American philanthropy is undergoing a revolution. Wealthy donors who might once have been content to send an annual check, trusting in charitable organizations to use funds effectively, now want to be more involved — and more targeted — in their giving. What’s behind this shift to so-called high impact philanthropy?
Some philanthropists believe that in recent years government agencies have fallen short in such areas as improving education, and addressing hunger and poverty, and feel compelled to step in to help. Others may be influenced by professional business practices, where donors expect the use of metrics and data to create transparency and accountability. Board members are being asked to use their expertise not just for fundraising but also for sound governance and operating efficiency. Meanwhile, more information — particularly via the Internet — has given philanthropists a view of a new set of potential, immediate outcomes. At the same time, many donors still have questions about their giving.
Wealthy donors now
want to be more involved
and targeted in their giving.
As part of the philanthropy group at U.S. Trust, we’re often approached by clients seeking answers to a wide range of questions, including: Where and how much are my peers donating? Should I give to more than one organization? Can I use more than one giving vehicle?
Some clients are looking for ways to involve other generations in the family’s philanthropic goals. In those cases, we typically encourage them to clearly define their family’s values using a series of customized questions and exercises or to create a philanthropic mission, which can help drill down to what’s relevant for the family.
Uniting in this way can be helpful when a family is geographically separated or has a history of problematic relationships. If each generation has its own independent assets, families that work to discover common goals and a shared mission can often pool these assets to create a greater immediate impact and improve more lives. Similarly, by understanding their children’s philanthropic goals, parents can guide them to charities in line with those goals.
Wealthy donors, including those with limited experience in high impact giving, may seek to connect with like-minded philanthropists or charitable organizations. In those cases, U.S. Trust may bring both parties together in one way or another — through in-person meetings, phone calls or the like. A highly effective way to learn more about an organization, we may tell clients, can be to volunteer — perhaps by raising funds or joining its board.
Traditionally, nonprofits have maintained hierarchical relationships with donors. However, many are now responding to the requirements of modern giving by becoming not only more transparent but also more collaborative with donors, knowing that stronger ties can often lead to longer-term financial commitments.
Ways to give
“Focused giving” may sound like it involves giving in only one way. In fact, it is not uncommon for a focused donor to use a variety of giving vehicles. That
may mean donating directly to a nonprofit organization, funding a charitable trust where beneficiaries can include a nonprofit group and loved ones, giving to a donor-advised fund where donors can be involved in directing contributions, or creating and funding a private foundation of their own. (For more, see “Three Case Studies About Focused Giving.”)
To learn more about high impact giving, the different ways to donate, or how to connect with other philanthropists or philanthropic organizations, contact your U.S. Trust advisor.
Illustration by Stephen Stickler/Getty Images
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