USA – March 18 2020

7 Characteristics of the New Normal in Philanthropy

By Neil Ghosh, CEO of SOS Children's Villages USA

There was a time when we in the development community identified needs, designed projects, requested funding from our donors, and received their support. The work was intrinsically worthwhile, so donors were satisfied if we could demonstrate some benefit as our projects moved along. They were happy to help advance the upward trajectory we had plotted out for humanity.

Times have changed. Just as we must recognize that the programmatic solutions of 50, 30, or even five years ago will not work today, so too must we accept that the current philanthropic community has different priorities and a different mentality from donors of just a decade ago.

In part, donors have become investors who insist on a return in the form of impact, scale, and perhaps most importantly, systemic change.

Alongside this shift, I have noticed a more subtle but unmistakable turn toward a more holistic approach to the challenges we face. Donors across the political spectrum are beginning to recognize the complex interplay and impact of numerous factors – education, nutrition, healthcare, employment – that affect people’s lives, and they are united in their commitment to building opportunities for children, youth, and families. As we face the spread of coronavirus and watch as schools close and parents worry about losing their means of support, the interconnected ways in which these factors bring stability to children’s lives are brought into stark relief. 

As donors evolve in their thinking, they are asking civil society, including NGOs, to evolve as well.

In my conversations over the past three years, I have asked both donors and practitioners about the most important trends in their sector. From those conversations, I distilled the following seven trends.

1.     Systemic change. Donors are moving away from helping individuals in isolation and are looking to effect systemic change. In Africa, for instance, PEPFAR has set a trend of focusing on community- or household-level interventions that surround individual needs (nutrition, livelihood, education) rather than focusing on the vulnerability of individuals (HIV testing, reducing stigma). Donors also see the importance of strengthening local systems and programs to facilitate service delivery. Localization is crucial to self-sufficiency, empowerment, sustainability, and credibility.

2.     Building resilience. Donors are seeking to reduce dependency on “charity” by developing integrated prevention strategies and initiatives to increase resilience. They want their contributions to incubate self-sufficiency and self-determination. Many donors are bundling poverty reduction, education, environmental protection, and gender equality as programmatic themes that must be met by implementing partners as part of an overall effort to build resiliency to shocks such as catastrophic health issues, a poor harvest, or loss of income. Workforce integration and work skills building (with sensitivity to child labor concerns and safety) have also started to trend.

3.     Youth employment. Donors are recognizing that youth employment is key to social improvement across the board. Youth unemployment is a huge problem in the developing world, which is home to nearly 90% of the world’s young people. This is not just an economic issue; it’s also a social one. Many unemployed youth head to burgeoning megacities to search for work, or migrate from struggling states to Europe or the United States. Isolated from their families, roots, and traditions, they are at greater risk of exploitation or of falling under the influence of extremism.

4.     Collaboration. Donors are demanding more collaboration with other civil society actors spanning the Global South and Global North – and they are recognizing that collaboration lessens the financial burden of development while magnifying its impact. In addition, there is greater emphasis on working with local and national governments and abiding by established protocols and regulations. In many developing countries, government ministries with a focus on gender and youth are starting to exert sufficient policy influence to protect rights and provide tools or uniform guidelines that must be complied with across all assistance efforts.

5.     Accountability. There is virtual consensus in the development community on the need to improve measurement and evaluation of its work. This is driven as much by a new culture of accountability as by a true desire to make every penny count toward the ultimate goal of impact. Programs will need to provide local implementors with technical capacity building and support so that they can accurately measure and assess the success or failure of a project.

6.     Big ideas. Donors are open to bold, innovative ideas that will bring transformative change. While ostensibly more focused on the bottom line, donors I spoke with were enthusiastic about the need for civil society to think big. They are driven by a tremendous sense of urgency when confronting major systemic gaps. One starting point could be to explore solutions that acknowledge the interconnected nature of pressing issues; for example, the links between environmental degradation, extreme poverty, and youth unemployment. Big ideas have stemmed from reexamining the systemic and structural blind spots that perpetuate inequality, from redesigning downstream interventions based on an evolving understanding of the root causes of inequality, and from testing or scaling new theories of change based on findings. 

7.     In my backyard. The United States has its own development needs, even as we continue to lead the world in international development. With a child poverty rate of over 20%, the U.S. now ranks 32nd among developed nations – behind Mexico – according to data compiled by the OECD. Furthermore, wage stagnation, wealth inequality, automation, and structural economic transition driven by technology and globalization have hollowed out the middle class in recent years, with far-reaching social, economic, and political effects – impacts that will likely deepen due to the coronavirus pandemic.

It is important to unpack these trends in concert, without isolating them in separate silos. An overall focus on cooperation, holistic interventions, and system-wide change frames the actions of today’s donor community.

I believe that the boards of organizations of any size that engage with the donor community should take a moment to reflect on the truly tectonic changes taking place there, and initiate conversations internally about what those changes mean for their own mission. If necessary, they should bring their most reliable donors into these conversations – the list above might be a good way to jump-start the discussion.

These conversations will determine whether the energy I see is channeled into progress or is allowed to dissipate in a fog of institutional inertia. These trends may be difficult for many in the development community to process. They put pressure on individuals and organizations accustomed to a nonprofit model to adopt a more entrepreneurial approach. They challenge single-issue experts to consider their own focus in a more intersectional context, and to understand that intersectionality as the key to their own success. They force all of us to be accountable not just to our good intentions but to the facts on the ground.

Yes, they may be difficult. But to ignore them is to court irrelevance, and worse: the reversal of the progress of the last half century.

In the end, I believe these trends present rich new opportunities for those NGOs willing to internalize their deeper meaning, and to respond by contouring their thinking and cultures to align with new perspectives and approaches.

The donor community is speaking.

To those who are listening, this can be a time of unprecedented growth, collaboration, and transformation.

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