5 steps to becoming a more strategic philanthropist

Julie Davitz
Posted by Julie Davitz
Strategic Philanthropy

Many of today’s ultra-high-net-worth philanthropists are looking for smart ways to make their donation dollars work hard for causes they care about deeply.

Back view of young-ish man looking out over a dark lake and horizon with blue mountains in the background.They often value additional guidance on how much to give, through which funding vehicles, to which charities, over what timeframe, and with what purpose in mind.

In Bank of the West’s Wealth Management Group, we often help such clients consider new choices in the shape of Purpose Investing. Purpose Investing combines charitable donations with investments in companies designed to build wealth and contribute actively to society. It allows clients to expand philanthropic impact by directing their funds toward organizations that support the causes they believe in.

Purpose Investing includes socially responsible investing options, microfinance, impact investments and social impact bonds. We also help clients in screening their portfolios based on environment, social, and governance preferences, for example.

If you are interested in a similar strategic approach to philanthropy, these five key steps may help you:

1. Identify vision and goals. The first step is a conversation with a professional advisor about your philanthropic goals. Identify the causes, programs and/or geographies that are important to you and your short- and long-term expectations for impact.

2. Find the right match. Identify worthy investments that align with your vision and goals.

3. Explore ways to make your donations work harder. Savvy philanthropists can leverage their donations in many ways. Collaborative funding – where a network of high-net-worth families come together for a single shared cause – is on the rise, especially among women and younger generations. Volunteering and word-of-mouth advocacy are other powerful ways to extend the reach of financial contributions.

4. Pinpoint the right funding vehicles. Donor-advised funds (DAFs) may be an efficient way to direct dollars to a charity. They also allow donations of both liquid and illiquid assets, such as art, property, or other investments. For ultra-high-net-worth clients, personal foundations offer a hands-on way to leave a lasting charitable legacy.

5. Set expectations for communications and reporting. As a donor, you are entitled to full transparency from the programs and causes you support, but many charities operate on a shoe-string administrative budget, and too much reporting can take dollars away from the organization’s core work. Donors and charities should agree upfront on measures of effectiveness.

The steps outlined above are great first steps for today’s donors who are looking for smart, personalized ways to make a meaningful impact on society for generations to come.

To learn more about wealth management services at Bank of the West, visit our site.
All investing involves risk, including loss of principal. When redeemed, an investment may be worth more or less than the original amount invested.


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