Greater Good Blog

Thanks to our work with a wide variety of clients and partners, the team at Arabella has a unique view of the social sector and the philanthropic ecosystems that support it. Given that perch, we assembled a panel of contributors from across the firm to highlight key trends for 2024 in three broad areas: 1) what will get funded; 2) who will make funding decisions and how; and 3) which vehicles funders will use to pursue their philanthropic goals.

Our insights derive from hundreds of client engagements and thousands of interactions with sector partners, supplemented and supported by publicly available data. We hope that what we share here will spark fresh thinking, raise questions, provide encouragement, and inspire you to make change.

Based on the work we’re doing and the data we’re analyzing, here’s some of what we expect to see in 2024.

What Gets Funded

If history is any guide, we can practically guarantee that total giving in the United States will be about 2 percent of US GDP in 2024—the level it has hovered at for decades. Macroeconomic trends establish the broad contours of giving. Still, we see an urgent opportunity to unlock more potential philanthropic capital, and we expect that a significant number of our clients will ramp up their giving this year. We continue to hear from donors across the sector who are interested in spending down their endowments and/or in going beyond the 5 percent payout requirement given the mounting severity and urgency of the challenges before us.

Within that broad context, we also anticipate a greater level of engagement in certain areas and approaches that have been and will continue to dominate headlines. These include:

1. Democracy and civic engagement: In 2024, more than half of the world’s population will head to the polls. That’s more than 4 billion people across 50 countries engaging in democracy’s defining act—including, of course, people in the United States. There will be lots of standard election-year funding activities, including support for get-out-the-vote efforts and advocacy for policies at the federal, state, and local levels. There will also be efforts to address threats of rising authoritarianism, to champion democratic principles and institutions in our increasingly polarized society, and to adapt effectively to the rapidly evolving digital landscape that both empowers modern democracy and threatens to undercut it. It’s entirely plausible to think that democracy will be put to the test this year as never before, and funders will step forward to help.

2. Reproductive health and justice: Since the overturning of Roe v. Wade, more than 33 million women, girls, and others who can become pregnant (ages 15–49) now live in a state with regressive policies that severely curtail access to reproductive and maternal health care, resulting in critical unmet needs. In response, funders have shared in the sense of urgency with organizations protecting reproductive health rights and advocating on behalf of people affected by this lack of access. While there have been reports that initial “rage giving” has slowed, a handful of nonprofits interviewed by InsidePhilanthropy shared that they have seen sustained increases in the number of donors and continue to see spikes following news coverage on reproductive health-related stories. This is consistent with what we’re seeing and hearing from clients and partners across the sector. There will be no shortage of media coverage on the topic this year, as elections loom and stories about the effects of Roe’s collapse on individuals and their bodily autonomy continue to circulate. As a result, we believe we have not yet reached the peak of this trend, and organizations on the frontlines of the fight for women’s health and reproductive freedom will continue to see funding increases in 2024.

3. Artificial intelligence and public interest technology: As we’ve noted before, 2023 was a big year for the emergent public interest technology field—from President Biden’s recent executive order on artificial intelligence and the acceleration of generative AI to renewed calls to develop a strong pipeline of technologists focused on the public interest to intensifying discussions about disinformation. As AI continues to capture headlines across our sector and our society, organizations and individuals will seek to learn more about the intersection of new technology with the public interest—and the effects of this new lens on their existing funding and impact strategies. We expect to see an increase in both government and foundation funding focused on technology-related work. Specifically, we’ll see more investments to support the responsible development and deployment of technologies, as well as capacity-building efforts within nonprofits to help them better adapt to the digital era we’re living in.

4. Climate change mitigation: The Intergovernmental Panel on Climate Change has declared a “code red” for humanity on climate change, and the inequitable impacts of climate change on communities around the world become clearer every day. Innovative nonprofits are racing to protect the planet and the human communities that are most vulnerable to the effects of climate change, but according to ClimateWorks Foundation’s most recent report, climate-related efforts receive less than 2 percent of total global giving. If we have any hope of addressing this growing crisis, funders of all shapes and sizes need to increase their investments—and quickly. Fortunately, climate experts are optimistically anticipating a spike in the level of federal investment in climate mitigation projects via incentives built into the Inflation Reduction Act (IRA). We expect this to create significant opportunity for philanthropic co-investment, including via novel financing, such as for clean energy infrastructure.

Who Makes Funding Decisions (and How)

By the middle of the 21st century, the United States will be a “majority minority” nation, and this demographic fact is increasingly reflected in the faces of wealth. Women currently hold roughly 40 percent of global wealth and, according to UBS, more than a million high-net-wealth investors in the United States today are Black, Asian, Hispanic, or Latinx.

Based on our experience, such “new majority” philanthropists often care deeply about creating systems change to dismantle intractable issues. They are often looking to invest in emerging leaders and ideas, are willing to fund more grassroots and higher-risk endeavors, and are more willing to consider their philanthropic investments as “patient capital.” This means they often look at different metrics and measurements than the ones others in our field have often relied upon. Additionally, many of these philanthropists also are stepping up to lead family businesses—often driving impact holistically across multiple platforms, including the business itself. They are looking to build legacies and impact but not necessarily to launch new foundations.

