Philanthropy’s Role in Economic Development

Philanthropy and a thriving economy may seem like vastly different categories, but the two actually work in tandem with one another, as economic growth often leads to an increase in charitable giving, and it is believed that philanthropy can broaden wealth generation at a local level.

It is a frequently shared mindset among donors that economic development is a central part of philanthropy in general and a direct byproduct of giving back. According to the several donors interviewed by Nonprofit Quarterly, the specific types of philanthropy that have the most impact in today’s world include education and job training, community revitalization, social impact investing, and bundling money among varying sectors.

Education

Investing in education and the expansion of job and skill training is perhaps the most effective way to build human capital. College scholarships, specifically, have been shown to be popular among older individuals’ preferences regarding educational assistance, citing that they are then able to either pay it back or pay it forward through the knowledge they gained with more opportunities. 

Another great outlet to donate to is education among at-risk or underprivileged youths, or supporting organizations designed to help K-12 programs in lower income neighborhoods. These can embody such efforts as tutoring, afterschool programs, or summer programs.

Community

Revitalizing a community, no matter how big or small, is essentially rebuilding a foundation upon which people can thrive both professionally and personally. This can be broken down into many different sectors. For example, donors that have a passion for art or music can contribute to local symphonies or opera houses. Those that value thorough journalism and media outlets might donate their funds to newspapers or digital media organizations in the area. 

The point of these local level donations is to increase the draw to the respective organizations rather than giving back to a larger corporation, which would essentially offer them a tax break and not much else.

Social Impact

Often referred to as the “double” or “triple bottom line,” economic and social returns earned from the efforts of nonprofits include areas like environmental issues and general societal improvements. Today, we are living in a world where environmental consciousness is just as important economic development, which many philanthropists believe has been lost to the majority population that values the economy over the planet.

Luckily, a majority of the philanthropic community today believes that social and economic benefits should be directly associated with one another, albeit a data-driven approach is highly recommended.