I recently attended the Victoria Forum, where over 800 philanthropic leaders gathered to discuss the future of Canada, our communities, reconciliation, public policy and how we as leaders can best tackle the complex issues in front of us. The environment was filled with courage, optimism and a commitment to “act”.
I left reflecting on one important question on my flight back home: Have we over financialized generosity?
Generosity is one of humanity’s oldest social technologies.
Long before foundations, charitable tax credits, donor-advised funds, impact measurement or endowments, people shared with one another. We shared food. We cared for children who were not our own. We helped neighbours rebuild after disasters. We cared for the sick and elderly. We welcomed strangers. We contributed our labour to things our communities needed.
Generosity helped make community possible.
At its core, generosity is not primarily a financial transaction. It is a recognition of a relationship: I have something that may help you, and your well-being matters to me.
That “something” might be money. But it might also be time, knowledge, food, land, relationships, influence or care.
Over time, however, we built institutions such as community foundations to organize generosity. And those institutions accomplished something remarkable. Philanthropy allowed generosity to become larger, more durable and more sophisticated. Community foundations could aggregate resources, invest them, preserve them across generations and deploy them intentionally against some of society’s most difficult problems.
But institutionalization also changed generosity.
Increasingly, we translated generosity into financial capital—and then began applying the logic of finance to how that generosity was managed and deployed.
The result is one of the central tensions facing philanthropy today. One that was on my mind after many conversations at the Victoria Forum.
When generosity became capital
Consider the journey of a philanthropic dollar. Someone begins with an act of generosity. They give something away.
That gift enters a foundation and becomes an asset. The asset becomes part of an investment portfolio. The portfolio is managed according to principles of diversification, risk and return. Investment income is generated. A portion is eventually distributed through grants.
None of this is inherently problematic.
In fact, it has allowed philanthropy to build institutions capable of serving communities for generations. But something subtle happens along the way. The language of generosity begins to resemble the language of finance.
We talk about portfolios. Investments. Returns. Leverage. Risk. Performance. Scale. Outcomes. Due diligence. Eventually we even begin talking about the “return on investment” of generosity itself. And that raises an uncomfortable question:
Have we become better at managing the financial assets created by generosity than at cultivating generosity itself?
The financialization of philanthropy
Financialization occurs when financial concepts, incentives and measures increasingly shape activities that were previously governed by other social values.
In philanthropy, financialization does not simply mean that foundations invest money. Responsible investment management is necessary.
The deeper issue arises when financial logic becomes the dominant way through which we understand social value.
A foundation may begin asking whether an intervention can be scaled, whether an organization is sufficiently efficient, whether outcomes can be quantified, whether philanthropic dollars can leverage other capital, or whether a social problem can be transformed into an investable opportunity.
Again, these can be useful questions. But they are not the only questions that matter. What is the return on investment of belonging? What is the market value of reconciliation? How do we price the value of a neighbour caring for another neighbour? What is the financial return of a community in which people trust one another?
There are dimensions of human flourishing whose value is enormous precisely because their value cannot adequately be represented by their price.
Water provides a simple illustration and I spoke to this on a Panel discussion at the Victoria Forum regarding “Philanthropy’s Next Horizon”.
A glass of municipal tap water costs almost nothing. Put essentially the same fundamental resource into a branded plastic bottle, transport it, market it and sell it through a retailer, and its price can increase hundreds of times.
The water has not become hundreds of times more necessary to human life. What has changed is its capacity to be commodified. This distinction between price and value matters enormously for philanthropy.
Because philanthropy exists largely in the territory where society produces extraordinary value that markets cannot fully capture.
The danger of making every problem investable
The growing interest in impact investing, social finance, blended finance, catalytic capital and mission-related investing represents an important evolution in philanthropy.
Foundations should absolutely be asking whether more of their assets can contribute to their missions rather than separating the investment portfolio from the granting portfolio. But we should resist the temptation to conclude that every social problem is simply an investment opportunity waiting for the right financial instrument. Affordable housing may support investment. Renewable energy infrastructure may generate returns. Social enterprises may repay patient capital.
But reconciliation, community organizing, democratic participation, belonging, arts and culture, advocacy, caring for vulnerable people and rebuilding trust may generate enormous social value without producing an attractive financial return.
That does not make them bad investments.
It may mean investment is the wrong metaphor altogether.
The question philanthropy should ask is therefore not:
How do we make this problem investable?
It should be:
What kind of capital does this problem actually require? Sometimes that will be market-rate investment. Sometimes patient capital. Sometimes a guarantee. Sometimes government expenditure. Sometimes an unrestricted grant. And sometimes what a community needs most isn’t financial capital at all. It needs relationships, leadership, knowledge, convening power, volunteers, institutions or trust.
From transactions back to relationships
This points toward another transformation already underway in philanthropy. Traditional institutional philanthropy often organizes giving as a transaction.
A foundation establishes priorities. Organizations submit proposals. Funders assess them. Successful applicants receive money in exchange for delivering specified activities and outcomes. They then report back to demonstrate that the terms of the transaction have been satisfied.
There are good reasons for accountability. But generosity did not begin as a compliance system. It began as a relationship. Trust-based philanthropy is therefore more significant than simply shortening grant applications. Its central insight is about power and relationships.
