Editor's Note: This article was originally written for and published by Forbes.com


Giving happens in many different ways. When we see the images of horrific damage brought on by hurricanes in the Caribbean, Florida or Texas, or by the earthquakes in Mexico, we are moved to send money in response. Through a simple financial transaction, we’ve helped address an immediate need. The same is true when we support a local food pantry to provide a meal for a hungry family, when we donate to a homeless shelter to keep a single mother and her children off the street or when our gifts to a domestic violence service agency help a battered woman escape an abusive relationship.

This type of transactional philanthropy is important and necessary to help those in immediate crises meet very pressing needs. For many donors, that’s enough. But what happens when we think more strategically about the needs in question? What if we think not about making transactions to help meet needs but about changing the conditions that create the needs in the first place?

What if we set out to create transformation in our communities rather than to constantly feed needs created by the status quo?

I call this Transformational Giving™, but it has many other names: funding upstream, addressing root causes, funding proactively, moving the needle. The point is that transformational funders are focused on creating change for the better by transforming current practices and policies — or even existing mindsets and narratives — to improve conditions not just for individuals in need but for entire populations or communities.

Transformational Giving requires that funders:

  • Decide on a specific focus and articulate the problem, approach and anticipated outcomes clearly.
  • Identify grantmaking strategies to meet those outcomes, but recognize that grantmaking alone won’t create transformation. Transformational givers also identify other actions, such as advocacy or research to achieve their ultimate goals.
  • Work with a host of partners. Transformation doesn’t happen in a vacuum, and even the largest funder in the world can’t transform a system or policy on its own. Transformational giving requires the work of many, aligned for a common purpose.
  • Communicate openly and often. Good communication is the backbone of transformation. For people to be willing to change systems and practices that may feel comfortable and safe — even if they’re known to be detrimental — they need to feel informed, heard and included in the process.
  • Leverage all assets at their disposal. Money is just one asset that funders can lend to address a systemic problem. They also can lend their reputations, intellects, voices and connections (institutional and personal) to the work.
  • Commit for the long term. The problems that currently plague society didn’t spring up overnight, and their solutions won’t either. Funders who truly wish to be transformational must be willing to commit to a targeted focus for years, if not decades. Unfortunately, this runs counter to the notion that grantmaking must deliver demonstrated results within a year or two or three in order to be considered a success. But being clear about long-term goals and sharing regular updates on progress and adjustments along the way can reinforce the value of a philanthropic investment.
  • Learn constantly. Transformations are complex undertakings. Funders must continually learn from their community, from other communities and funders who have undertaken similar work, from experts and from their own experiences.

Obviously, Transformational Giving can provide deep and lasting benefits to a community. It also can accrue deeper benefits to donors who recognize that transformational giving can align their philanthropic goals with private investment goals for a more impactful total return. (Read more about Transformational Giving in the new book The ImpactAssets Handbook for Investors.)

Bottom line? The difference between transactional and transformational giving is one you can feel. Make a transactional gift and you’ll feel good about it for a little while. Commit to transformational giving and you’ll feel it as a lifelong calling that continually deepens in meaning and value.