What Does it Mean to be Philanthropic?
When we hear about “philanthropists,” most of us probably think of extremely wealthy individuals, families and foundations, like Bill and Melinda Gates, Warren Buffett, the Carnegies and the Fords. Therefore, philanthropy often seems like an “out of reach” aspiration for the rest of us – we merely give charitably when the asking seems fit.
But it’s important to remember that philanthropy and charitable giving have a lot in common; they can both be defined as the act of donating money, goods, time or effort to support a cause. Usually, the commitment is over an extended period of time and for a certain reason (e.g., you know someone who suffered from a specific ailment or you had a great experience at a particular school). In a more fundamental sense, giving back may encompass any altruistic activity which is intended to promote good or improve human quality of life, with the donor deciding on what is good.
So maybe the difference is simply one of scale. That is, philanthropy is funding new wings of hospitals, cultural institutions or sweeping social programs, while charitable giving is writing the occasional check to one’s alma mater or in response to a specific request. Of course, these many individual donations, in aggregate, can actually have a greater and more meaningful impact than the contributions from a single well known philanthropist.
In our view, the fundamental difference is that of strategic planning. Top philanthropic foundations are strategic and disciplined in creating and executing a thoughtful plan. They know their top priorities – the causes they want to invest in – and they know how they will measure their success (with metrics for impact, return on investment and progress).
There is no reason that those of us without private foundations can’t adopt a similar, best practices approach to giving. In fact, when we discover our clients are charitably inclined, we recommend that they develop a plan that is consistent with their personal values and financial goals, but which also incorporates flexibility to allow for evolution as times and circumstances change. To shape such a philanthropic plan, we recommend starting with several critical questions:
- What or who do you want your giving to benefit?
- What are you trying to achieve with your donations of money, time or assets?
- Why are you giving? Do you have a specific legacy in mind? What is your motivation?
- How much and what are you capable of giving?
- How much involvement do you want with various organizations?
- If you have a family or children, how may they benefit by being involved in the process?
- How will you know if your contributions are making a difference? By what criteria will you evaluate your existing donations and future charitable opportunities?
These can seem like intimidating questions, and their answers may evolve over time. However, we have found that the most effective philanthropists and satisfied givers are those that address these questions. In other words, the answers establish a strong and sustainable foundation for rewarding giving.
Here at Truepoint, we take very seriously our role in helping clients understand their charitable inclinations, articulate their motivations and further define their objectives. However, even the latter isn’t always as clear to individuals who have historically given back to society. Sometimes a process of engaging in explorative conversations centered on passion, historic experiences and family history to name a few, can draw a clearer picture for clients of what they are trying to achieve with their contributions. We welcome the opportunity to further explore these topics with you when such a time arises that you wish to begin the process.
If you have any questions, please don’t hesitate to contact us. If you’re not currently a client, but would like to schedule an appointment, please contact Lisa Reynolds at (513) 792-6648 or [email protected].