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How To Be a Philanthropist
We feature Sarah Cochran in this issue because of her tremendous, yet little-known, impact on the College. Sarah was a philanthropist in the way we traditionally think of them: she accomplished all she did for Allegheny and others from a position of great wealth. Yet, the only real difference between her and most readers is the scale of her gifts. We all can bring out our inner philanthropists (donor, volunteer, or both) and create a financial giving plan through self-reflection, an understanding of our ability to give, and knowledge about the organizations whose missions align with our interests. Read on.
Reviewing your current and past gifts to charity is a great first step. Look at the organizations and causes you supported, what and when you gave, and how you got to the gifts. Were you asked for them, or did you give them proactively? Were they planned, or did you give as inspired? Are there patterns? What might they suggest? You may find that you gravitate to specific nonprofits, or that your gifts do not align with what you consider important because you give from a sense of obligation. Perhaps you have not yet been a donor. This assessment can help you to focus on the charities and causes that are most meaningful for you.
Your “why” will affect where, how, and when you make your gifts, and it will likely change with time and circumstances. There are millions of registered charitable organizations in the U.S. — and sometimes it seems that we hear from all of them! — so a bit of research will help you to narrow the field. You may identify possible recipients by talking with friends and family, financial and legal advisors, librarians, community foundations, United Ways, and the Better Business Bureau’s Wise Alliance, and by searching the Internet. Websites like www.charitynavigator.org and www.GuideStar.org provide information about organizations’ financial health and practices.
How and what you give should correlate with the impact you hope to make with your philanthropy. Do you like to make small gifts for many organizations or large ones for a chosen few? Do you prefer to give alone, on your schedule, or do you like the idea of leveraging your gifts with others by responding to challenges or partnerships? Do you want your total donation put to immediate use (operations), or would you like to have most of it saved, with a specified portion doled out annually (endowment)?
Smaller gifts will have greater buying power when put to current use, for endowments last in perpetuity by making only a minimal percentage available for annual spending. Generally, making larger gifts to fewer organizations will have a more significant impact, yet many organizations like Allegheny are judged, in part, by their number of donors and are thus grateful for annual support regardless of gift size. You may respond to solicitations from friends, family members, neighbors, employers, and fundraising appeals. In time, you may develop relationships with organizational staff and volunteers, perhaps increasing your involvement as your financial giving expands. Your philanthropy may become more targeted, even within the organizations you have long supported, and you might begin offering gifts before being asked. Eventually, you may be involved in highly personalized solicitation/negotiation/acceptance processes involving financial and legal advisors.
How you give will also depend upon the activities you wish to support, your resources, your age, and your financial goals, as charitable gift planning can help with tax and wealth management issues. Most annual gifts to charity support general operations, are solicited through mass communications, and are usually made from readily available cash and equivalents. Major gifts stem from personalized solicitations for specific initiatives. They come from assets that have increased in value over time, such as bank accounts, stocks and bonds, individual retirement accounts, donor-advised funds, private foundations, real estate, and other tangible items. Estate and legacy gifts are made through wills, retirement accounts, life insurance, real estate, beneficiary designations, and charitable annuities and trusts (that pay donors income during life, with the balances put to organizational use at their deaths).
Returning to your “why” may help you to clarify what, if anything, you would like or expect in exchange for your gifts. You might prefer to be anonymous or be happy to have your gifts recognized. (Please know that far from vanity, allowing your name to be publicly associated with your charities is an endorsement of their good work.) Consider also if you wish your support to go beyond making traditional gifts (e.g., would you like to provide direct services or become involved in volunteer leadership?) and ask about options.
To be a philanthropist is to be thoughtful about our charitable giving. It requires us to understand our motivations, identify the organizations producing the outcomes we wish to see, and know the best ways to give in light of our personal circumstances.
