It is expected that an estimated $17 trillion will be transferred by the mid-2010s from the World War II generation to the Baby Boomers; a significant portion of this amount will be used for charitable giving. At the same time, more giving is predicted to come from donors sending their checks directly to nonprofit activists without using grant-making institutions as philanthropic middlemen. Fancy proposal writers are in great demand today, but the faster, more chaotic donor marketplace of tomorrow will find them gone.

I believe that the era or large, eponymous foundations is coming to a close. Large, disproportionately influential private institutions dedicated to philanthropy are becoming an anachronism. Increased scrutiny by the media and Congress of how much foundations give and to whom and the desire of many new donors for faster, savvier ways of investing in social change are changing the face of philanthropy. The added burden of compliance with new regulations reduces the appeal of creating an eponymous private foundation. Like the first three television channels, large institutional donors may remain active players, but their influence is waning as others rise up all around them.

More and more wealthy donors may follow the lead of George Soros and use a private foundation for mainstream purposes and privately write checks for political activities. A new generation of donors–people like Pierre Omidyar and the Google guys, Sergey Brin and Larry Page–want increased flexibility and risk taking in their grant-making. The good news is that this new generation of major donors is looking for ways to take risks; the bad news is that like many people of their generation they will probably be less institutionally loyal and therefore we will see an increased turnover of grantees.

As soon as institutions are created and staff are hired, foundations tend to become slow moving and risk-averse. Consider that (1) the more regulations there are to comply with, the more foundations need staff, and (2) since the mid-1990s, foundation staff have been hired at an incredible rate. For the decade of the 1970s, 1,055 large foundations, defined by the Foundation Center as foundations with at least $1 million in assets or those making grants of $100,00 annually, were created. In the 1990s that number jumped to 8,046. Three quarters of these new foundations were likely to hire professional staff.

What do all of these professional funders do? They create grant-making guidelines, they go to meetings with applicants and make site visits to verify that the work is being done, and they meet with colleagues to design funding strategies. As a result we have more deliberate giving, but giving at a much slower pace. In addition, large staffed foundations tend to take fewer risks simply because more people are involved in funding decisions and staff have their own reputations to maintain and agendas to follow.

We can see how fundraising can have its own Excalibur Effect, where raising more happens by asking less, because of a company called ParishPay.

The Archdiocese of Chicago was facing a giving problem familiar to all churches: inconsistent giving, summertime slow-downs in attendance, and end-of-month drop-offs in contributions. A church has difficulty planning ahead if it does not know exactly when and how much the drop-off will be. In response, the Archdiocese contracted with ParishPay to automate church donations.

ParishPay describes the drop-off in donations as reflexive giving. The choice to give and how much to give are impulsive actions that parishioners take on the spot, or reflexively, at church. Parishioners have to choose between the amount they have available in their wallet right now and their expenses for the rest of the day or week or month. The process of reflexive giving also assumes that parishioners have remembered to bring money to church and that they have a denomination they feel comfortable giving.

According to internal research commissioned by ParishPay, parishioners regularly say that they intend to give more than they actually do on Sundays. ParishPay moves people from spontaneous giving for the moment and planned giving for the year, from giving reflexively to giving reflectively. ParishPay is an automated online or credit-card paying system. It allows parishioners to set a constant giving amount that regularly comes out of their credit card or bank account. Parishioners using ParishPay can plan regular tithing. The church is also able to plan when it knows that large portions of its donations are guaranteed.

According to information on its website, churches using ParishPay increase their donations on average by 75 percent, an increase that confirms that parishioners do want to give more but need a mechanism for doing so. ParishPay illustrates that the Connected Age not only makes giving easier and faster but also can significantly change how much is given to a cause.

Good fundraising is like the food pyramid. A broad base of good foods, or steady donors, is at the bottom. The pyramid builds to a small confection on top, a chocolate-chip cookie or that one big grant that would magically make all our problems disappear. However, those confections at the top are mirages filled with empty calories. We either spend an inordinate amount of time trying to get that big grant, thereby ignoring our base, or we find that getting that big grant means spending too much time attending to the needs of a grantor who may be gone next year. Better to concentrate on the fruits and vegetables on the bottom for steady support.

When people are involved in authentic ways, they believe in what you are doing and contribute in many ways. As Kim Klein writes, “You need to see a broad base of individual donors not only as the one place where you can continue to raise money now, but also as a test of community support; a source of ideas, volunteers, and bigger and bigger donations; and a pool of ambassadors educating the public in the form of their friends and colleagues about the issues your organization addresses. A broad base of donors has intrinsic value and is something to pursue whatever the economy, the government, or foundations are doing.”

The Connected Age enables you to have genuine relationships with many more people than before. When you are powering the edges, you can have real conversations with your activists through a blog or a listserv or chat room. Participants can be invited to post their own photos of an event for others to comment on. Local meetups can be organized in communities across the country to discuss the issue of, say, sprawl.

Perhaps the best fundraising news is that when network participants are released from proprietary silos and are sharing the burden of social change by contributing various skills and services, expenses will be lower. It takes fewer staff to work in a networked world. Overhead costs are reduced when people in the network are working on communications or fundraising or research.

Too often the ultimate goal for activist organizations as they become larger is to become self-perpetuating. Their stated goal of helping people and strengthening communities begins to be drowned out by the need to feed the organization. Staffs, boards, funders, all naturally equate growth in the revenue and size of an organization with success. It’s one of many inappropriate habits that nonprofits have picked up from the for-profit sector.

