‘I never make predictions, especially about the future,’ joked Yogi Berra, baseball star and legendary American wit. When it comes to predicting trends in philanthropy, his advice is particularly apt, since it requires forecasting both the supply of philanthropic capital, which means charting the likely path of economic growth, share prices and social norms, and the demand for private money to play a part in tackling society’s problems. Nevertheless, health warning duly provided, I will try.

Overall, I expect far more philanthropy in the years ahead, done better than ever, and that it will be increasingly global both in terms of where the money comes from and where it is spent.

The fifth Golden Age of Giving
At this time of austerity, this may seem like wishful thinking. In Philanthrocapitalism, my first book with Michael Green, we make the case that the world is in the early years of the fifth Golden Age of Giving. Each of the previous golden ages the start of a similarly gilded period of wealth creation, often the result of entrepreneurial innovations that were then adapted to facilitate more effective giving. The first was in the middle ages, as the new merchant classes of Europe built fortunes through trading; the second in the 18th century, following the invention of the joint-stock company; the third in Victorian Britain and continental Europe as the industrial revolution took hold; and the fourth in America as new industrial processes created what remains the world’s biggest economy.

The current Golden Age of Giving is being driven by a long economic boom that began in the 1980s, produced by a combination of rapid technical innovation, market liberalization, reduced marginal tax rates for the wealthy, increasingly liquid equity markets and globalization. The collapse of Lehman Brothers in September 2008 marked a significant inflection point in this boom, as Michael Green and I argue in our book The Road From Ruin.

Prior to that point, the strong global economy seemed to be the rising tide that lifted all boats, even if growth was strongest in the developing world where new fortunes were created and hundreds of millions of people were lifted out of poverty. The policymakers of the rich world became increasingly confident that they had found the magic formula to grow jobs and keep inflation low – what Ben Bernanke, the chairman of America’s Federal Reserve, called the ‘great moderation’.

The developing world moves centre-stage
After September 2008, that confidence was shattered. It became increasingly clear that the benefits of growth for average families in the developed world had been hugely exaggerated by the ready availability of debt. This false sense of wealth fuelled a massive housing bubble. The bursting of that bubble made clear that in America and parts of Europe the average family had barely got any better off economically in the previous decade, while at the same time creating a deep sense of economic insecurity. As economic growth in the developed world faltered, it became clear that the centre of gravity in the global economy was moving rapidly to the developing world.

Much of the growth that has taken place since 2008 has been in the economies of developing countries. In every quarter since the collapse of Lehman Brothers, emerging economies have generated at least two-thirds of the global increase in total GDP, and in some quarters all of it.

This shift from developed to developing countries is expected to continue for many decades, with dramatic consequences for the shape of the global economy – and with it, the potential for philanthropy. In 2011, America contributed almost 23 per cent of total global GDP and the 15 Eurozone countries 17.1 per cent, slightly more than China, which accounted for 17 per cent, while India provided 7 per cent, according to the OECD. By 2030, China is forecast to generate 28 per cent, compared with just under 18 per cent from the USA and less than 12 per cent from the Eurozone.

It remains to be seen if this growth will be accompanied by any significant change in the percentage of national income that is given away, which currently seems to be far lower in developing countries than in developed ones, especially America. One caveat: there are few reliable studies comparing levels of giving between countries, not least because of inadequate data collection and differences in what is defined as giving. Astonishingly, the most cited source on international differences remains a rudimentary 2006 study by the Charities Aid Foundation, which looked at 12 countries, ranging from America (with 1.7 per cent of GDP given annually) and Britain (0.7 per cent) to France (0.14 per cent). CAF’s survey-based World Giving Index, which suggests that giving fell across 146 countries in 2011, has yet to win broad acceptance.

Following the markets
GDP growth trends may be reasonable indicators of giving by the general public, which in America, for example, is about ten times greater than giving by the super rich, even though it is the occasional big gifts rich of the rich that tend to grab the headlines. Giving by the rich, by contrast, is more closely correlated to changes in share prices, as Patrick Rooney of the Center on Philanthropy at Indiana University points out.

The same is true of endowed foundations, where the main cause of variations in asset values is movements in share prices, particularly in the US, because of the legal 5 per cent payout requirement. In other countries, payouts are typically well below 5 per cent. In Britain, for instance, in 2010 two of the biggest foundations, Garfield Weston and the Children’s Investment Fund, paid out only 0.8 and 1.6 per cent of their assets respectively, according to Cass Business School. I would like to see a 5 per cent payout rule introduced everywhere, and believe that this would increase the amount of money available to grantees. However, this idea is strongly resisted by the foundation sector and there is little sign elsewhere of the sort of populist backlash against foundations that prompted the introduction of the payout rule in America in the 1960s.

