Making progress: An essay, Part 3

[Editor’s note: This article first appeared in the 2004 annual report of the Z. Smith Reynolds Foundation in Winston-Salem, N.C.]

By Todd Cohen

In the 1980s and 90s, philanthropy changed more than at any time in the century. Older foundations brought in new leaders, practices and priorities, moving beyond support for programs, and aiming to strengthen nonprofits operations and influence public policy.

Philanthropic thinking evolved, expectations grew and funders focused on their mission as never before. Instead of simply charting a course for nonprofits, funders scrutinized their own direction. The message of philanthropy no longer was its money but its mission.

To help spur innovative strategies to fix some of our most vexing problems, more foundations began to visit local communities or worked with experts in a variety of fields to identify emerging and critical needs, and then solicited proposals from nonprofits for creative ideas to address those needs, often through community-based collaborative efforts.

Corporations expanded their philanthropy from supporting the pet causes of their CEOs to aligning their giving with their line of business, and added philanthropic staff, while individuals and families, either inheriting wealth or creating it through the sale of existing companies or the growth of new ventures, established or expanded their own foundations or funds at community foundations.

Entrepreneurs formed family foundations and became hands-on supporters of the nonprofits they funded, and a handful of homegrown companies like Bank of America and Wachovia adjusted to enormous growth that pushed their business and their giving far beyond the state’s borders.

All that change coincided with a surge in charitable assets, and in the size, sophistication and diversity of philanthropy. The ranks of foundations have grown, as have their assets and staffs. And staffs and boards look more like North Carolinians overall, and are better trained in the business of philanthropy as it adapts to shifting market conditions.

Rapid growth, greater professionalism, tougher competition and highly publicized scandals among nonprofits led organized philanthropy and individual donors to expect and demand more of nonprofits. More donors and funders asked nonprofits to strengthen their operations, improve their effectiveness and measure their impact. And more foundation staffs and boards paid closer attention to investing their assets and tracking their investment returns.

An industry of for-profit companies and consultants emerged to serve nonprofits with services ranging from fundraising advice and the management of charitable assets to providing software for fundraising, grantmaking and back-office operations. Nonprofit trade and advocacy groups were formed to deliver services ranging from management assistance to group rates on liability insurance and phone service. And new academic programs began to focus teaching, research and training on philanthropy and nonprofit management.

Now, with more donors and nonprofits, and smarter giving and fundraising, philanthropy in North Carolina continues to change. In a state in which urban centers enjoy jobs, wealth and growth, rural areas still suffer steep unemployment and deep poverty. And despite its affluence, our state faces crushing problems ranging from hunger and homelessness to poor health and bad schools.

To help address those ills, donors and nonprofits are looking for new ways to do business, and breaking down walls that traditionally have divided organizations and kept nonprofit, for-profit and government funders and agencies from working effectively with one another.

Other stories in the series:

Part 1: Philanthropy, more targeted and strategic, works for change. 
Part 2: Philanthropic legacy rooted in wealth from traditional industries. 
Part 4: Philanthropy expands to engage new markets.
Part 5: Philanthropy moves to help nonprofits gear for change.
Part 6: Philanthropy changes to help guide the ‘invisible hand’.

Part 7: Philanthropy without borders emerges as new model for change.

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