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5 Myths of US Philanthropy (& Their Busts!)

Posted by mwuycheck

It is crucial for nonprofits and other charitable organizations to understand the philanthropic environment they operate within, so as to maximize their own impact and revenue. However, there are several myths and misconceptions about US philanthropy that if upheld, can thwart an organization’s success.

In its fall 2019 issue, the Stanford Social Innovation Review published “8 Myths of US Philanthropy”, an article written by the faculty of the Lilly Family School of Philanthropy to highlight eight of the most common myths that nonprofits fall victim to. Subscription to any of these myths would be a costly misstep in the pursuit of securing the funds an organization needs to survive and thrive.

Five of the eight myths are listed and discussed here, along with how we at Social Venture Partners Arizona have busted them in our own workplace.

#1: Women are less philanthropic than men.

Visual representation of male to female participation in SVPAZ partnership.

This myth was built on antiquated data concerning women’s wealth, income, and education, which have long been considered three of the most accurate indicators of philanthropic giving. More recent data, however, paints a better picture of a woman’s participation in philanthropy. In 2019, women accounted for half of all workers on US payrolls (including 50.2% of the college-educated workforce) and were the primary breadwinners or co-breadwinners in two-thirds of American households (Matias). Women are vital to the success of Social Venture Partners Arizona: our Partnership is 53.5% women, our Board is 50% women, and our staff is two-thirds women. Without women, our Partnership and organization would suffer, as would philanthropy and the nonprofit sector as a whole.

#2: Small gifts don’t matter.

The belief that small gifts don’t matter extends from years of organizations emphasizing the impact that funders can make with large gifts made over long time periods. However, that in no way means that small gifts do not play a huge role in philanthropy. Every penny is meaningful! Small gifts can be especially impactful as “aggregate flows of small gifts become the lifeblood of campaigns to save lives, stem catastrophe, and repair communities” (The Lilly Family School of Philanthropy). After Hurricane Harvey hit the Gulf Coast in 2017, the American Red Cross was able to donate $35 million due to receiving over a million gifts of under $100 each. After the 2015 earthquake that devastated Nepal, the $7.2 million that World Vision US donated was the product of 42,000 individual donors contributing an average of $171! Without each unique contribution, the impact that was made would not have been nearly as substantive.

Stay tuned! Our next blog will be an extended piece on the importance of small gifts to Social Venture Partners Arizona. This is one you won’t want to miss.

#3: People give because they are altruistic.

While we would like to believe that people give out of the kindness of their hearts, both history and science show that people give for myriad of more self-interested reasons, including social status, recognition, tax benefits, and personal relationships. A striking example of this came in the summer of 2014, when more than 17 million Facebook users participated in the ice-bucket challenge as a way to raise money for amyotrophic lateral sclerosis (ALS) research. A survey of 9,000 of these participants revealed that 34% of them considered their motivations to be narcissistic in nature (The Lilly Family School of Philanthropy). A nonprofit would be savvy to incorporate these findings into their campaign strategies, channeling self-interested motivations into social good.

#4: Millennials are disengaged.

This myth is substantiated by data showing that people in their 20’s and 30’s donate less frequently than people in their 40’s and above. However, this is dispelled by the understanding that the younger generation hasn’t had as much time to establish themselves financially. A more nuanced examination of the data demonstrates that “younger cohorts reach or even exceed the rate of participation of older generational cohorts once the younger cohort is at a later stage in life” (The Lilly Family School of Philanthropy). At SVPAZ, millennials comprise approximately 20% of our Partnership! We are excited to learn and grow with this new generation as they develop in their stages of life and take on larger roles in organizations similar to ours.

#5: Endowments just tie up cash.

This is a myth that has come from many questioning whether endowments “tied up” cash that could be better serviced in nonprofits for advancing mission work, saying that many endowments are too restricted. However, many endowments instead provide stability and flexibility for operational funding and enable nonprofits to focus more on their programs and overall impact. Furthermore, the reliable revenue they provide can help a nonprofit cover fixed costs such as salaries, scholarships, rent, HR, IT, or other areas even in times of economic turbulence.

Jacky Alling, Chief Philanthropy Officer of the Arizona Community Foundation and Board Member of SVPAZ, says,

“Endowments, in conjunction with access to cash are a critical part of the financial sustainability toolbox. Just like an individual needs a checking account, savings account and a 401k, this mix of capital for a nonprofit is essential to its effectiveness in the present and the future.”

 

Aside from these five myths, there are many others existing in philanthropy that we have not discussed or have even yet to uncover. Regardless, it is important to remember that in your business you should avoid making decisions based off of assumptions or uncertainties. Assuming that these myths are correct would only place your organization at a disadvantage. Taking the time to research and dispel myths such as these will enable your organization to integrate proper business practices and improve outcomes in many areas, including fundraising campaigns, marketing initiatives, and financial endeavors.

 

To read the full article and learn more about these myths and several others, please click here: 8 Myths of US Philanthropy.

 

 

 

 

Matias, Dani. “New Report Says Women Will Soon Be Majority Of College-Educated U.S. Workers.” NPR, NPR, 21 June 2019, www.npr.org/2019/06/20/734408574/new-report-says-college-educated-women-will-soon-make-up-majority-of-u-s-labor-f.

The Lilly Family School of Philanthropy, Faculty of. “8 Myths of US Philanthropy.” Stanford Social Innovation Review, 2019, pp. 26–33.

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