The Business of Philanthropic Advising: Influences from the West

The existing philanthropic consulting landscape is still highly immature.  However, with the growing interest to participate in philanthropy and the explosion of new wealth being created in Asia, many firms are popping up to meet these opportunities. But the field lacks well-developed business models to sustain or drive growth. The main challenges they face seem to be demand, compensation, and talent.

In the U.S. last year, three major changes took place in the field that may signal where the market is heading.

The Philanthropic Initiative merged with the Boston Foundation. In December 2011, the groups announced the merger with TPI being a distinctive unit of the Boston Foundation. TPI pioneered the field of strategic philanthropy advising over twenty years ago when it was launched as a nonprofit to help donors increase the impact of their philanthropy. Community foundations are trying to service their donors more by offering additional value added services. This merger allows BF to offer their donors this service, including access to TPI’s work on global philanthropy.

Blueprint Research & Design bought by Arabella Advisors. Lucy Bernholz sold her business to Arabella in May 2011. Her firm is known for its data-driven and analytical approach to philanthropy. For Arabella, the acquisition increased their geographic presence, giving it a west coast office with a trained team in place. It added a distinctive competitive edge for Arabella and provides them with a full service menu for current and prospect clients.

Tactical Philanthropy Advisors goes on sabbatiacal. Known for his philanthropy blog, Sean Stannard-Stockton launched TPA to advise donors in the “Second Great Wave of Philanthropy.”  In November 2011, Sean announced that TPA would be going on sabbatical of indefinite length. In April 2012, Sean declared that he “would not be coming back to philanthropy anytime soon.” Instead, he will continue to run his investment and advisory firm, Ensemble Capital.

So did these three major setbacks (or opportunities) disrupt the philanthropic advising field? I think we need to dig deeper in these three cases but in general, I think those in the field hesitated at first. I don’t think the field will see these major developments as failures but it does raise the question of what is the right business model.  In a time when many non-profits, including community foundations, are questioning their business models, it seems natural that those serving the bridge between the donors and the non-profits should do the same.