How to become a philanthropist.

Personal legacy planning
How to become a philanthropist

November 5, 2021

Key things to know

  • Philanthropy is the articulation of your values and passions and should be carefully researched prior to making an investment in philanthropy.

  • Understanding the purpose of your giving can help you determine how and where to become involved.

  • Working with your investment advisors can help establish a clear understanding of how your philanthropy goals relate to your overall wealth management objectives.

For many individuals and families of wealth, there comes a time when a decision is made to engage in philanthropy in a larger, more strategic manner.

Perhaps your relationship with wealth has matured. Or you may now realize you have an opportunity or even an obligation that goes beyond reacting to requests. In either case, you want to move toward a deeper engagement in giving that could make a significant impact on the issues you care about.

Making the shift from a “checkbook” donor to a philanthropist can be one of the most rewarding privileges of wealth. And while discussions about philanthropy often begin in the context of tax or estate planning, your planning should start with exploring what you want your wealth to accomplish and why you want to give.

Begin at the beginning. Why are you giving?

Your goals should drive the direction of your giving, and these questions can help your advisors find the appropriate focus:

  • How does philanthropy contribute to your family mission and identity?
  • What compelling issue(s) are driving your desire to become more strategic philanthropists?
  • What impacts are you seeking, both in the external world and within your family?
  • How do you want to involve family members, and what role might they play?
  • How will your strategy align with your broader financial and estate plan?
  • How will you measure the impact of your philanthropy?

Philanthropy is an articulation of one’s values and passion. Articulating values and passions isn’t always easy, however. The philanthropic impact team of advisors at Ascent Private Capital Management® of U.S. Bank work with families to help them identify their shared values and how those inform and contribute to a sustainable family legacy.

“The families I meet with approach philanthropy from a joyful, not a guilt-ridden perspective,” says Emily Bouchard, leadership and legacy consultant at Ascent. “They feel they’ve been blessed with wealth and see an opportunity to use some of it to nourish a community or a cause. For many, their passion stems from a personal experience — perhaps a family health issue, overcoming a challenge, or witnessing human injustice or environmental degradation. They recognize that an investment in philanthropy may not only make an impact on an issue they care about, but also is an investment in the soul of their family and their future generations’ joy.”

Identify your area(s) of interest

With a world of possibilities, where would you like to focus your philanthropic impulse?

“The best approach to finding the thing around which a family can build a philanthropic endeavor is to ask, ‘What can we do as a family that we can be proud of?’” says Bouchard. “It’s not about the money you give; it’s about the impact the money will make. You want to get everyone on board with a ‘why are we giving’ that reflects your family’s values.”

Philanthropy can be as personalized and customized as the individuals and family engaged in it. That’s part of the beauty and reward of sharing your wealth.

Once you’ve identified the area(s) of interest, it’s important to get as specific as possible about what you wish your philanthropy to achieve. If your passion is education, is your interest local or global? Do you want to provide support for children or adults, those who are poor or underserved, or those who are uniquely gifted? Do you want to make an impact on scholarship availability, or educational research, or getting more girls into science and engineering? The more you can zero in on exactly what interests you, the easier the next step.

Do your homework

Aspiring philanthropists often embark on a course of action after a thorough analysis of the landscape.

“You can’t just throw money at a problem if you really want to make a difference,” says Jamie Vandergriff, director of wealth strategy at Ascent. “For any given issue, you have to take the time to learn who the actors are, what strategies they already employ, which organizations have a sound reputation and are respected in the field, and what will it take to really move the needle. Talk to thought leaders, visit organizations, and read all you can on the issue you’re passionate about. This can help you identify where your family and you can make a real impact.”

Figuring out where and how you can make the most impact benefits from collaboration, sharing data and best practices, and surrounding yourself with smart people you trust to give you good advice. “It’s a myth that philanthropy doesn’t require the same level of strategy and smarts that business does,” Vandergriff continues. “And, not unlike a business, it takes an investment that endures over time to see incremental movement toward a bold goal. Don’t expect change overnight.”

Measure your impact

With strategic philanthropy, it’s important at the outset to ask: What will impact look like? How will we measure it? How often?

Some initiatives lend themselves to metrics (e.g., How many people were served? Did test scores go up? Did the incidence of disease decline?). In other cases, the evaluation of impact may be less specific or not driven by metrics. Be open to the idea that impact can take many forms.

Don’t forget to think about internal impact as well. How do you want your philanthropy to affect your family? Will it be a positive catalyst for strong family relationships and communication? Contribute to a greater sense of purpose? Engage the younger generation in a different way, perhaps one that prepares them for future responsibilities?

Defining the impact and periodically measuring it can help you make course corrections and/or adjust your giving if needed. Remember, strategic philanthropy is usually a long-term commitment. Experienced philanthropists understand that nothing truly significant happens overnight with problems that are complex and intractable.

Investing in philanthropy

Investment performance typically plays an important role in philanthropy. Working with your investment advisors to create an investment policy statement can help establish a clear understanding of how your philanthropy goals relate to your overall wealth management objectives.

“We believe each purpose for your wealth — basic needs, lifestyle, long-term family needs, and ‘excess wealth’ available for philanthropic endeavors — should have its own investment policy statement, as should any formal philanthropic entity that you create, such as a private foundation,” says Andrea Ho, investment strategist at Ascent. “The investment policy statement describes the objectives of the portfolio, risk tolerance, asset allocation and liquidity requirements. Is the intent to grow the assets or spend them down over time?”

In addition to investments managed by a private foundation for a specific philanthropic purpose — and subject to specific criteria and rules — many families use impact investing as another way to deploy assets to advance their family mission and legacy.

Impact investing identifies the intersection between the financial benefits of specific investments and your own values and beliefs. “Philanthropy and impact investing are complementary means of making an impact,” says Ho. “There are things you can invest in that you can’t give to, and vice versa. It’s putting your wealth to work, with the goal of earning reasonable returns that are generating additional wealth to support your impact goals.”

Philanthropy can take many forms

Philanthropy can be as personalized and customized as the individuals and family engaged in it. That’s part of the beauty and reward of sharing your wealth. With experienced advisors you trust, engage your family in identifying a place where your interests and passion intersect with a clear need, and begin the process of moving from checkbook donor to strategic philanthropist.


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