Businesses in the for-profit sector need to grow continuously in order to increase profits—profit being the one undeniable measure of business success. Activists are not in the business of making money, yet we often use the same gauge of success, constant growth, as the commercial sector. Many board members are successful businesspeople. They bring their business lenses with them and assume that increasing the size of the staff and the budget is the same as improving an organization’s impact and effectiveness.

Add the quixotic and short attention span of many funders, who want to support only “new and innovative” programs, and the natural reaction is for activist organizations to push every year to increase the budget and to add new programs and staff. We must change our habits before our habits sink us.

Organizations need to ask themselves whether they should or need to or even want to grow in size. Not everything needs to be supersized, franchised, and replicated. Small can be beautiful. Some for-profit businesses can successfully grow while being closed and secretive because they have the capital to run many focus groups, which simulate real conversations. U.S. automobile companies have for decades been shifting their marketing into overdrive while the quality and desirability of their cars continue to decline. Underresourced activist organizations cannot grow and succeed this way. If for no other reason, the lack of capital available to activist organizations makes massive, ongoing marketing efforts unworkable.

Self-determination will be a beacon not a repellant for funds. It is easy for someone to say that who doesn’t have to make payroll and pay rent. Being told that everything will be all right when your neck is on the line is particularly painful for activists working in communities with few resources or for organizations that may have few opportunities to create fee-based revenue streams. But the Connected Age is a double win for these activists because less money has to be raised, and raising money is less expensive.

Fundraising online doesn’t require sending out mailings or hosting special events. Smaller, broader, smarter—those are the fundraising mantras of the future. Throw away the direct-mail manual. You will be successful raising money online when you are building a broad base of networked participants.

In one Bugs Bunny cartoon Elmer Fudd looks at Daffy Duck and sees only a duck on a platter. Many activist organizations make donors feel like that duck waiting to be plucked. Activists too often practice fundraising as a transaction rather than a relationship. They generally only sporadically engage institutional and individual donors, mainly around a request for funds. They then forget donors for months with perhaps only a newsletter to break the silence. Activists caught up in a race for funds can easily forget that donors have much to offer: expertise, energy, connections, and, yes, money.

In January 2005 the leading trade publication for fundraisers, the Chronicle of Philanthropy, published an article in which the author stated that “a growing number of people in and out of the nonprofit world are asking whether too many groups are overlapping with one another and draining resources from those charities that do the best work.”

These concerns are not those of people receiving services. After all, I have never heard of a hungry person saying that there are too many food banks, or a homeless person commenting that there are too many affordable apartments. Rather, the uneasiness over the number of activist organizations reflects the cacophonous competition among social activists for funds.

The never-ending parade of organizations, all with different causes, fundraising appeals, and special events, overwhelms individual and institutional donors alike. Every month seems to be fundraising season, with dozens of requests coming in the mail or into in-boxes at work from organizations trying furiously to inspire us, persuade us, or simply hit us up for cash. As a result, funders and other supporters feel as though communities are being overserviced.

I am not suggesting that there isn’t a real need for money to support activist causes, but we can choose a different pathway that will help us raise more money over time than we are now.

I was sitting with a program director of an after-school program. With a great flurry the development director burst into the room and shouted, “We did it; we got a $50,000 grant from the community foundation for mentoring!” After the development director left, I asked the program director why she looked so dismayed. With tears in her eyes she whispered to me, “We don’t do mentoring.”

Funding worries hang over the activist sector like smog filling the sky over Los Angeles. We know fundraising is a problem, but we rarely talk about it, much less do anything about it. Our inaction is due in part to an assumption that there is nothing we can do about it. Many folks feel that the way people give money and the way organizations ask for funds are unchangeable; these activities are as natural to the order of the earth as gravity.

The Connected Age provides an opportunity to change fundraising as we have known it. We can use social media to rethink fundraising entirely and help people to become more involved, to give more, and to give in different ways than they have in the past. The importance of facing this issue now is intensified by the rising Net-Genners, who have different ideas about giving than their parents do. They are likely to be less loyal to institutions, but they may well become loyal to institutions that connect with them in meaningful ways. We have to broach the uncomfortable topic of changing how we raise funds, of shifting the interactions between givers and receivers of donations. This transformation has to occur or public confidence in the sector will continue to sink and our prospects for increased donations will inevitably be dampened.

Foundations and grantees often have relationships that are uncomfortable, exhausting, and unhappy. This strained relationship has many causes but just one result—ineffectiveness. The different cultures and perspectives of donors and activists have created a codependency that ends in dances of deception called fundraising proposals and appeals. Are activists to blame for overpromising, which leads to outsized expectations for results by funders? Or are funders to blame for flaunting their power and forcing activists to tell half-truths? The responsibility is shared equally.

If you put twenty activists in a room they will have fifty stories of ways that they have been capriciously, unfairly, and rudely treated by donors and foundations. There are oft-told tales of donors criticizing their office furniture; donors insisting on particular, inappropriate results; foundations keeping them waiting for a funding decision for months; and each funder having maddening, expensive, and customized reporting requirements. If you sit down with a roomful of donors, you will hear about their frustration with constant haranguing by money seekers, the runaround they get when asking about results, and the constant sycophantic behavior. (Well, one foundation officer told me that that is the part she likes the best!)

The truth is that both donors and money seekers need to change their behavior and relationship with one another to be successful in the future.