In striking contrast to global GDP, the world’s stock markets have not shifted much to the developing world. During the crash, the developed countries’ share of global market capitalization fell from around 95 per cent in 2000 to 74.3 per cent – still well above their share of GDP – and by 2012 it had even edged up a little, to 75 per cent. This is partly because the overseas arms of developed world companies have benefited in the form of higher share prices from developing world growth, and partly because it is more attractive for developing country companies to list on exchanges in the rich world. This makes it complicated to work out where control of this stock market wealth really resides, and thus how and where some of it might potentially be given away.

Lifting all boats – or only the luxury yachts?
All over the world, the economic prospects for the rich improved rapidly after the end of the financial crisis that followed the collapse of Lehman. This reinforced a growing trend of inequality at the very top of the income and wealth ladder. According to a 2011 study by the OECD, in the previous 20 years inequality between the incomes of the richest and poorest deciles of the population rose in most developed countries, even as it declined in developing countries (although even there, the wealth of the very richest is growing faster than anyone else’s).

The OECD argues there is nothing inevitable about this. Policies focused on investing in human capital through education and training, active labour market policies that help get the unemployed back to work and the underemployed into more fulfilling and lucrative jobs, together with tax and benefit policies designed to ensure no one has a disincentive to work, could result in the sort of ‘inclusive growth’ that really is the rising tide that lifts all boats. So far, however, despite the persistent shockingly high unemployment in developed countries that followed the financial crisis, it seems to me that there has been little progress in introducing such policies. Unless that changes, the trend of growing inequality is likely to continue.

More billionaires and more of them from developing countries
According to Forbes magazine’s annual ranking of billionaires, the number plunged from a peak of 1,125 in early 2008 to 793 in 2009. But by 2013, the total had soared to a new high of 1,426. In 2008, 444 of the billionaires (just under 40 per cent) were Americans, while Russia, India and China between them accounted for 182 (just over 16 per cent); by 2013, however, although the US still had the most billionaires, their share had fallen to 31 per cent, while Russia, India and China together boasted 287 (20 per cent). A growing number of billionaires are from other parts of the developing world, from Indonesia to Brazil and Mexico, which in Carlos Slim now boasts arguably the world’s richest man.

There are similar trends among the mere millionaires. According to Cap Gemini, which publishes an annual Global Wealth Report, the number of high net worth individuals (defined as having at least $1 million in financial assets) now exceeds 11 million, up from 8.2 million in 2004. Over 3.4 million of these millionaires were in the Asia-Pacific region, roughly the same as in America and slightly more than in Europe.

The extra sensitivity of the fortunes of the rich to changes in the stock market has increased rapidly over the past 25 years, as a growing number of entrepreneurs have looked at an early age to put money in the bank by getting their start-up an ‘exit’, ideally through a hot IPO (initial public offering). This has created a phenomenon described by journalist Robert Frank (in his book of the same name) as the ‘High Beta Rich’, whereby exposure to financial markets tends to cause the fortunes of the rich to soar disproportionately high during good times, only to plunge dramatically in bad times. To get a sense of this volatility, compare the relatively modest changes in, say, America’s GDP from 2007 to 2010 – up 4.9 per cent, up 1.9 per cent, down 2.3 per cent, up 3.7 per cent – with the roller coaster that was the S&P 500 index of American shares: up 3.5 per cent, down 38.5 per cent, up 23.5 per cent, up 12.8 per cent.

The volatility of their wealth embarrassed a number of rich people when their fortunes went up in smoke. The Scottish retail entrepreneur Tom Hunter surely regretted his public pledge to give away at least £1 billion during his lifetime when he found himself worth far less than that in the aftermath of the financial crisis. My guess is that this chastening experience will limit not so much the willingness of the rich to become philanthropists – the decision by Mark Zuckerberg, Facebook’s co-founder, to give away millions of dollars in his mid-20s is certainly part of a trend to start philanthropy as young as possible – but how far and how quickly the youthful philanthropists transfer their financial assets to a charitable foundation or definitively give them away.

Unless there is significant shift in policymaking, therefore, I see three fairly strong trends continuing:

• There will be more wealthy people with larger fortunes.
• An increasing proportion of these wealthy people will be outside of what we now call developed countries.
• In developed countries (and perhaps developing ones as they approach rich-country levels of GDP per capita), inequality will continue to grow, especially between the 1 per cent and the rest.

