Don’t “Give Money Away” (Invest in the Community)

When financial advisors are asked why affluent investors would be reluctant to make charitable gifts, they say it's because they don't know if they can afford it. When asked directly, though, affluent investors cite a very different reason: They are worried their gifts will not be used wisely.* We think this makes sense. The clients we work with are often business owners or corporate executives; anytime they have been forced to make a decision to invest capital, they are concerned with productivity and ROI. Therefore, it often doesn't resonate with them to give money to non-profit organizations that they feel will use their money unwisely or unproductively. To develop a philanthropic strategy you can feel good about, we recommend following these two steps:

Change the words you use pertaining to charitable giving
Be strategic in selecting organizations in order to maximize your impact

Change the Conversation Word choice matters. If you use different terminology, it can cause you to reframe how you approach a topic. Instead of "giving money away," we suggest you think of charitable gifts as investments. But instead of investing in the stock or bond market, you are investing in the community or in causes you care about. By thinking about it in these terms, you can start to develop a strategy for charitable gifting that appeals not just to your heart, but to your head as well. It opens the door to enable you to consider ways to maximize the impact of any gifts you make. Maximize the Impact of Your Gifting In order to maximize the impact of your gifting, you need to feel confident that the organization(s) you are supporting will use your money wisely. There are several great online resources you can use to help assess the effectiveness of different charitable organizations. The best tool for you will depend on what type of help you need. For those who want to do their own analysis:

Guidestar - Provides a huge database of information on non-profits including 990 tax returns and other financials for those who want access to extensive data in order to do their own research.

For those who have narrowed down their search and want to compare options:

Charity Navigator – Offers evaluations and a scoring system for charities and, although you are relying on their scoring criteria, it can be a good place to compare different charities by using their search tool.

For those want recommendations on the highest rated charitable organizations:

GiveWell – A good resource for those who do not have particular charities in mind and a really looking for a cultivated list of the most effective ones to consider.

Get Started If you like the idea of being more strategic and intentional with your charitable giving, but don't know where to start the process, we've created a complimentary resource for you to use. It's a Philanthropy Questionnaire that is designed to help you formulate a vision for your charitable giving strategies.

For example, there is a question that asks you to name up to three areas of focus for your gifting (i.e., education, religion/faith, the environment, etc.) It’s a question that, just by being asked to think about it, can help you to focus and prioritize the areas you hope to support with your gifting. There are two side benefits to this as well:

If you are wanting to include and collaborate with your children in philanthropy, this can be a good place to start by seeing if there are any specific areas of commonality.
It also makes it easier to say no to grant requests that are not aligned with those areas of priority. (Incidentally, this was the #2 answer cited by affluent investors as to why they are reluctant to give.)

You can click here to access our Philanthropy Questionnaire. Then, just contact us to schedule a phone call to discuss it. *Source: THE U.S. TRUST® STUDY OF THE PHILANTHROPIC CONVERSATION: Understanding advisor approaches and client expectations, Conducted in partnership with The Philanthropic Initiative, 2018.