In early times, charity was usually prompted by religious faith and helped to assure a reward in an afterlife, a notion found in Egypt many centuries before the Christian era. Throughout history, active participation in philanthropy has been a particular characteristic of Western societies. A traditional philanthropic ideal of Christianity is that of the tithe, which holds that one tenth of a person's income should go to charity. Charity is also important in Islam, Buddhism, and other religions. Foundations—institutions that distribute private wealth for public purposes—also have an ancient history.
At the end of the 19th cent. it was recognized that corporations could play a part in financing voluntary agencies when the Young Men's Christian Association set a new pattern for raising money: intensive drives over a short period of time, the use of sophisticated techniques to raise money, and an emphasis on corporation donations. Other voluntary agencies soon copied this pattern, and it is still the typical practice for large-scale fundraising. During World War I, coordination of effort became a trend in philanthropic activity. In the United States, this coordination took the form of Community Chests, which combined a number of charities under one appeal, now known as the United Way.
Today the organization and coordination of philanthropy has eliminated much of the spontaneity of giving. They have also brought about a more rational assessment of ability to give as well as the introduction of scientific methods of ascertaining community and national needs and of raising money. The focus has also shifted from the relief of immediate need to long-term planning to prevent future need.
During the past few years, philanthropy has become more mainstream, owing in part to the high profile of rock star Bono's campaign to cancel Third World debt to developed nations; the Gates Foundation's massive resources and ambitions, such as its campaigns to eradicate malaria and river blindness; and billionaire investor and Berkshire Hathaway Chairman Warren Buffett's donation in 2006 of $31 billion to the Gates Foundation.
The purpose of philanthropy is also debated. Some equate philanthropy with benevolence and charity for the poor. Others hold that philanthropy can be any altruistic act that fulfills a social need that is not served, is under-served, or is perceived as unserved or under-served by the market.
Some believe that philanthropy can be a means to build community by growing community funds and giving vehicles. When communities see themselves as being resource rich instead of asset poor, the community is in a better position to solve community problems.
Philanthropy responds to either the present or the future needs. The charitable response to an impending disaster is an essential function of philanthropy. It offers immediate honor for the philanthropist, yet requires no foresight. Responding to future needs, however, draws on the donor's foresight and wisdom, but seldom recognizes the donor. Prevention of future needs will often avert far more hardship than a response after the fact. For example, the charities responding to starvation from overpopulation in Africa are afforded swift recognition. Meanwhile, philanthropists behind the U.S. population control movement of the 1960s and 1970s were never recognized, and are lost to history.
The need for a large financial commitment creates a distinction between philanthropy and charitable giving, which typically plays a supporting role in a charitable organization initiated by someone else. Thus, the conventional usage of philanthropy applies mainly to wealthy persons, and sometimes to a trust created by a wealthy person with a particular cause or objective targeted.
Many non-wealthy persons have dedicated – thus, donated – substantial portions of their time, effort and wealth to charitable causes. These people are not typically described as philanthropists because individual effort alone is seldom recognized as instigating significant change. These people are thought of as charitable workers but some people wish to recognize these people as philanthropists in honor of their efforts.
A growing trend in philanthropy is the development of giving circles, whereby individual donors -- often a group of friends -- pool their charitable donations and decide together how to use the money to benefit the causes they care about most. The re-emergence of philanthropy in recent years, led by Bill Gates and Warren Buffett, which involves applying the techniques of business to philanthropy has been termed philanthrocapitalism.'