Adventures in Philanthropy: Your Strategy for Giving
Allocating assets and measuring returns in your charity portfolio.
With the Dow dipping below 7,000 on Monday, the sad irony of today's nonprofit sector is that just when charities need funding the most, donors have the least to give.
After more than a 40% drop in the stock market in less than 6 months, charitable contributions -- which are directly tied to the market -- are set to decline even further this year. Public funding is also falling, precipitously in some cases, as many states experience budget crises. Yet the need for charitable services continues to grow, as the same negative economic forces strike family budgets and limit employment opportunities,
With the demand for charitable dollars up and the supply down, philanthropists must be smarter than ever. Four strategies borrowed from personal finance can help you apply the maximum rigor and strategic thinking to your charitable investments during tough times.
Strategy 1: Make a Plan
Making an impact begins with developing a strategy for your giving. Just as your investment strategies differ depending on your goals, so should your giving plan. Start by identifying overlaps between your philanthropic interests and your community's needs. Then determine the amount you can give to each cause, and the results you expect from your investments. Instead of responding spontaneously to organizations that ask for support, resolve to seek out nonprofits that match your priorities.
Strategy 2: Do Your Homework
Conducting due diligence on nonprofits before giving is just as important as evaluating a company before investing. To determine which organizations are most effective and sustainable, consider their financial viability, the quality of their leadership and their methods for documenting performance and evaluating results. Review their publicly available tax returns and annual reports, and talk to others knowledgeable in the field. You may be surprised.
For example, one of our clients was about to support a project to which she had been giving for several years. As her philanthropy advisor, we did a little digging and found that the project was going to end shortly. Then, we helped her find another project that was just as well-matched with her priorities. By looking beyond the surface before writing a check, you'll make a greater impact with your giving.
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