Making progress: An essay, Part 4

[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

Philanthropy is a marketplace, brokering the exchange of charitable supply and demand. An intermediary that taps, connects and helps shape the use of public and private resources to address and fix social and cultural problems, philanthropy at its best adapts to changing times and challenges, builds on what works and takes risks to foster innovation.

As philanthropy in the 1980s and 90s expanded, it also matured and stretched, looking for new and more effective ways to put private wealth and know-how to work to gear nonprofits for change, attract government and corporate partners and investment, and play a bigger part in policy change.

Strengthening the operations of individual nonprofits and of the nonprofit sector itself became a more important focus for philanthropy. As funders began, however modestly, to shift some of their grants to individual nonprofits from program support to operating support, some also invested in statewide initiatives to address the needs of nonprofits overall.

The Z. Smith Reynolds Foundation was among a handful of funders in the early 1990s that supported the startup of the North Carolina Center for Nonprofits and the Philanthropy Journal of North Carolina, while the W.K. Kellogg Foundation invested in statewide expansion of a new certificate program in nonprofit management at Duke University.

Faced with a rapidly growing nonprofit sector that swelled demand for grant support, and a scandal at United Way of America in the early 1990s that triggered skepticism about charity overall, funders began to ask nonprofits to better account for their operations and impact.

A growing source of support for nonprofits in the 80s and 90s flowed from community foundations, which provided a popular vehicle for individual and family philanthropy. In addition to making grants, community foundations convened civic leaders to talk about common issues, and brokered nonprofit partnerships.

While local United Ways for generations had run workplace campaigns to raise money for health and human service agencies, they now began to help member agencies better measure their performance. Also gaining entry to the workplace to raise money were federations in fields ranging from the arts and public schools to health and the environment.

The start of an unprecedented shift in wealth between generations has helped drive rapid growth in community foundations and the charitable services they and financial-services companies offer as they evolve into one-stop philanthropy centers that manage charitable funds and help individual donors, families, private foundations and corporations develop and operate more effective giving programs.

 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 3: Philanthropy plows new ground to address critical problems.
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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