Multi-year unrestricted funding, reduced administrative burdens, community participation and mutual accountability all begin from a different assumption: the people closest to a community’s challenges possess knowledge and agency that capital alone cannot purchase. The Trust-Based Philanthropy Project explicitly describes practices such as unrestricted multi-year funding, streamlined paperwork, feedback and support beyond the cheque as ways of creating more equitable funder relationships. Community Foundations of Canada has similarly framed trust-based philanthropy around shifting power, listening deeply and expanding community participation in decision-making.
But trust-based philanthropy may only be the beginning.
The next wave: from philanthropy to generosity
The first great achievement of modern philanthropy was institutionalization. We created foundations capable of transforming individual generosity into durable institutions.
A second wave brought professionalization. We developed strategies, theories of change, evaluation frameworks, professional investment management and sophisticated grantmaking practices.
A third wave has increasingly emphasized impact. We have explored trust-based philanthropy, participatory grantmaking, systems change, impact investing, blended finance and new ways of sharing power. The fact that trust-based approaches now emphasize unrestricted capital, community voice and support beyond the cheque illustrates how far the field is moving beyond transactional grantmaking.
But perhaps the next wave needs to go deeper. Perhaps we need to move from asking: How can philanthropy become more effective? to asking: How can philanthropy help create more generous societies?
Those are not the same question.
A foundation can become extraordinarily efficient at distributing grants without making its community more generous. It can grow its assets while social trust declines. It can demonstrate measurable programmatic outcomes while civic institutions weaken. It can increase charitable giving while people feel increasingly isolated from one another.
If generosity is fundamentally about recognizing our obligations to one another, then philanthropy’s ultimate purpose cannot simply be moving money. It must also be strengthening the relationships that make generosity possible.
Reclaiming generosity
This does not require abandoning finance. It requires putting finance back in its proper place. Yes – I am a CPA saying this!
Finance should be a tool of social purpose. Social purpose should not have to justify itself according to the logic of finance.
That distinction leads toward what we might call the reclaiming of generosity.
Instead of understanding communities primarily through deficits requiring financial intervention, we begin recognizing the many forms of capital already present within them.
Financial capital matters. But so does social capital. Civic capital. Cultural capital. Knowledge. Relationships. Trust. Reciprocity. And belonging.
The role of a philanthropic institution therefore changes. It moves from being primarily a manager and distributor of philanthropic capital toward becoming a steward of community capital. That is a particularly consequential possibility for community foundations.
The community foundation of the future
Community foundations possess something increasingly valuable in an era of accelerating change: place, relationships and time. Governments operate through jurisdictions and election cycles. Businesses operate through markets. Charities frequently organize around particular missions. Community foundations organize around place. And place is where all of these systems ultimately meet.
Housing intersects with health. Immigration intersects with belonging. Economic development intersects with education. Climate change intersects with infrastructure. Inequality intersects with social cohesion. None of these challenges belongs neatly to one institution.
The community foundation of the future therefore may look less like a traditional grantmaker and more like community infrastructure.
It might convene institutions that rarely work together.
It might provide communities with data.
It might mobilize private investment.
It might guarantee a loan.
It might support a social enterprise.
It might provide unrestricted funding to a struggling civic institution.
It might help residents make decisions about community resources.
It might preserve land or other community assets.
And sometimes it might simply create the conditions in which people who profoundly disagree with one another can still sit together and imagine a shared future.
The common denominator isn’t the financial instrument.
It is community purpose.
From preserving endowments to regenerating generosity
This leads to perhaps the most difficult question for endowed philanthropy. What exactly are we trying to preserve? Traditionally, our answer has been the financial asset. Preserve the endowment so that future generations can benefit from the generosity of the past. There is wisdom in that idea, or is there?
Preservation of financial capital cannot become detached from the condition of the community the capital was created to serve. The better aspiration might be regeneration. Can today’s generosity generate tomorrow’s generosity? Can philanthropic capital strengthen institutions that allow communities to solve problems themselves? Can a grant build relationships that persist after the grant ends? Can an investment create community ownership? Can philanthropy increase people’s sense that they have both the capacity and responsibility to contribute to one another?
The objective then becomes something larger than perpetual financial capital. It becomes a perpetual community capacity for generosity.
Generosity as civic infrastructure
Perhaps this is the next horizon for philanthropy. Not simply more giving. Not simply smarter investing. Not simply bigger foundations. And not even simply more effective grantmaking. The next horizon may be rebuilding the conditions in which generosity flourishes –trust, reciprocity, relationships, agency, belonging, a sense of mutual obligation.
These are not soft concepts sitting at the margins of economic life. They are part of the invisible infrastructure that allows communities and democracies to function. Markets are extraordinarily powerful mechanisms for exchange. Governments are indispensable mechanisms for collective action. But neither can substitute entirely for the human willingness to say:
Your well-being matters to me, even when I am not required to care.
That is generosity. And perhaps that is ultimately what philanthropy exists to protect.
For more than a century, institutional philanthropy has become extraordinarily sophisticated at managing the financial assets created by generosity. The challenge of the next century may be becoming equally sophisticated at cultivating generosity itself.
If we succeed, the community foundation of the future will not be judged primarily by the size of its endowment or even by the amount it grants each year. We will ask a much more demanding question:
Is this community more capable of caring for itself and for one another because we exist?
That may be the next wave of philanthropy. Not the financialization of generosity.
The regeneration of it.
