Advertise on podcast: Giving With Impact

If you’re a frequent listener of this podcast, or have attended any of our SSIR conferences, you probably know that one of the maxims about social innovation that I believe strongly is the one that states “the most effected are the most effective” – that those who are closest to the problems are often the ones with the greatest insights into what needs to occur to address them. In many ways, this is the ethos behind the idea of “participatory grantmaking.” Participatory grantmaking encompasses a range of models and methods. At its core, this approach to funding cedes decision-making power about grants to the very communities impacted by funding decisions. As with so many other sectors, the philanthropic sector has seen a heightened demand for greater accountability and transparency, with people wanting greater voice in the decisions affecting their communities. But as with any other approach, what does this strategy look like in action? And what can we learn about our individual approach as donors from organizations that have adopted a participatory approach?

Traditional approaches to solving various social and environmental problems taken by government, philanthropy, and nonprofits have tended to focus on specific areas like housing, education, or health. But experience has shown us that these problems don’t exist in a vacuum. A recent article published in SSIR talks about the importance of placed-based strategies for addressing challenges faced by communities and outlines several new approaches being pursued to uplift these communities. Some organizations are achieving remarkable change by focusing on transforming place first and foremost, rather than focusing on specific problems or goals in a siloed manner. They pursue holistic place-based systems change. But what does this place-based approach look like in practice? And how can we help leverage resources and relationships to empower community and achieve lasting and transformative change?

When thinking about making a donation to support a charity we believe in, most of us immediately think about writing a check or typing in a credit card number. Even when we proactively think about using other assets that we may hold as a way to fund our charitable giving, our instinct is to liquidate that item and donate the proceeds. But that may not be the most effective or efficient way to donate. Sometimes, cash isn’t king. And with the growing popularity of cryptocurrency, these days, “cash” may not even be cash

Modern philanthropy provides us with a wealth of opportunities and approaches to help create the change that we want to see in the world. One such approach that continues to grow in popularity is the idea of collective giving, which often translates to giving circles. It’s estimated that there are currently over 2000 giving circles in the U.S., with over 150,000 people involved in these circles, helping to donate nearly $1.3 billion. Giving circles can provide donors with a way to increase both their knowledge and understanding of issues and solutions, and their impact on those issues, while helping them to connect with other like-minded donors in their community.

The vast majority of Americans tend to handle their charitable contributions using fairly straightforward means – opening their wallet or personal checkbook. But for many people, there may be advantages to the use of what are broadly referred to as ‘planned giving vehicles.’ Benefits for doing so can include favorable tax treatment of assets in the vehicle, or the ability to take a tax deduction in the current year for gifts that are made in the future, among others. So, what are these various types of giving vehicles, and how can you determine which one might be best aligned with your charitable goals and objectives? Are they mutually exclusive, or can they be combined across a broader philanthropic strategy? And once you’ve decided which to pursue, how do you get started?

Since the late 1990’s, the philanthropic sector has been focused on data- and results-driven approaches, often referred to under the umbrella of “strategic philanthropy.” It can be argued that this thinking has strengthened the field of philanthropy in many ways, helping to bring greater rigor and focus to the hundreds of billions of dollars in annual charitable giving. At the same time, some have argued that an unexpected outcome of these practices is a distancing between donors and those grantees who are doing the work of effectively addressing issue areas, lessening their voice, and reinforcing systemic inequities. These critiques have led to the emergence of the movement known as trust-based philanthropy. At its core, trust-based philanthropy is about redistributing power—systemically, organizationally, and interpersonally—in service of a healthier and more equitable nonprofit sector. So, as a donor, how do you reconcile these two approaches? What does each mean for giving strategies? And are they really as disparate as some would believe?

The vast majority of US donors don’t give to charities simply to get a tax benefit; they give because they genuinely care about the work of the organizations that they support, and want to see those organizations succeed and make a difference in the world. But it’s also true that tax law in the United States can have an impact on the volume and type of gifts that donors may choose to make. And while there may be truth to the old adage about “death and taxes,” as far as we know, only one of those two is immutable. So how does current US tax law effect charitable giving, and how might those laws change over the next several years? Are there ways that donors should be approaching their giving strategies to maximize the amount of money getting into charitable organizations? And what do these policies and strategies mean for the nonprofits who depend upon this support?

Research tells us that there are certain resources most donors consult when starting to assemble a strategy for their philanthropy. These include peers, family, and well known, publicly-available sources of information on nonprofits like Guidestar or Candid. But among those top sources are also their existing financial advisors – people they already trust and are comfortable talking with about their finances. While many advisors may initially engage in financially-focused charitable conversations such as how much to give and the tax implications of various types of gifts, these discussions often become much deeper. They can include donors’ motivations and goals for giving, or the best ways to identify a cause or organization, and even how to involve their family in their charitable plan. So, how do you start these deeper conversations, whether you’re a donor or an advisor? And what does this sort of strategy entail? And – perhaps most importantly – how does all this planning help the organizations and causes that donors are looking to support?

If there is one thing that the events of the past year have helped to remind us of, it’s the simple fact of how interconnected our world truly is. Issues like public health or the environment are global in nature, and new solutions to global challenges are being innovated all around the world. But when you’re a donor here in the United States who may be looking to support causes or organizations in other countries, how do you get started? And how do you make sure that you’re maximizing the impact and effectiveness of the support that you’re providing? Many of us may sincerely want to “be the change we wish to see in the world,” as Mahatma Gandhi famously said; but how do we do that?

So, you’re a thoughtful, impact-focused donor, and you’ve done your homework and identified some nonprofits that you’d like to support. But deciding what type of gift to make can sometimes be as challenging as knowing what cause to fund in the first place. Restricted gifts, unrestricted gifts, endowments – what are the differences, and what are the benefits of each type of gift? How can you ensure that your giving is helping to accomplish your overall philanthropic goals – your purpose for philanthropy, as it were.

Over the past decade, the popularity and use of donor-advised funds, or DAFs as they are commonly known, have grown dramatically. According to the National Philanthropic Trust’s 2019 Annual Donor Advised Fund Report, “grantmaking from donor-advised funds to qualified charities has nearly doubled in the past five years,” with philanthropists recommending over $23 billion in grants to charities from their DAFs in 2018. How can nonprofits leverage donor-advised funds to support their operation and maximize their fund-raising results?

A 2014 report by the Center on Wealth and Philanthropy at Boston College estimated that $59 trillion will be transferred to the next generation from 2007 to 2061, the largest wealth transfer in US history. Lifetime giving to charity in that same period is estimated to be $20.6 trillion. At the same time, there is an increasing desire among families to work together to use their resources to solve social challenges, with longer life spans and greater understanding of the benefits of multigenerational philanthropy having encouraged more multigenerational collaboration. And while a variety of challenges can compromise the work, successful intergenerational giving strategies can foster an ongoing tradition of giving, make an impact on issues the family cares about, and deepen family relationships. What contributes to these successful strategies?