As the face of philanthropy continues to change, we see two trends picking up pace.

1. Trust-based approaches will continue to take root—and bear fruit—across philanthropy. In 2024, we expect to see broader adoption of trust-based, equitable, and participatory or community-based grantmaking practices—not only among early-adopter families but also among corporate and institutional funders. “If we want lasting impact, establishing genuine partnerships with grantees is fundamental,” says Dawn Frances Reese, a director on Arabella’s advisory team who specializes in this work. “This necessitates steering clear of rigid processes and antiquated approaches. We must learn to open communication and build trust. Funders genuinely committed to sharing power must cede resources and decision-making to those most proximate to the work, including those uniquely positioned to share pertinent lived experiences.” Encouragingly, we are indeed seeing the ultimate beneficiaries having more voice in what and who gets funded, as well as an increase in dollars going to community foundations. As the Foundation Center recently noted, “studies have shown that a strong local ecosystem for community philanthropy will strengthen both outcomes and ownership across the board.” 

2. Efforts to increase equity will continue—despite resistance from some quarters. Our clients are not backing away from efforts to advance the principles of diversity, equity, and inclusion both within their organizations and in their funding decisions. We expect these commitments will continue despite active campaigns designed to undercut DEI efforts and a softening of support for DEI initiatives among some organizations in both the public and private sectors. The clients we work with are increasingly requesting new and concrete ways to ensure their commitments to equity are woven throughout their grantmaking, governance, evaluation, and human resources systems and practices—and we anticipate that this desire will lead to continuing innovations. One of our teams at Redstone, for example, has been testing and applying more powerful mechanisms for engaging people with lived experience. “As one option, our clients are increasingly relying on a Bayesian approach to analytics, drawing on multiple forms of data to center equity and guide inclusive decision-making,” shared Kathy Francis, the head of inclusive impact for Redstone.

Vehicles Used to Move Money

As donors continue to become more sophisticated and diverse, so will the ways they seek to deploy philanthropic capital and pursue impact. The desire to tackle systemic challenges is pushing donors and their advisors to think beyond traditional philanthropic vehicles. Historically, donors tended to operate through a single private foundation. Today, many are choosing innovative and diverse vehicles to support a range of activities, from research and education to advocacy and lobbying as well as return-seeking impact investments. We expect to continue to see increased interest in the following:

1. Intermediary grantmaking vehicles, including donor-advised funds (DAFs) and fiscally sponsored projects: DAFs are frequently replacing private foundations in philanthropic toolboxes, and we anticipate that donors will be drawn to them in the year ahead, despite critiques and challenges. Additionally, the practice of fiscal sponsorship will continue its steady march forward, as social entrepreneurs increasingly recognize that this tool provides unmatched opportunity to quickly launch and fund new initiatives. Fiscal sponsorship is particularly well-suited in the context of uncertainty—which we will have in droves in 2024.

2. Mechanisms to share wealth directly with individuals—and to do so at scale: Growing interest in so-called “direct giving” programs is an outgrowth of the principles and values that drive trust-based philanthropy, as well as an indication of a more urgent desire to help people weather crises of all kinds. Even as many funders seek to use intermediaries to move money to the grassroots, we’re seeing a notable rise in the number of funders—including corporate and institutional foundations—inquiring about how they can efficiently and compliantly move dollars directly into the hands of refugees, families, single parents, students saddled with debt, and homeowners and renters struggling to make payments. Doing so often requires complex legal maneuvering and may spur new innovations in fin-tech programs, says Ryan Ulbrich, a senior director at Arabella who specializes in grantmaking design and implementation.

What now?

Even if global philanthropy levels hold steady, we expect—and even encourage—the funders we work with to increase their giving in 2024 in response to increasingly dire and compounding challenges that demand ambitious action. We are also urging the nonprofits we support to think about what these trends may mean for their operations, whether that’s preparing for an influx of dollars, changing processes to align with different reporting requirements, or training leaders and staff to address heightened concerns about cybersecurity, disinformation, and media attention.

If you’re a changemaker with big ideas, now is the time to be bold. Next-generation donors who are serious about impact will more forcefully break down barriers and sector silos to create needed change. Their efforts will require the sector to be more flexible in how we approach our work, whether that means deviating from traditional grantmaking practices that create unintended burdens, engaging on-the-ground experts to support international programs, or simply being more generous with sharing insights and data that can benefit others.

Opportunities will abound, and we believe the sector will rise to meet many of them. We also know from experience that the sector’s changemakers will themselves need help managing change. In 2023, we saw a spike in requests for change management support, and as nonprofits and funders alike grapple with the trends identified above, there is a real opportunity in 2024 to be thoughtful and proactive in how they integrate change. Whatever the year ahead brings, we stand ready to advise on how to experiment with new tools and approaches to maximize impact in our rapidly evolving world. We hope you join us.

 

Contributors: Betsy Erickson, Kathy Francis, Alissa Gulin, Lydia Guterman, Nathan Huttner, Jessica Robinson Love, Drew Rabe, Dawn Frances Reese, Steve Sampson, Bob Shaver, Erin Spence, Susan Steckler, Ryan Ulbrich, and Shelley Whelpton