Humanity first survived by finding sustenance whenever and wherever possible. Our ancient ancestors mostly lived as game hunters, fishers, and gatherers of plant-based food sources growing in the wild, at least until the agricultural revolution started.
Around 10,000 B.C. a significant transition began in human history from small, nomadic bands of hunter-gatherers to more extensive agricultural settlements and what we call early civilization.
What caused the hunters to shift to farming?
No single factor led humans to begin farming, and reasons may have varied from region to region. Principally the demand for food exceeded what could reasonably be provided by hunting.
Farming offered several advantages: more security of food, less need to migrate with the seasons, the ability to have surpluses allowing settlements and other trades to begin and flourish.
The shift continues
It took humanity centuries to gradually transition from subsisting on wild plants to tending large crop fields. Even today, humans continue to transition.
For example, not long ago, the supply of wild seafood seemed in-exhaustible. But by 1999, farmed salmon production surpassed the wild catch and today makes up two-thirds of the combined production.
Are charities hunter-gatherers?
Charities survive mainly by stewarding existing donors, which is much like farming. Every year many donors make contributions, just as every year many farmers grow crops.
However, when growth in demand requires additional sources of funds, finding new donors becomes like a hunting situation. Fundraisers today may use sophisticated tools such as databases and honed conversion techniques, but they are nevertheless prospecting for new donors as hunter/gatherers.
Furthermore, fundraising is subject to the whim of the donors. Potential donors at any time for any reason may or may not choose to support a given charity, and even if they do, amounts given can vary widely. This same situation applies to government grant applications. Just like hunters experience good times and bad, so too do charities fare when they need more money.
Is farming preferred?
The charitable sector already has two farming-like approaches to sustained financial support: annual donors, and charitable foundations.
Annual donors are cherished by charities and are encouraged to give the occasional major gift or to make significant legacy gifts via their wills.
Larger donors may set up foundations to spread sizable donations over time. In some cases, these donors aim to give sustainably for perpetuity. Foundations operate much like farms. Every year foundations grow money (their crops) for charities from investments (the farms).
Funds consumed supporting charities in one year are replenished by another crop grown at the foundation the following year. This cycle creates stability for many, but not necessarily for all charities. Shifting social priorities for granting by foundations and governments can create a boom-or-bust cycle atmosphere at the individual charity level.
Much as the hunter faced the challenge to support greater demands, so too charities face significant demand growth in the face of curtailed donations:
Industry advocate Imagine Canada predicts the charitable sector will need an additional $25 billion to meet spiking demand for services over the next ten years. Otherwise, we face a crisis - a "Social Deficit" – i.e. not enough services to meet demand.[i]
The Canada Helps 2021 report forecasts 9.8% donations drop in 2020, affected by COVID curtailed fundraising approaches.[ii]
What is more constraining is the concentration of donors: 10% of donors give 64% of total donations in Canada[iii]
With only so many potential major donors and tight government budgets, how can charities not just survive but significantly grow, to say double, quadruple or more in size?
The solution
If the charitable sector grew funds to create annual funds and replenish foundations, 'farming' donations could augment hunting for new donors and new endowments. The result would be more reliable, predictable, and sustained funding sources.
Systemic barriers today like the Canada Revenue Agency's Disbursement Quota (DQ) prevent organic growth of capital within the charitable sector. As charities need to improve their ability to raise capital, governments should be more flexible regarding the DQ. At this time of writing, the government is considering changes in the administration of the DQ which could usher in a great opportunity for organic growth.
However, how the government changes DQ rules from time to time is not in the control of charities. Other approaches are possible and can circumvent these obstacles by building a way to grow funds outside the regulatory confines of the charitable sector.
To migrate from the hunter-gatherer approach to funding requires the emergence of a 'fund generator.' Today a purpose-built entity to grow new funds for charities and foundations does not exist.
A fund generator would have as its only purpose the growth of invested funds to repeatedly create donations or endowments for foundations. Such an organization would be laser-focused on growing funds to meet increased social demands.
A fund generator would likely have to be external to charities to skirt DQ regulations however, just as entrepreneurs grow funds outside of charities that become gifts to charities, so too could fund generators grow gifts for charities.
Any individual who amasses a large estate is celebrated as a potential funding source and is already the target of today's fundraising hunts. Fund generators expand the funds available from successful businesspeople by creating a new source, based on a farming model.
Slow transition
The hunters of long ago were reluctant to change away from successful practices. Today's charities are also unlikely to switch quickly to a farming model to create new donations or to replenish foundations. Only with demonstrated successes could some movement to fund generation begin.
A farming approach to funding is one new direction promising vast expansion of the charitable sector's influence. Sometime in our distant future, we'll wonder how we ever managed under the hunter-gatherer mode.
Just as the agricultural revolution triggered a host of new opportunities and developments, a growth-by-investing approach to charitable funding promises to advance our society in ways we cannot imagine.
[i] ce-social-deficit-infographic-2018-06-en.pdf infographic per Imagine Canada [ii] The-Giving-Report-2021_EN (1).pdf Figure 11, per Canada Helps [iii] Per (Lasby & Barr, 2018), as quoted on page 218 of Intersections-and-Innovations-Change-for-Canadas-Voluntary-and-Nonprofit-Sector.pdf (muttart.org)
Photo by Mario Mendez on Unsplash