Philanthropy is the practice of giving money, time, and other resources to causes like education, healthcare, the environment, and arts and culture.
The world is facing many challenges. Poverty, climate change, failing healthcare systems, and conflict are just a few examples. While progress can feel like a distant dream, individuals, communities, and organizations are working hard to address deeply-rooted issues. Philanthropy represents just one of the methods. It’s the practice of giving money, time, and other resources to improve society and work for the public good. While philanthropists are usually seen as very wealthy individuals, anyone who consistently donates resources to social causes is a philanthropist. In this article, we’ll provide five examples of philanthropy, describe the different types, and explore the benefits.
What does philanthropy look like?
Philanthropy and charity have many similarities and are often used interchangeably, but they are different. The National Philanthropic Trust, which is a public charity that provides philanthropic expertise, defines charity as short-term action. That could include donating books to a school library. Philanthropy, on the other hand, is a more strategic action focused on long-term impact. Funding a new library counts more as philanthropy than charity. Here are five other examples:
#1. Education philanthropy
Education is a favorite cause for many philanthropists. Countless schools, universities, and college departments exist because of philanthropic gifts, while charitable foundations often focus on improving education around the world. In 2022, MacKenzie Scott gave millions of dollars to schools with no conditions, meaning schools were free to use the money how they saw fit. One Cleveland district decided to create the Get More Opportunities Fund, which would fund projects like college visits, teacher proposals, and school facility upgrades. Scott is just one of many philanthropists who participate in education philanthropy. In the United States, philanthropic gifts to colleges and universities totaled almost $60 billion in 2022, according to a report. That number represents a 12.5% increase from 2021. Organizations give the most money, followed by alumni.
#2. Healthcare philanthropy
Healthcare or medical philanthropy focuses on donating money, time, and resources to support healthcare causes, like research, hospital wings, programs, new technology, and much more. Around the world, the COVID-19 pandemic revealed countless fractures in healthcare systems. Philanthropists did their best to help by funding research, emergency grants, and more. According to one report, US institutional grantmakers and high-net-worth donors gave more than $20 billion toward Covid-19-related efforts in 2020. Early that same year, country singer Dolly Parton donated $1 million to research at Vanderbilt University. Seven months later, Moderan’s COVID-19 vaccine was released. Parton was thanked in the preliminary report.
#3. Environmental philanthropy
Environmental philanthropy focuses on sustainability, conservation, climate change mitigation, and other initiatives that protect the environment. As climate change worsens, philanthropic impact is hard to measure as governments and corporations fail to meet their climate targets. If the world cannot lower its emissions, there’s only so much philanthropists can do. Many have focused their efforts on policy advocacy and campaigning. The Greta Thunberg Foundation, which was founded in 2019, donates any money associated with awards or prizes that Greta receives. Donations have supported climate activists, the International Organisation for Migration, and UNICEF.
#4. Arts and culture philanthropy
Philanthropists have funded theaters, museums, art exhibits, concert halls, and creative arts programs for decades. These places are essential to preserving culture, empowering young people, and fostering creativity. According to Giving Compass, arts and culture philanthropy took off in the late 1970s and early 1980s, but one of the most famous philanthropists was supporting the arts in the late 19th and early 20th centuries. Andrew Carnegie, who made his wealth in oil, steel, and iron, gave away 90% of his fortune during the last 18 years of his life. He founded Carnegie Museums of Pittsburgh and Carnegie Hall, which is one of the most famous concert venues in the world.
#5. International development philanthropy
In the last few decades, philanthropy has played an outsized role in international development. According to The Organisation for Economic Co-operation and Development, over 40 of the largest philanthropic foundations gave almost $10 billion to developing countries in 2020. That money can be used to prevent diseases, support economic growth, protect women’s rights, and more, but critics warn about the power dynamic at play. With money comes power and influence, and as philanthropists pour funds into developing countries, they advance their own agendas at the same time. One Business & Society article points out that philanthropic foundations often have a “conservative and regressive” outcome, and as resources become scarcer, the need for profit will direct philanthropy.
What are the different types of philanthropy?
Philanthropy doesn’t just look like one wealthy individual writing a check. Here are the four main types:
#1. Corporate philanthropy
Corporate philanthropy is philanthropy fed through a corporation. Using donations, initiatives, foundations, and other actions, corporations help advance the public good. It’s not completely altruistic, however, as corporations benefit from good publicity, tax breaks, and improved business value.
#2. Community philanthropy
Community philanthropy occurs when community members get together and combine resources in service of a cause. They usually collect resources to meet a local need, but communities may also send money or volunteers somewhere else to help with an issue that doesn’t directly affect them. As an example, the California Fire Foundation established a disaster relief fund to support firefighters and citizens in Maui, which experienced a devastating fire in early August of 2023.
