John Egan
11/01/2007
According to a study released last year by Bank of America and the Center on Philanthropy at Indiana University, affluent donors tend to receive advice from three primary sources: 41.2 percent consult most often with fundraisers or other personnel from nonprofit organizations; roughly a third (35.9 percent) consult most often with peers; while 26.6 percent confer primarily with accountants. (Respondents could choose more than one answer from the 10 possibilities offered.)
Even with this level of frequent consultation, the growing need among dedicated philanthropists to establish wide-ranging goals has caused a surge in the number of consultancies that specialize in helping the affluent give effectively and wisely. The rise of such organizations coincides with record-breaking generosity on the part of Americans. U.S. charitable giving hit a record $295.02 billion last year, according to Giving USA 2007, a report published by the Giving USA Foundation and authored by the Center on Philanthropy.
Whenever this much money changes hands, the potential for corruption exists, and Paul Comstock, chairman of investment and wealth advisory firm Paul Comstock Partners, acknowledges that a few flimflam artists work in philanthropy consulting, and some financial and legal advisors lack the breadth of knowledge to properly educate clients about charitable giving. But, he says, a majority of philanthropic advisors are skilled and passionate. "For the most part, everybody I know who touches this field touches it because what they personally feel is important in life is to give, not just receive," Comstock says. To help donors identify experienced, ethical consultants, the National Network of Consultants to Grantmakers in Santa Fe, N.M., is developing standards for picking philanthropic advisors, and creating an online database for donors, consultants and media outlets.
Even with paid consultants, philanthropists bear the responsibility for the success or failure of their giving. Experts suggest that before making gifts, philanthropists should perform thorough due diligence on the recipient, just as if they were buying a company. They should also meet with nonprofit officials, and talk with executives from broad-based community foundations and others who have donated to the recipients in question.
Finally, philanthropists should be proactive, rather than reactive, counsels Curt Bassett, president and CEO of Princeton Social Capital, a philanthropy consulting firm based in Princeton, N.J. "Most people are check-writing philanthropists, and they simply write a check because they want to make the gift quickly, rather than making it in a way that will have the greatest positive impact on the charity or be less expensive to the donor."
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