A recent New York Times article has reignited a long-term debate within the philanthropic sector and scrolling through the comments, you’ll find a cornucopia of varied opinions. While the effective altruism movement in philanthropy has been to optimize giving and look for the most bang for the buck, the article argues that perhaps you don’t have to. And therein lies the debate. What is the right way to give, particularly for private foundations? And is there really a wrong way? Should you always opt to optimize giving, and if so, does that mean you may miss out on the other motivations to give that may include magnificence?
It may help to zoom out a bit further and understand that the terms “charity” and “philanthropy” are sometimes tossed around interchangeably but they mean different things. For instance, the article’s headline refers to “charity.” But you can think of charity as reactive giving and philanthropy as proactive giving. (By the way, there is room for both, which we explore here.)
As a leader within this sector, we have long been a part of these conversations, providing guidance and helping to summarize which giving approach(es) may be best based on one’s goals, values and passions. It’s important to note that choosing one approach to giving does not mean you can’t pursue the others or even use them together to maximize efforts.
For instance, working with more than 2,000 private foundation clients for over two decades, we’re in a unique position to witness the remarkable diversity of resources, personalities, interests and influences that exist in this vast melting pot of philanthropy. We have observed five common approaches to giving taken by private foundations in their quest to make a difference.
1. Checkbook Philanthropy: The simplest way to give. You write checks to your charities of choice, often at year-end in response to annual appeals or to help in a crisis or disaster. This type of giving doesn’t require evaluation or reporting from the recipient.
2. Strategic Philanthropy: With this proactive giving approach, you’re in the driver’s seat for determining the problems you want to address and how to solve them, rather than reactively supporting initiatives driven by a charity. This approach also involves robust reporting so you can measure your charitable impact. Ideas: Make grants and loans to charities, start a scholarship program, conduct research, or establish a food pantry.
3. Trust-Based Philanthropy: Giving in this way means you view your grantees as the charitable experts. You grant them unrestricted funding, trusting them to deploy your support most effectively. You’re also more transparent in your communication and you streamline your reporting requirements so grantees can focus on what’s really important – achieving charitable impact.
4. Venture Philanthropy: With this exciting and results-driven approach, you partner with your grantees as if they’re business startups seeking investment. Not only do you grant them funding, you work with them hands-on to tackle a challenging issue that may or may not be achievable. The risk is higher than other charitable pursuits but if successful, the reward is impactful.
5. Disruptive Philanthropy: Take this route when you want to shake up the status quo and tackle a longtime problem in a bold new way. It’s about questioning previous attempts to solve the problem and funding ambitious, high-risk efforts for a solution. Innovation, creativity and collaboration are key to this approach’s success.
In short, foundation giving can take many forms – and it can evolve over time as your goals and resources change.
Questions about your approach to giving?
We’d love to help! Schedule a call with us or reach us at 800-839-0054. Together, let’s #begiving.