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10 Questions for Your Philanthropic Consultant

 

You’ve got the financial freedom to help better the world. Ask these questions to get started.

By Emily DeNitto

1. Why give? You may be looking for meaning in your life, you may want accolades, you may be interested in social or business advantage, you could be trying to help cure a disease that claimed a loved one or you might just want the tax benefit. You have to know your motive in order to achieve your goals.

 

2. When do I need a philanthropic advisor? “If you’re giving to a capital campaign or have great confidence in the leadership of a specific organization, you may not need one,” says Eileen Heisman, CEO of the National Philanthropic Trust. But advisors can be of great value in forming a strategy or investigating work in an area of interest. They can also help navigate family dynamics when the giving will be multigenerational.

3. How should I structure my giving? “This is one area where professional help is critical,” says Ron Rubin, CLU, ChFC with Union Square Financial Partners in New York. “If you want to give $10 million, you might want to set up a family foundation; with$150,000, you might consider a donor-advised fund. ”Family foundations and DAFs provide funds during a donor’s lifetime; charitable remainder trusts and charitable annuity trusts provide an income to the giver and then donate to a cause after the donor’s death.

4. How much control over the disposition of my gift can I have? The answer depends on how much influence andresponsibility you want. “Younger, more entrepreneurial donors often have very strategic goals and are quite involved,” says Bruce Boyd, Chicago-based managing director of Arabella Advisors. “Older clients’ giving is often driven by relationships with specific organizations.”

5. How many causes should I give to? Focusing your resources will maximize their impact. “I advise concentrating on no more than around three causes,” says Heisman.

6. How should I define success? Give your charity time before judging its re­sults. “It’s important to have some tolerance for ‘failure,’” Heisman says, “particularly if it’s an emerging group or cause.” That doesn’t mean you shouldn’t have bench­marks. The important thing is to know what they are before you write your check.

7. How do I donate to international causes? Two main ways: You can give to an organization dedicated to overseas work, such as Doctors Without Borders. Or, if you want to give in a more targeted way, investigate the recipient to make sure it meets IRS and anti-terrorism requirements. (Disaster relief is a particularly tricky area.) That’s probably a job for your philanthropic advisor.

8. How can I broaden support for my philanthropy? High net worth families are frequently solicited for donations, so be careful about hitting up your peer group; you don’t want them to think of you as an irritant. Consider so-called “quid pro quo giving”—donating to friends’ causes so that they will give to yours.

9. What’s the best way to involve my children? The answer differs depending on the children’s ages, but one strategy is paramount: Make sure they get direct involvement in the causes that matter to your family. “At any age, volunteering and going on field visits goes a long way toward engaging kids,” says Boyd.

10. How much should I give? Bill and Melinda Gates and Warren Buffett have provided one answer with their giving pledge, which calls on the nation’s billionaires to donate 50 percent of their fortunes to charity. “Of course, half of $1 billion is different from half of $10 million,” notes Boyd. Foundations are required by the IRS to give away at least 5 percent of their assets each year and there is discussion among regulators to require the same of DAFs.

For more information, contact Ron Rubin, Union Square Financial Partners, This e-mail address is being protected from spambots. You need JavaScript enabled to view it , 212.228.5558 ext. 272; Eileen Heisman, National Philanthropic Trust, This e-mail address is being protected from spambots. You need JavaScript enabled to view it , 215.277.3010; Bruce Boyd, Arabella Advisors, This e-mail address is being protected from spambots. You need JavaScript enabled to view it , 312.345.9033.