Updated: Jul 29, 2021
I just read a good article in Private Wealth magazine written by Jan Alexander called, “Maximum Impact Philanthropy.” The crux of the article is that wealthy families are still giving, but they have gone in one of two directions: 1) reduced their annual giving amount given the economic climate; 2)revamped their approach. This approach, for a lot of people, is more strategic. Many financial institutions provide traditional philanthropic support to individuals and families. But Alexander states, “…there is also more detailed service that helps the client figure out what charitable causes would enhance his own life, then helps him find the best candidates for funding.” Philanthropy is a maturing industry. There is a philanthropic learning curve where people give when asked and then they start to experiment. But the move to become a strategic donor often causes people to turn to their trusted advisors with whom they already have relationships. Many of these advisors are great at putting together prudent financial plans, but not too many are experienced putting together inspired plans which speak of impact and outcomes from their charitable assets.
This is where specialized philanthropic advisors can come into the picture. These trained and experienced individuals can help advisors deepen their conversations with philanthropically minded clients who want to achieve impact however they define it. They can also work directly with the individuals and accompany them on their journey.
The need for specialized services providing pure philanthropic advice is a growing trend. Backer and Friedland conducted a survey of 75 consultants to wealthy families in 2008. They summed up their learning as follows:
1. Effective advising takes many forms. 2. Philanthropic advising is still very much a cottage industry. 3. Training and professional guidelines are needed. 4. Providing opportunities for donor learning is important. 5. Effective donor collaborations should be promoted.
Backer and Friedland also highlight 8 key areas of interaction between donor and donor advisor: 1. Financial assessment: Assess the capacity to be philanthropic. 2. Values clarification: Guides philanthropic planning. 3. Family involvement: Determine whether the family members will be engaged and how they’ll be impacted. 4. Structure: Apply the appropriate tools and techniques. 5. Actions: Make specific grants to nonprofits. 6. Learning and peer networking: Help the donor connect to others. 7. Collaboration: Work with other funders. 8. Evaluation: Help the donor define and measure success.