The giving season is the perfect time to ask ourselves how we can be more philanthropic. With Thanksgiving and GivingTuesday around the corner and myriad annual fundraising appeals forthcoming, how can we maximize the impact of our giving? And what does it really mean to be philanthropic? Consider the following four questions.
1. What is Philanthropy?
Determining how philanthropic we are first requires a clear understanding of philanthropy. While there are many definitions, most include the following key elements:
- donation of substantial resources (primarily financial but also time and expertise) to a cause
- desire to further progress on a systemic issue and improve the welfare of others
- emphasis on providing sustainable support that aims to effect meaningful change
It also helps to differentiate “philanthropic” and “charitable.” Think long-term and strategic vs. short-term and emotional. Charity is often driven by a natural response to an immediate situation, such as donating to a hurricane relief effort, giving books to a library or making annual year-end donations to favorite causes. Philanthropy, on the other hand, is a more thoughtful and planned process that addresses the root cause of an issue to make a lasting, positive impact. For example, a donor aiming to support education determines through research that early childhood literacy is low. In response, they establish a program that provides books to children under the age of five to foster a love of reading.
So, consider how you’ve been giving to others. While both ways of giving are helpful and essential, it helps to understand your approach. For instance, if you’d classify yourself as “charitable” could you expand your giving to be more philanthropic with some planning? What are some long-term goals you’d like to achieve with your giving? What impact would you like to make? Thinking along these lines may change the way you want to give, including which charitable vehicle(s) you want to use.
2. What’s Your Philanthropic Personality?
In other words, what drives you to give? By understanding the root of your personal motivations, you can give more effectively and impactfully. To aid in this process, we’ve summarized the major donor segments that were introduced in The Seven Faces of Philanthropy. Which one best describes you? Are you a: Communitarian? Investor? Socialite? Repayer? Altruist? Dynast? Or are you Devout? To explore these personalities, visit here.
3. Do You Have a Giving Toolkit?
In working with our foundation clients, we often discuss the merits of giving in a variety of ways, from making grants to running direct charitable activities to impact investing through program- and mission-related loans, all of which and more donors can do with a private foundation. Having a flexible philanthropic toolkit can enable all donors – whether they have a foundation or not – to customize their giving to maximize charitable impact while enjoying greater tax savings and tax-free asset growth.
Optimal versatility can be achieved by using a mix of charitable vehicles such as donor-advised funds (DAFs) and planned giving tools like charitable remainder trusts and charitable gift annuities. For example, tremendous philanthropic and financial synergy can be achieved by giving through a private foundation as well as through a DAF. Whereas a private foundation offers more control over grants and almost limitless capabilities for giving, a DAF enables convenient, anonymous grantmaking.
4. Are You Open to Partnership?
While charities and nonprofits always appreciate donations, they also welcome opportunities to form meaningful partnerships with donors beyond the dollars. So, to be more philanthropic, consider collaborating with your chosen nonprofits to assess their needs and determine how you can help to address them. From skill-based expertise to network building and introductions, check out these ideas on ways you can offer meaningful support to your nonprofit partners.
Experimenting with a variety of approaches can also help you land on the unique combination that is best for you. We hope these questions help you reflect on your giving, so that this can be your most impactful giving season yet.
Want to learn more about giving?
Discover strategies for giving to different types of organizations here.
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