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.
Your charitable goals should drive the direction of your giving, and these questions can help guide you in creating a values-based, strategic plan for your giving:
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 works with families to help them identify their shared values, apply these shared values to a formative framework for giving, and then engage in practices that ensure their giving strategy has continuity over time and can sustain a family legacy.
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.
“The families I meet with want to structure their giving to bring their family together, ascertain and pass along shared values, and empower the rising generation to carry forward the family legacy.” says Ashlee Woods, managing director of philanthropic impact at Ascent. “Families believe the privilege of holding wealth confers a responsibility to give back and an opportunity to use their wealth to do good. For many, their passion stems from a personal experience that leads them to take action—perhaps a family health issue, overcoming a challenge, or a desire to create meaningful change in the world.”
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 Woods. “Charitable giving is not only about the money and impact, it’s also about the motivation to give. Reaching consensus around ‘why we are giving’ aligns your family’s values to your giving and helps your family stay inspired over time.”
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 Woods. “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,” Woods 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.”
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.
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 Woods. “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 Woods. “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 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.
Learn how Ascent Private Capital Management can help you make an impact with your wealth across generations.
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Ascent’s regional team locations across the U.S. offer personalized support and a full suite of wealth management services.
NEXT GENERATION WEALTH
One way to share your values with your children is by encouraging them to actively participate in charitable giving.
STRATEGIC PHILANTHROPY,PHILANTHROPY
Donor-advised funds, qualified charitable distributions and gifts of appreciated stocks offer prime opportunities to enhance your giving and potentially take advantage of greater tax savings.
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