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Solving the Philanthropist's Dilemma

Philanthropic capital has played and will continue to play a critical role as we rebuild after the pandemic. According to the Center for Disaster Philanthropy, more than $20 billion in global philanthropic funding was invested in response to the COVID-19 crisis.

At the Milken Institute's Center for Strategic Philanthropy (CSP), we are heartened by this influx of capital. CSP has consistently advocated for getting philanthropic dollars off the sidelines with real urgency by spending down donor-advised funds (DAFs) and increasing foundation payouts. However, without vigilance, philanthropy can become (and in some cases, already is) plutocratic, nontransparent, wasteful, and rife with unintended consequences—harmful and otherwise.

One of the most worrisome of these unintended consequences is the very real possibility that well-meant donations may perpetuate the very problem they are intended to eradicate. Some prime examples of this reality—CSP calls it "the philanthropist’s dilemma"—are the following: Support to homeless shelters can exacerbate homelessness, giving to higher education in the US may further entrench inequalities instead of redressing them, and donations to hunger relief organizations in the US can actually reinforce income inequality and food insecurity.

This report offers tangible solutions to solve the philanthropist’s dilemma and advocates for the urgent investments required to dismantle the inequitable, racist, and draining systems structures entrenched in this country and throughout the globe.