Reimagining institutional philanthropy

Throughout the 20th century, large US institutional foundations such as the multiple Carnegie foundations, the Ford Foundation, and The Rockefeller Foundation played an outsize role in philanthropy.

By virtue of their large share of the philanthropic marketplace, these institutions were able to shape the thinking of policymakers, attract social innovators, and exert influence to bring together the private sector, government, and civil society. As a result, they played a vital role in underwriting social change: They helped to eradicate polio in the United States and then across most of the world; they provided 96 percent of Americans with easy access to free libraries; they helped to reduce smoking in the United States by more than 60 percent; and they promoted a “green revolution” that dramatically increased agricultural production.

But as a consequence of unprecedented worldwide wealth accumulation and the rise of new philanthropists over the last two decades, the largest US institutional foundations (by which we mean independent foundations where the original donor is no longer alive, or, if the donor is living, where there is a substantial staff and other infrastructure to manage the giving) no longer dominate the philanthropic marketplace.

The share of giving that belonged to the largest institutional foundations in the late 20th century has declined precipitously. Consider how much the landscape has changed: The top 10 foundations in 1993, which together accounted for 15 percent of foundation giving, by 2014 accounted for only four percent. Moreover, of the top 10 US-based philanthropies in 1993, only two remained among the top 10 in 2014.

More capital is also flowing through other structures, such as LLCs and donor-advised funds, meaning that the decline is even steeper than these statistics indicate.

Read the full story at Stanford Social Innovation Review. 
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