Hewins Financial and Wipfli Hewins are proud to honor author and renowned philanthropy expert Joel Fleishman, and host a?special presentation?on his latest book,?Give Smart, on Wednesday, June 20, 2012.
John Bussel, Hewins? Principal and family-based foundation specialist, will be presenting this week an advisor?s take on high-impact giving and other issues discussed in Give Smart.
If you missed our posts earlier this week:?Part 1?& Part 2
Enjoy the full analysis as a complimentary PDF download available on Wednesday.
Q: Tierney and Fleishman focus, by choice, on philanthropy through the lens of major initiatives, but most donors are balancing a portfolio of concerns, interests, and constituents. Those truly serious about philanthropy must often confront conflicting family expectations as well as pressure from peers and colleagues. How do you help them balance these conflicts and enable them to achieve the best philanthropic results?
There are many pressures and obligations that individuals and families may have. For example, when a family is operating a business, they may be devoted to certain causes connected or relevant to the business in the community they serve, but are also acting as good citizens and as a good corporate citizen of the community.
Let?s say the family sells the business. Maybe they sell to a much larger entity that doesn?t have that commitment to the local community that the family did when they ran the business. There may be a set of expectations and a relationship that has developed that would compel the family to continue supporting those causes. One thing that Fleishman and Tierney touch upon is, how do you transition? How do you go from being a good corporate citizen in a community to a family running an effective family foundation?
It is a process that may take many years and generations. It may mean that, based on the dollars you?ve allocated to philanthropy in a foundation or other charitable vehicle, you come up with an annual budget of what you can afford to give away every year. You might take a portion of that budget and continue to do the kind of broad-based community support work that you were doing when you were running the business. But you might also take another portion of the budget and strategically address a small number of problems that you care about and can effectively address. ?Over time that balance should continue to shift in favor of the strategic, focused giving that would ultimately lead to more effective, smart philanthropy overall.
It can be disruptive for a family to quickly cut off long standing support of local organizations and switch to long-term strategic giving. The process usually has to be gradual; it can even take a generation or two to fully transition.
Q: Tierney describes the donor-grantee trap, whereby foundations and major donors participate comprehensively with grantees to add value beyond money given and?despite their best intentions?they create ineffective systems and undermine the results, sometimes leaving these communities and grantees worse off than they began. Is that a possible result of the transitioning you mention above?
Yes ? it?s very important to be sensitive to who has been reliant on you in the past and to recognize that those underlying organizations can?t just replace your funding because you?ve decided not to do it anymore. ?It could be a challenge for them to replace what they?re losing from you.
As you become a more strategic donor, you may see from the outset that your giving has a certain life to it?that after a period of time it will end, and you should make this clear. Or maybe you could set up a grant approach where over time you slowly decrease your giving in order to give the grantee some room, and accommodate their capability to replace your giving with that of another donor. Donors should recognize the challenges and the potential disruption that they could cause grantees.
The authors point to a lack of investment in overhead (management/infrastructure) in many of the case studies as affecting the success of giving. Is this something you?ve noticed in your experience (in both successes and failures)?
Donors generally want as many dollars as possible to float to the end-user, to the people in need. ?For example, in giving to a school program, the giver wants as much of the money and effort as possible to be impacting the children who need it. But if the organization has to spend a lot of money on salaries just to put the donation program together, or to support the organization?s offices and cover their costs of being in business, the donation could seem wasteful.
But that view can be fairly shortsighted. You have to understand that you are investing in people and in infrastructure. You can?t expect to get top-quality people and operations if you don?t invest accordingly. The people and infrastructure involved can largely affect the effectiveness of the program you hope to support and sustain for the long haul. You can?t expect, as the authors put it, to be able to avoid the investment in the infrastructure for the program you want to see working. It?s a challenge, but an essential part of philanthropy. It?s known as capacity building: building the capacity of the institutions that are running the programs you?d like to see succeed so that they are able to sustain themselves. It?s an important point from the book that donors and advisors alike should respect more. We use terms that sound bad, like the word ?overhead?- the tone of it makes it sound wasteful, but how would programs otherwise be developed and maintain success? It?s a fundamental investment.
Important Disclosure
Hewins Financial Advisors, LLC and Wipfli Hewins Investment Advisors, LLC (together referred to as ?Hewins?) are independent, fee-only investment advisers registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940.? The views expressed by the author are the author?s alone and do not necessarily represent the views of Hewins or its affiliates.? The information provided in this article is for general educational purposes only and should not be construed as, or used as a substitute for, investment advice.? If you have questions regarding your financial situation you should consult your financial planner, investment advisor or other financial professional.? Hewins is a proud affiliate of Wipfli LLP.?? A copy of Hewins? current written disclosure statement discussing Hewins? investment advisory and financial planning services and fees is available for review upon request.
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