The San Francisco Chronicle estimates that the Facebook IPO will create approximately 900 millionaires. Many believe the ongoing tech boom and tentative resurgence of the US economy are likely to create more millionaires across the country in the coming decades. Against this backdrop, The Chronicle of Philanthropy recently reported that as controversy over the yawning income inequality gap in the US persists, the wealthy are digging deeper to support a more just society at home and abroad. We are heartened by this development given the outsized toll public sector budget cuts and high unemployment are exacting on underserved communities—particularly communities of color.

Contrary to the old adage linking wealth with responsibility, at Tides we actually link wealth and opportunity. The ongoing consolidation and transformation of the non-profit sector have resulted in everything from shared spaces and services for non-profits, to social media fundraising tools and campaigns, to alternative finance mechanisms. Impact investing, for example, has the potential to unlock previously untapped capital to provide loans and equity investments to companies and nonprofits that provide social and/or financial return-on-investment. How can Next Generation philanthropists kick-start their giving? As follow up on my recent Facebook IPO blog, here are some of the Tides tools that empower emerging philanthropists take proactive towards making impact:

  • A donor-advised fund, or DAF, is a charitable giving vehicle administered by a public charity—like Tides—that creates management and tax efficiencies for individuals, families, and organizations. An alternative to creating a private or family foundation, a DAF allows philanthropists at any income level to create a low-cost vehicle that enables flexible giving. With an immediate tax benefit upon receipt of a gift, the DAF functions as a charitable investment tool to manage giving and investment. Once the gift is made, the donor has time to manage incremental giving using the DAF in a way familiar to anyone who manages a mutual fund or tax-deferred retirement account. Tides manages such accounts for more than 1,000 clients who are aligned around a common commitment to progressive social change. While DAFs are offered by many traditional investment firms, Tides is one of the few public charities that works exclusively with donors aligned with our vision of progressive social change.
  • A collective action fund, or CAF, is a similar investment vehicle for charitable giving. Unlike a DAF, CAFs pool charitable gifts from multiple donors to fund organizations, campaigns, or events organized around a common theme or geography. An example is Tides’ recently launched Gender Equity Fund. With guidance from an expert advisory committee, Tides uses pooled funds in the Gender Equity CAF to support change agents and activists working to ensure that women and girls have access to the same opportunities afforded to men. Like a DAF, contributions to a CAF also afford an immediate tax benefit.
  • (Ad)venture Philanthropy is a giving tool designed to educate and inspire emerging philanthropists. We realize this mission through shared 7-10 day learning journeys that explore innovative solutions to global and local challenges. We think of (Ad)venture Philanthropy as a global giving circle that meets on-the-road. Participants travel with Tides to a range of destinations to visit non-profits, social entrepreneurs, social enterprises, and activists. At the end of each trip, participants make a commitment to fund and collectively manage a CAF.  The next (Ad)venture Philanthropy learning journey—to India in September 2012—is now open for enrollment. For more information, please click here.

Noted Silicon Valley philanthropist and “Giving 2.0: Transform Your Giving and Our World” author, Laura Arrillaga-Andreessen, has spoken extensively about Next Generation philanthropy and the need to reboot the sector. We support her efforts and encourage philanthropists of all stripes—from $100- to $1M-annual givers—to get inspired and move their giving from “responsibility” to “opportunity”. We are proud to be a part of this transformation.

Join us in our goal to achieving a socially just world.

Chad Bolick is the Director of Impact and Innovation at Tides.

Photo via Flickr user ksaver1, used under Creative Commons license.