient and effective, many organizations and individuals have sprung up to improve the process of how donors give. Most of those efforts focus on giving advice to the biggest foundations, and only a handful of services focus on coaching individuals in the art and science of philanthropy. This imbalance in the way knowledge is shared is a key reason charitable giving is not meeting anywhere near its full potential to transform society.

When the prolific bank robber Willie Sutton was asked why he robbed banks, he responded, “Because that’s where the money is.” This reply also seems to explain why professional philanthropic research and advice has focused on large foundations.

However, it is a myth that large foundations dominate charitable giving.

Foundation grants accounted for only 13 percent of total charitable giving in the United States, according to Giving USA, while donations from individuals make up 82 percent of the annual total. (Corporations give the rest.)

Unfortunately, the extensive work that has been done to make foundation giving more efficient and effective cannot be easily transferred, because it fails to take into account the reasons people give.

In his 2006 book Strategic Giving, Peter Frumkin, a philanthropy scholar at the University of Texas, argued that five elements drive people to give a large share of their money away; change, innovation, equity, pluralism, and self-expression.

At big foundations, self-expression is rarely on the agenda. In most cases, it would be wrong for foundation employees or board members to think of grant making as their own personal self-expression,

But for individuals, self-expression is a vital part of giving. You cannot understand, or influence, a donor’s wish to encourage economic equity or pluralism without recognizing the way that such grants are inextricably linked to the donor’s self-image.

That can be a tricky proposition because Americans tend to think that “good” philanthropy requires sacrifice. Donors, our culture tells us, should not benefit from their giving. Giving is supposed to be motivated by a donor’s selfless desire to help others, and so the idea that a donor may use philanthropy as a form of self-expression seems to reduce the nobility of their gift.

If we ever expect to persuade more individuals to become effective philanthropists, the first step is to break the notion that philanthropy must entail sacrifice. Instead donors need to be encouraged to think about how professionals in many walks of life start with a passion and talent, and then train themselves in the skills they need to excel in the tasks they love. We don’t discount a musician’s performance because he clearly loves playing or an athlete’s accomplishment because she loves sport. So too must the passion for giving become linked with a desire to learn how to do it as well as possible.

The professionalization of philanthropy has produced a large amount of knowledge about what works. Large foundations and their advisers must learn to share their knowledge in ways that meet the needs of individuals who want to give money away.

Philanthropy is not simply a lifeless transaction that transfers money from one set of hands to another. Philanthropy is an act of creation that gives form to humankind’s highest ideals. Organizations and consultants that focus on philanthropy must recognize that they are in the business of spreading ideas and rendering them into tangible results. They can’t expect good results if they focus only on helping institutions become more effective grant makers.

It is high time that more organizations begin to serve the needs of individuals who make donations. Frankly, it will not be easy. Donors are idiosyncratic and motivated by a range of needs and desires that even they do not fully understand. But it is this very idiosyncratic nature that makes individuals far more willing than institutions to give money to causes that involve experimentation, risk taking, and new ideas. Individuals are the future of philanthropy. We need to stop failing them.

Sean Stannard-Stockton, a regular columnist for The Chronicle, is a principal and director of tactical philanthropy at Ensemble Capital Management and author of the blog Tactical Philanthropy.


  1. Sean,

    Thanks for this post – it has a lot of food for thought.

    Marion Conway

  2. Pete Manzo says:


    Excellent column, really frames the difference between individual and institutional philanthropy well.

    I’d like to offer a couple observations, however, and pose a question.

    First, on the relative weight of giving from individuals and giving from institutions, it is certainly true that over 80 cents of every dollar comes from an individual. What is less well understood, as you no doubt know, is that this understates the impact of institutional giving, in the following way. Most giving from individuals, as much as 2/3 or more, goes from donors to their congregations, or their schools. For higher wealth donors, particularly, donations also go to cultural institutions that provide services the donors themselves enjoy or benefit from (e.g., symphonies, museums, and so on). So in terms of “other-directed” giving, and certainly giving to support lower income or less advantaged communities, institutional donors play a disproportionately larger role, then (even allowing for the very important charitable work of congregations).

    I agree that institutional donors, and specifically their board members and executives, do not have a right to approach their decisions from the point of view of their own self-identity or expression. As for carrying forward a donor’s intent, my (no doubt unpopular) contention is that foundation board members have a responsibility to take society’s needs (and justice, especially) into account.

    About individual donors, from the standpoint of encouraging individuals to give, I completely agree that we should pay plenty of attention to their self-expression interests.

    Once individuals have decided to engage in philanthropy, however, I think we need to be able to say more. As you rightly point out, focusing on effectiveness is not enough to motivate giving. Similarly, I would question whether, to be a good donor, it is enough for a donor’s giving to simply (1) meet her or his self-expression interests, and (2) be effective at pursuing the her or his goals.

    I’m not exactly sure what that “something more” is that others might also accept. (I certainly have my own preference – advancing social justice (full disclosure: I am a member of the board of National Committee for Responsive Philanthropy).)

    In recent remarks in Los Angeles, Paul Brest made two very interesting points (among many others). Paul argued that we can no more question a donor’s choice of interests than we can question anyone’s tastes, including our own, and he also said he believes that while society can have something to say about the means with which a donor pursues her/his/its mission, we should not attempt to prescribe the ends – the choice of ends should be left up to the donor.

    In terms of law or regulation, Paul’s approach seems quite correct. I would not want legislators or lawyers getting involved in determining which donor interests and goals are best – rather, the law should only outline the boundaries of what is permissible (for purposes of tax exemption, compliance requirements for private foundations or public charities), and within those very broad outlines, leave well enough alone.

    But, from a moral perspective, I think we can very well demand that donors consider the common good, a broader public interest, in designing their goals and strategies. I’m not completely sure how to square this with the liberty we want to preserve for donors. A possible solution is to demand that a donor engage questions of the common good, or social justice, in the course of choosing a form of giving that also meets their interest in self-expression. We can’t enforce that demand, but we can demand it nonetheless, and to do so is not asking donors to sacrifice or give something up. Helping donors think through these concerns is something good philanthropic advisors like yourself can do; perhaps it is even an indispensable part of helping them discover and meet their needs for self-expression. (As Rabindranath Tagore wrote, “I slept and dreamt that life was joy. I awoke and saw that life was service. I acted, and behold, service was a joy. “)

    As you wrote, “[p]hilanthropy is an act of creation that gives form to humankind’s highest ideals.” In a future column, or perhaps in your live chat next Tuesday, I think we all could benefit from hearing your perspective on what responsibilities to the wider world, to our higher ideals, a donor must meet.

  3. Bravo for saying so clearly that philanthropy is an act of creation, through which people legitimately express themselves.

    So much more becomes possible when we (facilitators of philanthropy) focus a person’s attention on the kind of world they want to create — and what that says about who they are as a human being, what they stand for, even the meaning of their life.

    And how different that is from expecting (often, even demanding) that people simply fall in line and fund the “needs” an organization has self-defined.

    That traditional “fundraising” approach is the kiss of death to truly inspired acts of individual philanthropy.

    Great column.