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Purpose Driven Philanthropy — Beyond Just Writing a Check
How a planned giving strategy should be a part of your financial considerations
by Lewis J. Walker
July 1, 2006
T aken from the Greek root word philanthropos, meaning “humane, benevolent,” philanthropy signifies efforts to increase human welfare through charitable aid. The Greek philo + anthropos (man + mankind) also suggests “a love of humankind in general.” In a religious context, philanthropy may be stewardship, the dedication of time, talent and treasure in “loving one's neighbor.”
Often, we think of philanthropic activities as the exclusive domain of the ultra–wealthy. However, in the history of philanthropy, women occupy a unique niche. Women have established schools and orphanages and founded hospitals as well as provided shelter to the homeless, the battered and abused, unwavering in their mission to enhance society through donations of time and talent.
Philanthropic
leanings often emerge early in life. In an
Atlanta Journal & Constitution article dated April 9, 2006, on the pros and cons of a “
gap year” – taking time off after graduation and before starting career–oriented work – Catherine
Neiner, director of career planning at Agnes Scott College in Decatur, Ga, offered a perspective: “
The women I work with are very focused on their future and deliberate in their planning. They want
to have careers and families and make an impact on their world. Some of them see this time to do
community service before they settle down. They don’t want to look back at 40 and wish they had
done it.” Such altruistic motivations are likely to grow as we mature, and life experiences deepen
our understanding of purpose in this life.
In a previous column (April 2006), we touched on Abraham Maslow's famous “Hierarchy of Needs.” Our women from Agnes Scott no doubt will follow the 20 th century American psychologists’ progression, first working to provide for basic security, securing a comfortable lifestyle while having some fun, perhaps raising a family, and/or seeking career success. With psychical and financial success comes a yearning for significance, what Maslow called “self–actualization.”
Consider the intense focus on concepts of self–actualization as seen in the best–selling writings of authors like Rick Warren (The Purpose Driven Life) and Stephen Covey (The 8 th Habit). We recognize that life is a journey in which we have a purpose. We strive to discern that purpose or calling and actualize it. When we accept that “it's not just about me,” we are able to transcend beyond “self” to seek purpose and satisfaction in serving others.
From the Greek comes another word, charism, or “gift.” A talent may be used for our own purposes, for good or evil. But charism is a spiritual gift that only may be used for good. We dedicate our personal and our family's human, intellectual, social and financial capital to our charism–driven higher purpose. We seek meaning that transcends self and wealth. That is the heart and soul of true, transforming philanthropy.Activist Philanthropy
We know about the eponymous donor whose name emblazes buildings, and the anonymous donor whose gifts elicit appreciative gasps. But Baby Boomers have always been activists, spurring a growing trend in active philanthropy at the grassroots level.
Peter Lewis, ex–CEO of Progressive Insurance, known for major gifts, increasingly is funding smaller causes “close to his heart,” like mental health and retirement facilities. He has three criteria for giving: (1) the cause has to engage him emotionally; (2) he has to be sure the charity will use the money as it said it would; and, he wants to have fun with his gift.
For some donors, Lewis’ criteria translate into “hands–on” activity with the charity beyond merely writing a check. It may mean showing up at other fund–raising events, making challenge grants to spur matching, serving on the board of directors or committees, involving family members or rolling up your sleeves as a volunteer.
And it is not just mega–foundations that make a difference. Small, first–generation foundations are exhibiting effective, localized, personal styles of giving. Often targeting community needs, philanthropists seek organizations run on a shoestring by passionate staff and volunteers so as to get the most “bang’ for the donated buck. A new breed of venture philanthropists seek to use their business experience and leadership acumen to identify, fund and energize creative, effective and self–sufficient nonprofit organizations.
How might you determine your philanthropic motivations? Charles W. Collier, senior philanthropic adviser at Harvard University, has written a useful book, Wealth In Families (Harvard University, 2001). Rather than focus on the “how questions” relative to charitable giving and legacy planning, we should first examine the “whys.” Consideration of specific strategies should be secondary to “questions of meaning, legacy, and how we grow great human beings.”
When it comes to family wealth, Collier urges introspection centered on meaningful questions. What really is important to your family and what kind of a family do you want to be? What are the true assets of your family in terms of human, intellectual, social and financial capital? What do you wish to accomplish? How wealthy do you want your children to be? What might you do to guide and support the life journey of a family member while you are alive and, perhaps, after you are gone? What is your vision of responsibility to society? Affirms Collier: “The meaning you give to your financial wealth is a statement of who you are.”
There are valuable financial planning and tax–reduction aspects to charitable giving. Gifting highly appreciated assets, like a low tax basis stock, will save on capital gains taxes while garnering tax deductions based on market value. Charitable trusts and gift annuities can provide lifetime income for you and a spouse with the remainder going to charity after death. You can donate real estate while retaining a life estate, thereby generating tax benefits. Gifts via a will or a trust can reduce estate taxes. But all tax reduction strategies should be secondary to genuine charitable intent.
Most gifts to charity continue to be outright donations sans a separate legal structure for giving. However, there has been substantial growth in the use of community foundations, supporting organizations and donor–advised funds, as well as private foundations. Strategies may be designed to allow givers a role in decision–making, while reducing administrative costs and offering tax incentives.
Gifting via donor collaboratives, targeted “special interest” funds, women's funds, through a family business and charitable gift funds sponsored by financial institutions, also is increasing. Gifts of life insurance, such as Last Survivor policies, can significantly leverage a gift.
Perhaps the whole point of purpose–driven philanthropy was summed up by writer and philosophical humorist Leo Rosten, who said: “The purpose of life is not to be happy –but to matter, to be productive, to be useful, to have it make some difference that you lived at all.”
Living is giving. It is what defines you.
