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You can consider this blog/vlog entry a mini-workshop for those of you looking for a framework to help guide your philanthropic intentions. I have had several client families in the same predicament: they’ve saved diligently, and through our work together, we ensure that their nest egg will support them to and through retirement. They have charitable hearts but aren’t sure how best to utilize their resources to support the causes they care about. In the video below, I’ll walk you through creating your personal philanthropic philosophy.

 

If you prefer to read along, you can find the content below.

Introduction

Today, I want to walk through an exercise to help you create your unique philanthropic philosophy. This is one I love to do at workshops because so much financial advice is dependent upon the variables in your life, so ‘it depends’ is often a common answer to specific questions. However, this exercise gives you a useful, tangible thing at the end of it, no matter where you’re coming from.

I have no idea who coined this term, philanthropic philosophy, but I pretty consistently assume that anything I’m thinking of is probably a riff of something I heard from someone smart. This framework I’ve put together here is a combination of ideas I’ve seen work in practice with my client families, learnings that came from research, facts, and my opinion. So let this be a disclosure, and thank you to those who have contributed to creating this philanthropic philosophy as I’m defining it here today. You’ll need a piece of paper and a pen.

If you’ve been following Collective Wealth Planning for any amount of time, you’ll know we’re fans of Simon Sinek and his Start with Why concept. If you haven’t heard of it, you can watch his TedTalk on the subject. So we’re going to use his framework today. We’ll start by exploring core values with an effective exercise from one of our favorite researchers, Berne Brown. We’ll then develop a few ideas for identifying good or worthy organizations, and these are going to be unique to your outlook. The third step is to determine the right amount. Finally, we’ll pull all three together to help create a framework we can apply to our philanthropic efforts to serve as a guide moving forward.

Why: Core Values

Our first exercise is to identify our core values. These serve as the foundation of our why – our motivations for living and giving. Here is a link to Berne Brown’s exercise, Living Into Our Values. In it, she invites you to review a list of core values with the goal of identifying your top two. What I’ve seen work well is to go through this list and circle/write all of the values that resonate with you. Then, as you look at the shortened list, it becomes clear which values flow into each other or overlap. Once you identify your top two, she prompts us, in true Berne Brown fashion, to take our values from BS to behavior.

If you’ve already been through exercises like this before and feel clear on your top two values, I encourage you to run them through this section of the exercise to see how they hold up. Go ahead and take a few moments to click on the link and complete the exercise.

How: Defining a “Good” Organization

Our next step is the how – how do we define what makes a ‘good’ organization? This is subjective. Often, it’s interest-based, whether that’s a community you care about or a cause you want to support. It can also include a metric-based assessment – how much of the organization’s funding goes toward program vs. administrative expenses, as an example. If you’re thinking, “That sounds like a hard metric to measure.” It can be hard for small nonprofits; however, evaluators like Charity Navigator and GuideStar distill this information for larger 501c3s.

A good starting place might be to reflect on the organizations you’ve supported previously and look for any patterns or themes. I’ll ask you to take a few minutes again to write down two ways to define a good organization in your eyes – the examples on the page may help you get started.

What: What and How Often?

Our third step will focus on the what – what will we give and how often? Designing a tangible measurement can provide guidance that is flexible and repeatable. The determinant may be based on a dollar amount or percentage of some measurement of your wealth. It may be set on the number of hours you hope to volunteer. You’ll also want to indicate some frequency level, as the more specific you get, the more useful it will be. Take a moment to write down what you want to give and how often.

Putting It All Together

Our last step is to put the whole thing together. Like Mad Libs, you replace the bold words with your own:

I strive to give to organizations that support core value and core value.

They do that by definition of “good” and definition of doing “good.”

I aim to donate at least percentage or amount of my resource every frequency.

Take a minute here to plug your words into this construction, and we’ll refine it together once you’re done.

Examples

Well, how does it look? Sometimes it can be helpful to look at a couple of examples to refine yours.

I strive to give to organizations that support education and equality.

They do that by spending over 90% of their funding on programs.

I aim to donate at least 50% of my required minimum distribution every year.

I strive to give to organizations that support activism and community.

They do that by investing directly in my city.

I aim to donate at least 5 hours of my time every quarter.

I strive to give to organizations that support faith and leadership.

They do that by serving the youth in our community.

I aim to donate at least 10% of my income every year.

Notice the use of flexible words like ‘strive’ and ‘aim.’ The goal of creating a philanthropic philosophy isn’t to place limits on your gifting. It’s to give parameters as a starting place as you revisit your plan regularly. When on the cusp of a decision to join a board, or maybe you’re wading through the dozens of worthy charitable requests in your mailbox or inbox, having this philosophy close at hand continually points you back to your north star.

Parting Thoughts

You might feel like this short statement doesn’t quite encompass what you want your philanthropic philosophy to say. You’re welcome to expand, but I will share that the clients I’ve seen use this most effectively keep it short and simple. Not only does that empower effective giving for them, but a secondary perk of a brief statement is also that it’s easily sharable. At a minimum, this framework can open conversations with your advisor to maximize the tax efficiency of your monetary gifts. (You can use this checklist to help cover the financial implications when giving a monetary gift.) At its best and highest use, your philanthropic philosophy can grow a giving nature into a legacy and instill generosity in future generations. I have seen many client families share this with their kids and grandkids; it can be incredibly powerful.

I would absolutely love the opportunity to hear your philanthropic philosophy if you’re willing to share it. I hope this exercise was helpful. Stay well and give freely.