Why all eyes are on philanthropy for 2023

Call me an optimist, but I’m calling it – 2023 will be the single biggest year in the history of philanthropy on earth. On the one hand, things are objectively…challenging. On the other, a combination of tools and new organizations are stepping forward to meet the challenge. If we get this right, 2023 will be a year of monumental change through investment; if not, we will see the greatest lost opportunity and squandering of resources in human history.

India Rising
Within the next eighteen months, two major population events will take place. The first is that the global population will surpass 8 Billion people. The second is that for the first time since national population records have been tallied, China will no longer be the most populated nation in the world – India will seize that title. While sheer numbers tell one side of the story, going deeper unveils that the populations of China and India live two very different lifestyles, especially for women. India has democracy and many civil liberties not afforded in China, but fundamentally society within India provides opportunity to men first and to women infrequently. Between 2005 and 2019, female workforce participation in India shrank from 26% the year that Don’t Phunk with My Heart was released (2005 to the unenlightened) to just 20.3% in 2019. In education, India ranks 112 out of 153 countries ranked on women’s educational attainment. In China, workforce participation among women is nearly three times that of India (60.5%), women’s educational opportunities are twice that of India (and more in urban areas). These factors are exactly why India is growing at the rate it is: women are not being empowered; even compared to an authoritarian nation like China. The story of India is the story of population growth more broadly. Where women are not empowered socially and economically for upward mobility, populations boom. A combination of colonial legacy and nationalistic politics are keeping India from having the economic might of China, the EU, or the US. Ironically, the World Bank places India just behind the United Kingdom (the nation that colonized it and failed to complete proper border maps for it before leaving) in terms of nominal GDP. The UK holds roughly 1/20 of the population of India. In the past two years, Nigeria has added over 10 million people to its population. The DRCs population has expanded by 6 million, Tanzania’s by 4 million, in the same time period. Our greatest opportunity in 2023 is to recognize that more population means the need for more resources; and, our current need for resources results in the loss of human life and opportunity. Ergo, the opportunity lies in our response to this reality:

1. How do we consume fewer resources (ie. efficiency, shifting/reusing materials, using less), and
2. How do we empower every person on the planet to plan to have a family so that they can do their best to access the resources they need to provide for it (ie. women’s education and workforce participation, quality accessible health care including contraception, affordable nutritious food and water).

2022 showed us that we have a lot of work to do. From the overturning of Roe v. Wade to the uncovering of Indigenous graves at former residential schools in Canada – the west is not immune to its challenges and recognizing that we also have a long way to go.

We also have the resources and, therefore, responsibility, to make investments that move the needle. As we approach 8 Billion people, ask yourself what your organization is doing to respond to the demand for a historic amount of resources at a time when the current demand has stretched us thin and has put us on path to unstoppable climate change.

Nowhere to Go

Refugees contributed to the largest population increases this year being in Moldova and Poland, due solely to Russia’s invasion of the Ukraine. Refugees around the world are fleeing ongoing conflicts, and they are fleeing the reality of climate change.

The largest reason for refugees remains war and persecution, but it includes a growing cohort of climate refugees within it. Refugee numbers have grown steadily over the last decade. In 2011, the year of the Arab Spring, UNHCR reported 40M people in the world had been forcibly displaced. Last year, during the height of COVID, it reached 89.3M. 2022 will add the largest year-over-year increase to this number since the second world war, and we’re only in September.

This is a year where war has added to this pressure. But what if a major climate event hits a major city or region? With the increasing occurrence of these events, the pressure on people around the world to move where they live has never been greater. With over 100M refugees forcibly displaced in 2023, the world is watching how we treat the most vulnerable asking for a place to call home.

No Ceiling while the Floor Rots

In the largest cities, homelessness is exploding. Meanwhile, Jeff Bezos is building his latest superyacht.

Governments Offer Some Encouragement

The challenges don’t end with the points above, but they underscore the point: things aren’t getting better on their own. Any organization getting by on the status-quo is going to be outrun by those asking the deep questions, spending the time in community, and applying the lessons learned to get better.

In Canada, the status-quo won’t be an option for any foundation with more than $1M in assets. As of January 1, 2023, the disbursement quota – the percentage of total assets you must give to a “qualified donee” – goes from 3.5% to 5%. In other words, organizations are now being asked to give more of their assets, by law, than ever. This is good news for impact as fewer funds sit in endowments and go to supporting organizations on the ground. The Biden Administration too is making record investments. From the recent student loan announcement to the passing of the infrastructure and climate bills, the US is making social investments where they count.

Most significant is its under the radar shift in international development, where the US is leading investment in the “Build Back Better World Initiative” launched by the G7 in 2021. This $40T (yes, that’s T for Trillion) shifts the traditional US philanthropic model to offer more support for financing, insurance, and project expertise that supports investment in the global south.

The investments that governments are making to tackle the range of social, health, and environmental issues facing people and our planet are encouraging catalysts for real solutions.

The Era of Impact Partnerships is Here

Trust-based philanthropy has rapidly moved from idea to practice in a matter of a few years and gaining traction. It’s not hard to see why. The hustle of impact partnerships results in high turnover, volatile metrics/measurements, and wasted capital – not all partnerships are bad, but I have never come across a partnership that couldn’t improve its measures in one form or another.

Is it better to spend time vetting and putting partners through the due diligence process or is it better to spend time collaborating with the partner to tackle the solution together?

More organizations are realizing that the measures are better with the latter approach, and they’re happier too.

Foundations are committing to disbursing the entirety of their endowments in limited timeframes. We’ve seen organizations like the Brainerd Foundation give away their endowment over a 25-year period to achieve significant environmental impact in the Pacific Northwest.

The Community Foundations Canada recently undertook to committing to a policy of endorsing the disbursement of donor advised funds and other held funds by community foundations in the country. This is a hard push on the grantmaking pedal during a period when assets held by philanthropy are at a record high.

For the corporate sector, being philanthropic is no longer an option. From ESG reporting to community investment programs to partnerships to tackle specific issues, corporations are stepping up to the challenge by participating in philanthropy at a larger scale. The challenge for these companies is to turn the default of what is seen as a marketing exercise into a philanthropic one, where reports are real stories of impact as opposed to self-described successes of subjective measurements. The largest public-facing companies are boosting CSR jobs across the board to take on a host of the issues with managing their partnerships, on-the-ground work, and reporting that comes with CSR programs. In 2023, expect the record hires in CSR and granting to be fully onboarded into a new era of giving that will involve fewer grant applications (aka. Less reading and writing) and more time spent (aka. relationship-building) with partners. Look for ways to be introduced to the new hires and people making up the departments at the growing number of CSR entities. Prediction: more companies will formalize CSR departments in 2023 than any other year – precisely because of the adoption of CSR by SME organizations.

5 Things every organization should keep in mind as we approach 2023:

  • New partnership opportunities
  • Piloting big solutions at scale
  • Avoid mission-drift and shiny-object distractions, refocus on your core
  • Authentic reflection of your values is your greatest currency

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