Consequences for philanthropy
What does this imply for philanthropy? Judged simply by supply, I’d bet on a lot more billionaires and multi-millionaires becoming active donors; a rising share of super-rich donations as a percentage of total giving in most countries; and the emergence of significant philanthropy in many now developing countries where hitherto it has been relatively insignificant.

However, converting wealth trends into philanthropic trends is not always straightforward. Perhaps government efforts to promote philanthropy with tax breaks – or to end this preferential treatment, as has recently been mooted in both America and Britain – will make a difference, though the evidence suggests that this is rarely the primary influence on why people give.

The Giving Pledge – a new norm for the rich?
Another big unknown is the extent to which in future philanthropy will be a social norm for all who become super rich. In 2007, during my research for Philanthrocapitalism, Bill Gates told me that he reckoned serious philanthropy was currently still very much a minority activity, but that eventually a high proportion of the wealthy would engage in serious giving – ‘more like 70 per cent than 15 per cent’.

Through the Giving Pledge, Gates, together with his philanthro-friend Warren Buffett, is doing his bit to make philanthropy a social norm for the rich. Already, 102 billionaires have signed up. Sceptics point out that this is only 7 per cent of the Forbes billionaires list, so there is a long way to go. Also, most of the signatories were philanthropists before they took the pledge, so arguably Gates and Buffett have simply been preaching to the choir. This is strongly disputed by Buffett, however, who told me last year that signatories of the pledge are likely to give ‘more, sooner’, as well as becoming a source of inspiration for others not yet giving to start doing so – as they have already been to younger entrepreneurs such as Mark Zuckerberg and Elon Musk.

There is also some difference of opinion about whether the inclusion of several non-Americans on the list of new Giving Pledge signatories announced in February is as positive as it first appeared. Most of them, like Mo Ibrahim, are long-term philanthropists. Moreover, I have heard that it had been hoped to create a new Giving Pledge for people outside America, more tailored to local cultural conventions, and that adding these foreigners to the American list was very much a second-best option.

Nor, in proselytizing the Pledge overseas, have Gates and Buffett always been received with open arms. In countries such as China and India, they were told frankly that a society that still stresses dynastic responsibilities will not welcome its wealthy giving away the bulk of their fortunes. On the other hand, in both these countries, and indeed in much of the world, there does seem to be a growing expectation that the rich will engage in significant philanthropy, even if on a more modest scale than in America. Peer pressure seems to be playing a big part here. What tycoon will dare to turn up at, say, the World Economic Forum in Davos without being able to talk proudly of the work of his or her foundation?

Impact investing – less talk, more action
The Pledgers now meet together annually in order, as Warren Buffett put it, to become smarter givers – sharing best practice, seeking opportunities for collaboration, and focusing on topical issues like impact investing. If they can help establish a viable market for impact investing, that will have a significant impact on the future direction of philanthropy, not least by allowing donors to put their assets to work in supporting a philanthropic mission even before they are put to their ultimate charitable use. Today, most foundations still invest their endowments without any thought as to whether the money is affecting their mission.

While I think impact investing makes a lot of sense, I also think it is talked about far more than it is done. Unless this changes, its impact may prove to be minimal. Governments have an important role to play in encouraging it, perhaps through tax incentives and certainly through making as much use as possible of so-called social impact or social progress bonds. I am especially optimistic that it will take root in developing countries, where win-win opportunities for private and commercial collaborators continue to increase, perhaps before it does so in rich countries.

A crucial factor will be whether the new generation of high-profile philanthropists can deliver results, much as the Carnegie Corporation, Rockefeller Foundation and Ford Foundation did in their heyday. Today’s wealthy tycoons are highly motivated by winning, so if philanthropy becomes associated with getting things done, those that do it will do even more and others will also try their hand at it, competing to be the best. Fail to deliver, however, and philanthropy may start to lose its appeal to the rich. That is why the new techniques and risk taking that I write about in Philanthrocapitalism are so important. As long as philanthropy is allowed to – and takes the opportunity to – play to its strengths of long-term thinking, risk-taking and expertise in applying the best methods of business, then I expect the list of successes to grow fast, with a consequent virtuous spiral of increasing giving.

Retail giving
Will smarter giving have a similarly positive effect on so-called ‘retail’ philanthropy by the general public? The emergence of social media has brought with it the possibility of even small donors having far more engagement with those they are trying to support, and meaningful feedback about the impact of their gift. I am hopeful that this will help overcome the feelings of dissatisfaction many people have when they put money in a tin and never hear about it again, or are waylaid in the street by ‘chuggers’ (charity muggers). Combined with more sophisticated mass media and social media campaigns to encourage giving – such as the #givingtuesday campaign I helped launch in America last year, or the ‘one yuan a month’ campaign by film star Jet Li in China – there may be an upward shift in giving rates by the general public. This could be part of a big step forward in the development of a well-functioning global civil society, helped by the spread of social media (and, perhaps, as with Ford’s work in the 1960s and 1970s, by some smart big philanthropy). But we shall see.

