Women are becoming an increasingly powerful force in American philanthropy, bringing economic clout and financial acumen to charitable giving and assuming leadership roles.

In a recent webinar sponsored by the Purposeful Planning Institute, Melanie Hamburger (left), principal at Catalytic Women in Mill Valley, Calif., discussed the growing profile of women in the philanthropic arena, some of the challenges they face and the way in which their approach to charitable giving differs from men’s.

Catalytic Women, according to its website, is a consortium of philanthropy professionals who bring practical experience to helping individuals give wisely and with maximum impact.

A Shifting Demographic

Hamburger noted that in 2010, individuals in the U.S. donated $212 billion to nonprofit organizations. Thus, individuals have a significant role in funding nonprofits in general, providing a market mechanism to the sector.

In the San Francisco Bay area, where her work is concentrated, and across the country, Hamburger has noted a shift in demographics. Intelligent, well-educated women are focusing time on decisions that serve themselves and their families well and are engaging in philanthropy at a sophisticated level.

She said the market of Catalytic Women is women roughly in the 40-to-65 age range, many of whom have given up careers because they married into complicated situations of wealth, involving perhaps a successful husband, children, multiple properties and managing household spending decisions–essentially running a business.

Many of these women, she said, are now engaging in philanthropy at a very high level. They bring powerful collective economic clout to spending decisions. They think about best models of nonprofits and fund those models.

Women, she said, are shifting into positions as leaders; many have run family foundations. “A lot of women in the Bay Area are starting significant foundations,” she said.

Not everybody has yet figured out how influential women have become in philanthropy. She cited an example from her days as a fundraiser. When she and her colleagues were getting ready for a big “ask,” she would remind them to focus on the wife rather than direct all their attention to the husband because the wife is often the decision maker in these decisions.

And women are making decisions about philanthropy in a collaborative manner. Whereas men might look at a charitable donation as a transaction, she said, women focus on the people they work with, advisors and the staff at nonprofit organizations. In short, for women a charitable donation is a long-term investment rather than quick transaction.

Corporate Model

Hamburger, who started her career in corporate finance, spoke of the value of investment strategies in influencing approaches to charitable giving. She said that in the nonprofit sector, no market mechanism exists to make decisions about which provider is doing the best job.

“An organization can continue unintentionally to provide mediocre service,” she said. “Unintentionally, without a feedback loop in the market, we might miss opportunities to hone services.”

She said that applying a finance-related way of thinking to the nonprofit world is a positive element a donor can bring to how a nonprofit functions. By looking at how they give and considering which is the best organization doing the kind of work in the area they care about, donors are making a decision to fund the best-functioning nonprofit model. As a result, the more effective organizations will thrive because they will have more resources–to deliver better services.

Saying No

There is also an underside to the corporate model, she said. “Being thoughtful about how we give can sometimes mean making painful decisions, for example, not to fund certain organizations, deciding our charitable dollars can be better used elsewhere.”

And saying no can be difficult for women. “When women make decisions, we think about the people involved,” she said. “That makes saying no all the more difficult, because it seems some sort of lack of validation of the people involved. That’s not what’s intended. But saying no to less-effective nonprofit programs is critical so we can free up more money to invest in the best-functioning organizations.”

Sometimes, donors shift their giving because an organization may have outgrown a need for money. As well, a donor in the process of giving will educate herself about the problems themselves and the various solutions and strategies being used to address them. “I will start to change my priorities as I become more sophisticated in my knowledge. My priorities will change. I know the organizations and the solutions that are working.”