In the 1960s, ‘the Negro Problem’ was a key agenda topic for a board meeting at the Ford Foundation. This reminder by Darren Walker, the current President of the Ford Foundation, during a public event in New York in April 2024, signals how far the philanthropic consciousness and discourse have shifted.

Today, the criticisms of traditional philanthropy are both well-known and widely accepted by the philanthropic community. These range from the wealth inequities that the investments of the world’s largest Western philanthropies risk perpetuating, to the unreasonable demands on nonprofits, to the fickleness of family foundations. As a result, trust-based and participatory philanthropy are top of mind for most global foundations.

In 2021, 88 percent of large philanthropic foundations in the US believed that involving the local communities makes for more effective grantmaking. Mackenzie Scott is among the tiny and exceptional group of philanthropists who have, in fact, acted upon that belief. She relies on ‘quiet research’ to evaluate and select community-based non-profits in a way that ‘limits burden on non-profits and avoids diverting them from their work.’

While this approach has enabled her to give away a sum of USD 17+ billion since 2019, it isn’t perfect either. After all, the quiet research into nonprofits, mostly from the Global South, is led by Western-educated minds, and the burden of strategically deploying an unprecedented volume of capital falls solely on the nonprofits.

However, the bigger problem lies with the larger group of philanthropic foundations, who are aware of the post-colonial call for more equitable philanthropy but don’t exactly know what to do about it. As Prof. Melissa Berman from Columbia University puts it ‘there is no box for power sharing’ in a funder’s investment checklist today.

Philanthropy is voluntary, and so too will be the journey to becoming more equitable. To influence this journey, a more nuanced look at the challenges that equitable philanthropy poses to philanthropic identity, purpose, risk, outcomes, and operating models is required.

To start, the idea of a shift in power shakes the fundamental identity of a philanthropist as the decision-maker. It creates uncertainty about the role they can play, especially beyond check writing. Shifting power may even induce fear in families of not honoring their legacy or discourage new philanthropists from giving altogether. While many next-gen givers feel the burden of capitalism and ‘the urgency to give back quickly’, Vishal Kapoor, a strategic philanthropic advisor, notes that discussing the shortcomings of capitalism ‘with a new tech millionaire from Silicon Valley looking to donate’ will not be effective.

Moreover, philanthropy is a combination of both the mind and the heart. Even if philanthropists logically agree with the case for equitable philanthropy, most philanthropists feel a sense of emotional loss when thinking about conceding their decision-making leadership. As a result, if the approach to shifting power feels like decoupling the mind and the heart for a philanthropist, then it risks robbing them of the sense of purpose with which they started giving in the first place.

On the other hand, foundations may also have some practical concerns about program outcomes and industry health when considering trust-based unconditional grants. Over the last decade, there has been a tremendous push in philanthropy to make evidence-based decisions, monitor progress, and support the best organizations to grow. Unconditional grantmaking feels like a departure from some of these tested principles for many philanthropists today.

Philanthropy is best positioned as high-risk innovation capital where the market doesn’t see money and the government doesn’t see votes or have the capacity to drive change. This is where philanthropy can play can intellectual role of understanding the sector landscape, driving collaboration, taking risks, and innovating. Shifting power implies shifting the burden of this intellectual role too. This may raise concerns around the risk-taking appetite of a community that is embroiled in the issue and may find it relatively harder to step back and see the bigger picture.

Finally, equitable philanthropy means rethinking the very philanthropic model and organizational culture for many foundations. While foundation leaders attempt to do their best to create impact, they are beginning to recognize the need for mechanisms, guardrails and values for approaching equitable partnerships. This requires not only dedicated time and resources but also letting go of redundancies in the current system. Foundations looking to embark on this journey feel burdened about doing it strategically and sensitively without compromising their existing commitments to social impact.

The purpose of outlining the challenges to becoming more equitable from a philanthropist’s perspective is not to condone their inaction. The aim is to recognize that this journey is neither easy nor quick, and that different philanthropists are at different stages in their journeys to becoming more equitable. On the heels of this recognition, philanthropists can begin to have more deliberate conversations with other givers, their advisors, and nonprofits on how they can do better while still retaining a strong sense of purpose and driving impact.

There are no market incentives for building a practical roadmap to this change. Philanthropists have to fund and deploy it, and those who do will emerge as the philanthropic role models of tomorrow. Those who don’t, risk their goodwill, a public backlash, and at worst, perpetuating, not solving, inequities.

Charlotte Vangsgaard is a partner and leads the sustainability practice at ReD, advising and spearheading change management strategies at some of the world’s largest foundations, corporations and non-profits.

Ujjwal Gupta, is a manager at ReD Associates and a business anthropologist, who has contributed to research and papers for governments, Fortune 500 companies, global nonprofits and high-growth startups.