Is the philanthropic sector a fragmented market waiting for consolidation or an opportunity to harness the capability and capacity of the willing?

28th July 2014

Philanthropy is often driven by good intent and emotion.  Emotional attachment, however, brings with it opportunities and challenges.  People are willing to go the extra mile, make commitments others are unwilling to make and can succeed where others may have given up.   Resources, knowledge, experience and the ability to see things others can see however, may limit their ability to maximise their effectiveness.

The proliferation of small charities and foundations has been questioned by some in the community who see opportunities for consolidation and mergers that may lead to administrative efficiencies.  These efficiencies may not only be in the form of reducing overheads, but also in the form of redeploying limited resources to increase access to new and necessary skills.

Whilst consolidation may be one consideration, so are strategic collaborations. Strategic collaborations may work well for organisations that share common goals, but have different strengths.  We have previously written about the difficulties of ‘effective giving’.  That article referred to high-net-worth individuals and their desire and ability to make effective giving decisions.

Some small charities and foundations may also find themselves in a similar position where their fundraising has been successful, but their ability to be engaged in the giving process, including due-diligence, more limited.  This may be particularly true in complex areas such as medical research.

Collaborative giving is not about entrusting another to support projects on your behalf, but about the development and implementation of an agreed strategy that includes selection, reporting and ongoing engagement between the collaborating parties.  Pilot programs can be a good way to test the waters and build relationships. 

Of course, relationships are not only between organisations, but people.   We would encourage donors, charities, families and advisors to consider how collaborative frameworks can be more effective and increase the ability to make a difference and the enjoyment of giving.

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Does a larger number of charities with a similar purpose affect confidence in the sector?

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Do donors appreciate the difference between charities with similar missions?

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