I also expect big companies to play a more important role in addressing big social and environmental challenges. Not surprisingly, corporate giving is closely related to corporate profitability, which has been rising steadily around the world as a share of GDP. However, I expect companies’ most significant role in social and environmental issues will be not so much through giving as through a more enlightened approach to their strategy, along the lines described by Harvard Business School professor Michael Porter in his work on creating ‘shared value’ for shareholders and society. Again, these are early days. How Unilever does in executing its bold strategy of doubling its sales while halving its environmental footprint will be a key indicator of which way the corporate wind is blowing.

Where public provision meets private
The previous Golden Ages of Giving have arisen both because of an increased supply of wealth to be given and because of a growing demand for the money and services of philanthropists. Even prior to 2008, demand had been growing, both because of emerging new problems that were not easily tackled by governments (from climate change and pandemics to human trafficking) and because governments were struggling to meet obligations placed on them by previous generations of politicians. The financial crisis of 2008 significantly increased the pressure on many governments, by increasing demands for basic welfare services and causing them to massively increase borrowing to levels where financial markets demanded spending cuts as the price of continuing to lend. At the same time, rapid development in countries such as India and China is bringing with it pressure to tackle huge problems such as rising pollution and to build a viable welfare safety net.

It seems clear that governments everywhere will increasingly let private giving and business play a bigger role in delivering social progress, often in partnership with them. A big challenge will be to get the division of labour right. The more philanthropists are allowed to indulge in risk-taking and long-term or contrarian thinking, and the less they are looked on as deep pockets to be picked, the more likely they are to play a positive role.

Non-economic measures of performance
One guide to where the most innovative thinking is needed to move countries forward is the new Social Progress Index, launched in April. This project, which was initially proposed by a Global Agenda Council of the World Economic Forum that I chaired and was then taken forward with philanthropic support, compares countries according to a battery of non-economic measures of social and environmental performance.

Among other things, it highlights countries that lag behind other countries of similar GDP in terms of their progress. America, South Africa, India and Russia all delivered significantly less social progress than you would expect given their GDP, according to the first version of what will be an annual list. In these countries, there ought to be particularly strong demand for innovative solutions of the kind that philanthropists might provide. Strikingly, there has recently been a lot of philanthropic action in India focused on building the capacity of civil society to properly hold government to account. The initiative to create a unique digital ID for every Indian citizen, which involves the Indian government, philanthrocapitalist Nandan Nilekani and the private sector, may show how giving private sector innovators a leading role can enable developing countries to leapfrog developed ones in creating a well-functioning 21st-century state.

Beyond the MDGs
Another sign of how the world is changing is the leading role that philanthropists and businesses are playing in the debate over what international development strategy should come after the Millennium Development Goals for 2015.

My greatest uncertainty is whether politics will evolve in ways that increase the demand for philanthropy. Will the public become increasingly hostile to the activities of the super-rich and will that lead the rich to use philanthropy as a way to improve their standing with the public? Alternatively, increased philanthropy could be seen as a demonstration of growing plutocratic influence, so there could be political pressure to curb these interventions.

Andrew Carnegie’s call for the rich to embrace philanthropy (‘the man who dies rich dies thus disgraced’) was based in part on his belief that giving could help protect capitalism from socialism. By contrast, neither Gates nor Buffett believe that today’s philanthropists are motivated by the idea ‘that this is going to calm the masses’, as Buffett put it. In fact, he observes, ‘it is amazing to me the degree of inequality that exists without people really getting upset’.

I wonder how long inequality can continue to increase without significant numbers of people getting upset, or indeed seriously angry, and what activism they would need to engage in to convince the rich to give more away, if only as a precaution. Maybe less than Warren Buffett thinks. At any rate, hopefully it won’t be growing fear that persuades the rich to reach further into their wallets.

As for the rest of us, maybe our policymakers will surprise us by creating the right conditions for significant inclusive economic growth. Then we will all be able to make our personal giving pledges and take advantage of the technological advances that make it easier to give even small amounts in ways that make a measurable difference. Then we can all enjoy the warm buzz that the neuroscientists tell us philanthropy generates. Maybe. But as Yogi Berra also quipped, ‘It ain’t over ’til it’s over.’

Matthew Bishop is New York Bureau Chief of The Economist and co-author with Michael Green of several books, including Philanthrocapitalism: How giving can save the world. Email MatthewBishop@economist.com