At the Center for Strategic Philanthropy, we’ve worked with philanthropists at all stages of their giving to ensure that their giving is focused, intentional, and that it’s making the impact they wish to achieve.
The philanthropic realm has an abundance of advice about what to consider and how to get started on your personal philanthropic journey, which in and of itself can be confusing or even contradictory. Some themes have emerged from our own history of working with individual and family philanthropists. For those getting started on their philanthropic journey, here are some tips that may be a bit surprising but can nonetheless make all the difference in maximizing the full value of your philanthropic capital.
Give Outside Your Comfort Zone
Emerging philanthropists often begin their charitable giving with what is familiar or feels low-risk, such as an alma mater, or their child’s school. Other typical recipients include hospitals and museums. These establishments are sometimes considered “safe bets” in philanthropy. But compared to social and environmental justice organizations for example, institutions such as these typically have large funding reserves. They also primarily serve wealthy donors and their kin. True strategic philanthropy occurs when donors evolve from reactionary giving to a more intentional, discerning, and impact-focused channeling of resources.
In order to branch out from supporting known nonprofits within one’s familiarity or typical cause of interest, a donor must actively seek new information, recommendations, and referrals from sources beyond one’s immediate network. Consider looking to intermediaries such as Blue Meridian Partners, Tipping Point Community, Robin Hood Foundation, Co-Impact, and New Profit to provide a valuable pipeline of pre-vetted, changing-making nonprofits. Funding unfamiliar organizations necessitates a degree of risk tolerance, but it is a helpful practice that promotes the diffusion of philanthropic resources beyond a donor’s everyday footprint.
Your children may even serve as role models to help move your philanthropy outside your comfort zone. “Next gen” philanthropists often are more inclined to support less established organizations and engage in new forms of social impact, such as social entrepreneurship and impact investing. This younger cohort also tends to prioritize making charitable commitments over their lifetime rather than preserving their wealth. Given today’s pressing social and environmental needs, these practices are worth emulating.
Mobilizing transformative change takes time and often requires investments that may not seem particularly exciting to a donor. A nonprofit’s operational needs must first be met before it can successfully carry out programmatic work to achieve its desired impact. Thus, supplying general operating funds rather than project support is a key way for philanthropists to prepare the groundwork for true social or environmental progress. Donors should also consider paying the full cost of an organization’s endeavors, to circumvent the “nonprofit starvation cycle.”
Philanthropists can follow specific guidelines to promote capacity building among the charities that they support. For instance, they could commit at least 1% of their net worth toward building nonprofit infrastructures, including technology platforms and databases. In addition, 10% of one’s philanthropic contributions could be allocated for research and analysis, to help support nonprofits’ measurement, evaluation, and learning processes. These benchmarks provide possible paths to follow when determining the funding activities of your personal philanthropy.
Donating to a nonprofit is not the only way to advance a social or environmental impact agenda. With evolving practices such as impact investing and hybrid gifts, the very concept of philanthropy is expanding. Consider the full spectrum of your potential philanthropic portfolio, which can consist of traditional grants and charitable donations, but also loans and even equity in social enterprises.
Philanthropists can amplify their impact by leveraging their capital to attract additional resources to a cause. Research indicates that donor matching increases both the participation and revenue generated for charitable campaigns using this tactic versus those that do not. Of note, this is evident when the donor match is at a rate of 1:1, but raising the ratio to 2:1 or 3:1 has no additional effect.
Philanthropists can also fund a diverse set of change-making efforts, including coalition building, grassroots organizing, awareness-raising and education campaigns, nonprofit leadership development, and advocacy, to name a few.
Give Voice to Others
Elevating the voices of beneficiaries and incorporating their input is a key practice in order to better ensure a desired outcome. Philanthropists should listen to those with lived experience and support entities that do the same. This feedback loop is critical to ensure true and lasting progress.
Traditionally underrepresented and marginalized populations should be part of the co-creation and decision-making processes for programs targeting them. Whenever possible, philanthropists should cede both power and resources to these individuals in order to facilitate true inclusion and collaboration. There is no other group closer to the cause - and more crucial for instilling change.
By Melissa Stevens, Executive Director, Milken Institute Center for Strategic Philanthropy.