Searching for Solutions to the Decline in Philanthropy

The need for more philanthropy and the importance of volunteering was front and centre of a panel presented by Penta and United Way Worldwide at the Midnight Theatre in Manhattan on Thursday.

Half of working New Yorkers are struggling to make ends meet, according to a report released in April this year.

“The way we tackle that is through bringing partners together, from the corporate side, non-profits, and policy makers, to make sure that we are attacking the root causes,” said Grace C. Bonilla, CEO and president of United Way New York City.

Yet, philanthropy has been “decreasing” according to Angela F. Williams, CEO and president of United Way Worldwide (UWW), the 135-year-old non-profit which connects partners, donors, and volunteers in 1,100 communities across 37 countries.

Williams attributed the decline to several factors.

First, donations via once robust community institutions such as the church and popular charity schemes such as the United Way payroll deduction—formerly a staple in corporate culture—are not “as strong as [they] used to be.”

Second, young people want to see “immediate impact” when they donate a dollar and nonprofits are under increasing scrutiny over spending.’

“There is this missing understanding that some problems, some issues, whether it’s solving poverty, whether it’s graduation rates, whether it’s low-income housing, all of those things take time and have to be intentional,” said Williams in a discussion with Raymond J. McGuire, the president of financial advisory and asset management firm Lazard and 2021 candidate for New York City mayor.

Non-profit, she added, “doesn’t mean no profit, no margin. We have to operate; we have administrative costs.”

Williams said that there needs to be more emphasis on public-private partnership.

“We know that government can’t do it all, government can’t solve all the problems that are going on in communities and we also know that companies have employees in communities, and they draw their employees from those communities,” Williams said. “What company wants to operate in a community that is unhealthy, uneducated?”

“I think we need to do better,” McGuire agreed. “The challenges that we are now facing are as formidable if not more formidable than the challenges we have ever faced in their country…So we need to step up, we need to be more engaged.”

Last year, US$499 billion was raised in the U.S., according to Giving USA. US$319 billion came from individuals, US$105 billion from foundations, and US$45 billion from gifts in a will or trust. In comparison, just US$21 billion was from corporations.

“I can’t say it’s a responsibility, it’s an opportunity,” McGuire said. “My observations will be that the private sector will be even more involved and more engaged, because they recognise that there’s more at risk.”

For Ohio-native McGuire, whose mother was a social worker and whose grandfather only had a third-grade education and taught himself to read by perusing the Bible, the need to fight for a more equal society is personal. In 1979 he graduated from Harvard before becoming one of Wall Street’s longest-serving and most-successful Black executives.

“I had to make it in a world that was completely foreign for me and for people who look like me,” McGuire said. “The fundamental premise of that which we are attempting to attain is prosperity for all, at least the ability to participate. If there’s an opportunity for us to make a difference… then by definition the foundation of that which we stand for [has] got to be education.”

The Nation’s Report Card showed across the board declines in math and reading ability in 2022, declines that have particularly hit kids of colour, according to McGuire. “Before Covid, we weren’t making progress and now after Covid, post Covid we’ve retreated,” he said.

For Williams, who is the first Black woman to lead UWW, a salient solution is to create “a new table” of opportunity.

“I want a table that is inclusive, I want a table that brings in the voices of those who we are trying to solve for,” she said. “I want to have a table that says I’m not your saviour but I’m your partner, so come in and let’s talk… and co create.”

Williams used the example of United Way’s work in Maui, Hawaii, following the devastating summer wildfires.

“How do we make sure that the natives… can sit in the room and along with the state and federal government and county and city as well to say: How do we not lose our ancestral heritage?” she said. “How do we create a new thing and a new way of living and surviving and thriving that is equitable?”

Priorities for 2024 touched on in the panel included the climate, AI, energy transition, America’s ageing population, and cyber security.

The panel ended on a note of hope. Former NFL player Carl Nassib, who launched the app Rayze last year to connect people to non-profits, pointed out from his seat in the audience that roughly a quarter of Americans volunteer but 75% of those who do volunteer end up donating.

“Have you thought about the positive mental health benefits of volunteering and what they can do for young philanthropists?” he asked, suggesting that the recent mental health youth crisis is linked in part to a reduction in volunteering.

Volunteerism is “one of the ways that allow people to really become proximate to their community and to the issues they care about,” Williams pointed out earlier in the evening.

“And I think once you’re proximate and you get to walk alongside someone and you can see how you can relate and help them, that really makes the difference. And that it makes for a civil society, it makes for a civil human being.”

A sharp technology sell-off has exposed a new anxiety on global markets: whether the enormous borrowing behind the artificial-intelligence infrastructure boom can generate sufficient returns as interest rates rise and Chinese competition intensifies.

The artificial-intelligence investment boom has powered technology shares, semiconductor manufacturers and data-centre operators to extraordinary heights. Last week, investors were given a reminder that much of this expansion is being built with borrowed money.

The technology-heavy Nasdaq Composite fell 4.5 per cent over the week ended October 16, its weakest performance since late June. Semiconductor shares suffered an even deeper correction, with the Philadelphia Semiconductor Index losing about 11.4 per cent.

