Can Philanthropy be a Catalyst for Systems Change?

MacKenzie Scott’s bold, unconditional, unrestricted giving to nonprofits is ushering in a new era of “trust-based philanthropy,” said Dianne Chipps Bailey, Managing Director and National Philanthropic Strategy Executive for Bank of America.

Dianne Chipps Bailey and Iris Cole

Bailey was the featured speaker at “Philanthropy as a Catalyst for Systems

Change: A Fireside Chat.” The Oct. 9 event at the Anderson Center of Winston-Salem State University was co-presented by REACH Women’s Network and Bank of America. Nonprofit professionals from across the Triad came to hear a discussion with Bailey moderated by REACH Co-President Iris Cole.

Scott embodies a new trend away from “hyperprofessionalization” in the world of philanthropy, Bailey said. Gone are the days when experts flew in from other places, gathered in fancy hotel ballrooms, pondered community problems, and came up with “grandiose plans that were then dropped on top of communities. And guess what? It didn’t work.”

Scott’s multimillion-dollar gifts to nonprofits, including some rural and traditionally underserved organizations, are upending the old ways. The donations are transformative, enabling recipients to grow exponentially, serve more people in need and create meaningful change in their communities. Rather than forcing her grant recipients to jump through numerous hoops to prove they are worthy, Scott looks for more basic assets such as strong, effective leadership and documented impact.

Funders such as Bank of America are also looking at whether an organization is paying its leaders fairly – not overpaying or underpaying – and whether it is investing its assets in a way that ensures long-term stability, Bailey said. “That piece is incredibly critical, because what systems change is now requiring of us is bigger. It’s not one organization tackling a topic or issue. … It’s cross-sector solving, and so that really does take a lot of coordination. Building coalitions takes trust.”

Research on giving shows that most philanthropists don’t independently research the impact of their donations, Bailey said. Instead, they rely on the nonprofit itself to communicate its successes. Despite all the energy many nonprofits commit to perfecting tools like annual impact reports, donors still say they are not hearing enough from nonprofits.

Effective ways to cut through the “noise” include highlighting your nonprofit’s impact through individual stories of people who have been helped. Inviting donors into your organization in other ways, such as volunteering, gives them a chance to see your work from the inside and strengthens their commitment, she added.

“You’ve got to work through different ways of communication strategies to get there, because that will also change their hearts and minds, which ultimately is your number one job. … If you remember nothing else from today’s conversation, I want you to remember something about donor motivations: The number one reason that people give is their personal values and their personal interests.”

Despite uncertain times, there is much reason for optimism in philanthropy, particularly in the tremendous potential of women donors, Bailey said. Women are 7% more likely than their husbands to give to charitable organizations, much more likely to volunteer, and derive more joy and satisfaction from their giving. They are also likely to live longer than their husbands, and with an unprecedented $124 trillion of inherited wealth coming down from aging Baby Boomers, younger Boomers and Gen Xers present a wealth of opportunity, she added.

Women do tend to give lesser amounts to a broader range of nonprofits than men, Bailey said. “If you are only looking at the size of the gift, you’re not really seeing their full potential as a donor, because they do scatter their giving. You can ask them to give more, and coalesce around their giving by engaging them as volunteers. Women are the future of philanthropy, and the future is increasingly now, because they’re earning more money and they’re also inheriting more money.”