#3. Religious philanthropy
Philanthropy motivated by religious beliefs is arguably the oldest form of philanthropy. For centuries, people of faith have distributed resources, established organizations, and encouraged others to work for the public good. Today, many philanthropic organizations have religious roots, though many have moved away from directly proselytizing.
#4. Social impact investing
Social impact investing is a newer form of philanthropy with a key distinction from traditional philanthropy. Rather than give money to a cause or organization with no expectations of a return, social impact investors invest in stocks and organizations they believe benefit the world. It’s not true philanthropy, but many people use social impact investing as a philanthropic strategy.
What are the benefits of philanthropy?
Philanthropy has become a major source of funding for nonprofits and government agencies in recent years, which can present certain issues. There are benefits, as well. Here are four of the main ones to know about:
#1. Philanthropy can be contagious
Considering how much change is needed in the world, many people wonder if their philanthropic actions make any difference. What can one person do? Research suggests empathy and generosity could be contagious. Humans have a region in their brains that activates during pain, but it can also activate when humans see someone else experience pain. Known as “mirror neurons,” this phenomenon could help explain how empathy works. Empathy is a crucial part of what motivates giving, and if people live in a society where generosity is the norm, people are more likely to connect to social issues and engage in philanthropic actions.
#2. Philanthropy can help fill in funding gaps
Most organizations (including government agencies) focused on social causes like education, sustainable development, and women’s rights don’t receive the funding needed to make significant changes. Constantly fighting for funds and never having enough is a waste of time and energy, but until there are systemic changes, organizations need money to stay afloat. Philanthropy can help fill in gaps and draw attention to the funding crises affecting just about every social issue in the world. It’s not a permanent solution, but without philanthropy, many organizations wouldn’t survive.
#3. Philanthropy can unite communities around a cause
When people think about philanthropy, they often picture one wealthy individual doling out funds to their favorite organizations, but one of the types of philanthropy – community philanthropy – is rooted in a grassroots, collaborative approach. Community members come together and collect resources either from the community itself or from external sources. There’s lots of discussion about where funds and other resources go, so instead of concentrating power in the hands of one person, philanthropy can distribute power and promote participation from every community member. When those most affected by decisions are in charge of the decision-making, philanthropy has significantly more impact.
#4. Philanthropy is good for philanthropists, too
Philanthropy should always benefit causes like education and healthcare first and foremost, but there are benefits for those who give, too. Research consistently shows how generosity and kindness trigger the production of chemicals like serotonin, dopamine, and oxytocin, which help regulate your mood, give you pleasure, and make you feel connected to others. Health benefits include lower blood pressure, reduced stress, and even an extended lifespan. Philanthropists may also experience a renewed sense of meaning and purpose when they donate resources.
How do you become a philanthropist?
The term “philanthropist” has become closely associated with people rich enough to start foundations and fund entire libraries or hospital wings, but anyone can become a philanthropist. Here’s what you do:
#1. Identify the causes you care most about
Countless causes need your money and time, but it can get so overwhelming, it’s hard to know where to start. First, identify a few causes that matter the most to you. It could be something affecting you or your loved ones, or something outside your community you want to get more involved with.
#2. Check the credibility of an organization before you give your support
Once you know what causes you want to focus on, identify the organizations you think are doing the best job in those areas. You can check a nonprofit’s credibility on sites like Guidestar and Charity Navigator. Organizations also release annual reports that let you see how they’re distributing their money, what percentage goes directly to programs, and so on. Smaller, local organizations may not have structures that are quite this formal, but you can ask around to see what their reputation is like.
#3. Give strategically
Strategy is one of the biggest differences between charity and philanthropy. Once you’ve identified causes and organizations you want to support, consider setting up recurring donations or a volunteering routine. Thinking strategically helps you make the most impact. If you want to formalize your giving even more, talk to a financial advisor. They can help with strategy, too. A strategic mindset also helps you hold yourself and any organizations you support accountable. If you’re just giving your money away or showing up to volunteer shifts without much thought, you might miss opportunities for improvement, as well as problems that threaten the effectiveness of an organization.
#4. Form a group
Do you know other people interested in philanthropy? Consider forming a group of like-minded individuals. It can be something informal, like a group of friends that meets once a month to discuss what organization to donate to or volunteer with, or a more official nonprofit or foundation. What works best depends on everyone’s skills, finances, schedule, motivations, and experiences. If you decide to establish something formal, be sure to consult with a financial or business advisor if you have any questions or concerns.
