Technology and the democratisation of philanthropy


Cor Hoekstra


The philanthropic community has truly world-changing financial resources. Imagine if its technology infrastructure were equally robust.

As a small-scale philanthropist, I’m all too familiar with the barriers and inefficiencies faced by both nonprofits and smaller donors like me. I’ve dedicated the second half of my career to easing these challenges by joining the effort to bring modern technology to the nonprofit ecosystem – both to individual donors and to nonprofits.

My focus starts with donors. I believe that philanthropy should not be limited to those with the most privilege and that society will benefit most when people at all economic levels are empowered to make a difference. The future of philanthropy should rest in the hands of the many who care, rather than solely with a wealthy few. In other words, I believe we would do well to magnify the impact of community giving.

The technology and financial services sectors are now aiding a cultural shift that is well underway – the potential for the 99 per cent to join forces with the one per cent in funding the nonprofit causes that will make the world a better place for us all. The following is a look at some of the latest efforts to democratise philanthropy and a glimpse into what’s ahead, from my perspective where philanthropy meets financial services and technology: in the fintech industry.

Welcoming enthusiastic newcomers to the giving community

Giving has traditionally taken two distinct forms. In its more sophisticated and intentional form, we have philanthropy, an informed and strategic approach to giving that is sustained over a period of years. This has typically been the realm of high-net-worth individuals and institutions with deep involvement in their causes, a clear sense of goals, and visibility into the important impact they make.

At the other end of the spectrum, we have ad hoc giving by charitably inclined people. While this type of support is important, it tends to be smaller in amount, shorter-term, often emotionally driven, and less likely to be sustained over time. With this approach, it’s much more difficult for people to take a methodical approach to their giving, understand their impact, or build a sense of ongoing participation.

The current era of philanthropy is being defined by both the growing generosity and the distinct preferences of a new generation of givers, from across the economic spectrum.

The reason for these differences often comes down to awareness and accessibility. Simply put, the infrastructure of philanthropy has been designed with the biggest donors in mind, leaving smaller donors unsure how best to get involved. These differences are now beginning to disappear as the technology and financial services sectors offer the average consumer increasingly convenient ways to give back and feel empowered to truly make a difference.

The Influence of Tech & Financial Services

Established banks, as well as newer ‘challenger banks’ have taken the lead, using technology to help all types of people take a more strategic approach to giving, aligned with personal and financial goals. Banks offer new digital tools that make it simpler for people to manage giving on an ongoing basis alongside other financial activities like bill payment, college savings, and retirement planning.

There’s also a growing movement to draw everyday donors into donor-advised funds (DAFs), historically a philanthropic financial tool reserved for the ultra-wealthy. DAFs allow people to make a tax-deductible donation of assets and then invest those liquidated assets, letting them grow tax-free until they make a grant to their nonprofit of choice. In the fall of 2020, long-established DAF providers Fidelity Charitable and Schwab Charitable eliminated high account balance minimums, opening the doors to smaller donors for the first time. Charityvest, B Charitable and Endaoment all launched DAF-based digital platforms to make it easier for the average American to make their charitable giving more strategic and impactful, with options to donate cash, stocks, cryptocurrencies and other assets.

Next-gen philanthropists: the one per cent and the 99 per cent

The past year has seen a steady stream of surveys and analyses showing a generational shift in thinking about giving and wealth management. As the Great Wealth Transfer shifts trillions of dollars in assets from older generations to their children, the new ‘one percent’ are questioning their privilege. They are also embracing new tools and models for sharing their wealth, from cash apps like Venmo to new services offered by a new breed of neobanks that include Cheese and Porte and online investing apps like Betterment that let people donate from their stock portfolio.

Meanwhile, self-identified philanthropy now extends far beyond traditional socioeconomic strata. Three out of four Millennials now consider themselves philanthropists, regardless of their actual level of giving. Millennials and Gen Z are also more likely to donate quarterly, rather than the two or three gifts per year made by Baby Boomers and Gen X.

As these new donors increase their giving, they’ll also want to deepen their involvement. By providing a clearer sense of their impact, nonprofits can offer a more rewarding experience while building a more sustainable relationship. The ongoing modernisation of our infrastructure and democratisation of the philanthropic ecosystem will now help these individuals participate in full-fledged philanthropy at all levels. Here’s what to expect in the coming year.

Making philanthropy as easy as clicking a button

The current financial infrastructure doesn’t make it easy for the average person to make the jump from ad hoc or occasional donor to philanthropist. This limits the ability of people to participate while leaving large pools of potential funding untapped by nonprofits. But not for long. As modern digital giving tools make it frictionless for people to discover causes and charities that align with their interest, make and manage donations aligned with their giving goals, find information, and access financial advisors, we’ll see the giving community swell with new entrants. 

Millennials and Gen Z have come of age in a world of digital convenience and self-service, and they expect the same for their giving experience. In 2020, more than half of Millennials expressed a preference for online giving, helping drive a 12.1 rise in such donations. Mainstays of online life such as Venmo, PayPal, and Facebook have tapped into this spirit by enabling online and mobile donations with click of button, helping drive $2.5 billion in total U.S. donations during a 24-hour period on 2020’s Giving Tuesday.

The infrastructure of philanthropy has been designed with the biggest donors in mind, leaving smaller donors unsure how best to get involved. These differences are now beginning to disappear.

In addition to new ways of giving, the democratisation of philanthropy will also offer new ways to elevate small donors to the full philanthropic experience. From finding the causes they care most passionately about, to learning about the impact they’re having, to making plans for their giving over time, modern giving platforms will take a more central role in curating and suggesting specific causes and charities. One example of this is the NAVI tool introduced recently by Vanguard, which helps donors identify charities on the frontline of Covid. Recipient charities will be able to digitally connect with both current donors and like-minded networked donors by way of storytelling, creating a virtuous cycle while helping to address the need for greater transparency in the way donations are used. Experiences like these will help motivate these new donors to remain engaged and keep contributing for the long run.

Building new partnerships for the future of giving

Modernising the infrastructure of philanthropy will be a joint effort among stakeholders not only in the nonprofit world, but also in financial services and technology. Bankers, asset managers, and financial advisors will play a growing role in helping the new generation plan and manage their philanthropy, while new digital tools will enable more convenient, tax-efficient, and self-directed giving. The result of these efforts will be a win-win for everyone involved.

When donors at all economic levels can give as part of a larger financial plan, non-profits will receive much-needed additional funds to drive meaningful change. Financial institutions will strengthen customer ties by bringing the very personal act of giving into the ongoing banking/financial advisor relationship. And donors will be better able to align their giving with their values, financial goals, and giving goals.

The current era of philanthropy is being defined by both the growing generosity and the distinct preferences of a new generation of givers, from across the economic spectrum. With the resources to make a difference, the digital technologies to do so more easily, and the support of the finance and technology sectors, more and more ‘average’ individuals will mature from occasionally charitable people to thoughtful, strategic philanthropists. I’m looking forward to a world where more people, not less, take ownership of philanthropy.

Cor Hoekstra is the CEO and Co-Founder of

Tagged in: Next Philanthropy

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