The long-held version of philanthropy entails writing a check, taking the tax deduction, and possibly attaching a name to a building, program, or cause. Today a new breed of purpose-driven funders is redefining what it means to deploy capital that solves problems. They understand that no one form of capital is sufficient; instead, layering a combination of philanthropic, , and for-profit funding can help solve problems that have confounded philanthropists and municipalities for generations. Like funding a company to achieve certain goals, funding change requires not just one form of capital, but a capital stack. It requires a deep knowledge of both the problem and the ecosystem in which it operates. The key is determining where one can infuse the right forms of capital within an existing ecosystem to disrupt, evolve or redefine entrenched behaviors and systems. The capital stack must work together, and be funded appropriately, to solve problems such as affordable housing, food deserts, and education outcomes, to name a few. And a new breed of professionals is helping to guide these funders to achieve purpose-driven results.
Discovering the “Why” behind purpose
Historically, philanthropic families focused only on their grantmaking with specific nonprofits that fit their areas of interest. However, the behavior of the ultra-high net worth and family offices — a key source of wealth for the public sector — is moving beyond two-pocket thinkers to one-pocket capital deployers. That is, rather than viewing philanthropy as a one-way street for grant-making, they deploy capital — based on their values and impact goals — across a spectrum of business models, from nonprofit to hybrid to for-profit. Understanding their “Why” is a key first step to ensuring the impact remains focused on what is most important to the family and aligned through multiple generations.
“These families and individuals often seek guidance on identifying, articulating, and executing their world view,” said Avery Fontaine, head of Purpose at PNC Private Bank. “We work with at least nine vehicle choices — some nonprofit, some not — to facilitate a family’s purpose in the short- and long-term. We take our self-orientation out of it. Our job is to help the family or individuals accomplish their goals. Likewise, the nonprofits we work with also need help better partnering with these families. This behavior shift is transforming how funders think about problem-solving while simultaneously changing nonprofit capitalization and fundraising.”
Identifying the “What” of your purpose
By establishing the “Why,” the next obvious question would be “What?” But what exactly? Traditionally, families would ask, “What areas are we going to fund?” or “What nonprofits do we partner with on this subject?” The modern version of this is instead, “What problems do we want to solve and with what types of capital?” There are multiple exercises that explore preferred behaviors, locations, engagement styles, timelines, rising generation goals, root causes, and levels of anonymity. With a few questions, the Purpose team at PNC Private Bank tailors the experience to the family or individual. Ultimately, this leads to an outcome that is more comprehensive and useful for the family than the traditional approach of using process of elimination on a long list of subject areas.
The “How” of it all
Identifying why an individual or family needs to be involved in a common purpose and then examining what problems to solve are necessary initial steps. The goal, of course, is determining how to execute on these ideas. A newer strategy is to pair a 501(c)(4), which is not a charitable vehicle, with a charitable trust or donor advised fund. We see the Koch and Chouinard (Patagonia) families doing this: advocating for their beliefs with policymaking and tying in a philanthropic component. “The rising awareness that there are multiple paths to problem-solving, often simultaneously, leads many purpose-driven individuals and families to rethink old stereotypes of philanthropy and seek a more disruptive, entrepreneurial approach,” said Fontaine. “They are not abandoning philanthropy, but instead are pairing grantmaking to nonprofits with advocacy, lobbying, and social entrepreneurship to inject resources into the ecosystems they believe need more help.”
So, while philanthropy is a wonderful tool to have in the toolbox, PNC Private Bank has been at the forefront of offering and professionalizing the concept of “purpose-driven advice” rather than “philanthropic advice.”
It’s an approach that helps philanthropic-minded individuals and families not only maximize their impact, but also solve the problems they view as most consequential.
"Certainly, the technological and generational shifts we’re all experiencing are leading to a renewed sense of possibility and opportunity to solve age-old problems such as poverty, hunger, poor education outcomes, illness, and healthcare access, to name a few,” said Fontaine. “It’s an exciting time for those who are serious about aligning their values with their impact and ensuring their family’s purpose endures for generations to come.”