The selling spread quickly through global markets. Micron Technology fell 14.6 per cent over the week, while South Korea’s Samsung Electronics and SK Hynix dropped approximately 18 per cent and 24 per cent respectively.

This was more than a routine bout of profit-taking. Investors were reassessing three interconnected risks: higher interest rates, the rapidly expanding debt burden attached to AI infrastructure and the prospect of stronger competition from Chinese memory-chip manufacturers.

The debt behind the AI build-out

Artificial intelligence requires a physical infrastructure network of enormous scale. Data centres must be built, advanced processors purchased, power supplies secured and cooling systems installed before customers begin generating meaningful revenue from them.

Technology companies are increasingly supplementing their own cash with corporate bonds, syndicated loans, equipment leases, private credit and project-level financing.

JPMorgan describes the emerging funding model as a combination of conventional corporate borrowing and project finance tied to individual data-centre assets. In Australia, the Reserve Bank estimates that syndicated loans accounted for approximately three-quarters of data-centre financing during 2025 and 2026 to date.

The numbers are becoming large enough to affect broader credit markets. The Federal Reserve Bank of Dallas has cited Wall Street estimates suggesting AI-related investment-grade bond issuance could approach US$300 billion in 2026 alone.

That borrowing is not automatically problematic. Debt can be an efficient way to finance long-lived infrastructure when future revenue is sufficiently predictable. The concern is that AI technology, customer demand and computing economics are changing much faster than the repayment schedules attached to the assets.

A data centre financed today may carry debt for years. Investors must therefore make assumptions about future utilisation rates, electricity prices, chip performance, customer concentration and the amount businesses will ultimately pay for AI computing.

When interest rates rise, those assumptions become less forgiving.

Inflation changes the calculation

September’s US inflation data intensified the pressure. Consumer prices increased 3.7 per cent over the year, ahead of market expectations and up from 3.4 per cent in August.

The hotter reading reduced confidence that interest rates would fall quickly and pushed bond yields higher. That matters particularly for companies whose valuations depend on profits expected well into the future, as well as highly leveraged infrastructure operators that may need to refinance.

CoreWeave has emerged as a closely watched test case. The specialist cloud-computing company has accumulated substantial debt and lease obligations to build AI capacity, while relying on a concentrated group of large technology customers.

Its shares fell sharply during the sell-off, while the cost of insuring its debt against default climbed. CoreWeave has argued that its contracted backlog more than covers its obligations and that financial markets do not always understand its business model. Nevertheless, its securities have become a proxy for investor confidence in debt-funded AI infrastructure.

Oracle, another major investor in AI computing capacity, fell 8.8 per cent in Friday trading, while CoreWeave dropped 15.5 per cent.

The question is shifting from how much AI infrastructure can be built to how profitably it can be operated.

China adds another source of pressure

Interest rates were not the only catalyst. Reports of advances by Chinese memory-chip producer ChangXin Memory Technologies raised concerns that lower-cost Chinese products could increase competition across the global semiconductor industry.

Memory chips are essential to AI systems, but the industry is historically cyclical. Periods of tight supply and high pricing can encourage rapid investment, eventually producing oversupply and falling margins.

The prospect of a well-funded Chinese competitor expanding its technological capabilities unsettled investors in Samsung, SK Hynix and Micron. It also demonstrated that AI-related demand does not insulate chipmakers from conventional competitive pressures.

That combination—slower rate cuts, more expensive financing and potentially cheaper supply—challenged the assumption that every company exposed to AI would enjoy continually expanding margins.

A reset rather than the end of the boom

The sell-off does not establish that the AI boom is ending. Demand for computing power remains strong, the largest technology companies continue to generate formidable cash flows and many infrastructure projects are backed by long-term customer contracts.

What has changed is the market’s willingness to overlook the price and financing structure of that growth.

The most resilient companies are likely to be those able to fund investment from operating cash flow, secure long-duration customers and demonstrate that new capacity will earn returns comfortably above its financing costs.

More speculative operators may face greater scrutiny, particularly where debt is expensive, customers are concentrated or expected revenue depends on demand that has not yet materialised.

For Australian investors, the lesson extends beyond US technology shares. Local data-centre operators, infrastructure funds, electricity suppliers and property groups are increasingly exposed to the same investment cycle.

Artificial intelligence may remain one of the defining growth themes of the decade. But last week’s correction showed that enthusiasm for the technology does not eliminate financial discipline.

The next stage of the AI boom will be judged not only by computing power, model performance or demand for chips, but by something more traditional: whether the assets being financed can generate enough cash to repay the money borrowed to build them.

Fact box

Nasdaq Composite: Down 4.5 per cent for the week ended October 16, 2026

Philadelphia Semiconductor Index: Down approximately 11.4 per cent

Micron Technology: Down approximately 14.6 per cent

Samsung Electronics: Down approximately 18 per cent

SK Hynix: Down approximately 24 per cent

US September inflation: 3.7 per cent annually

Estimated 2026 AI-related investment-grade issuance: Approximately US$300 billion