DeBOSKEY: SIX TRENDS FOR 2016

The Denver Post - - BUSINESS -

Phi­lan­thropy has evolved in to­day’s world as a strate­gic in­vest­ment, trans­for­ma­tional for both so­ci­ety and the donor .»

With record lev­els of giv­ing, new ap­proaches to mar­shal­ing phil­an­thropic as­sets for im­pact, and bet­ter ap­proaches to phil­an­thropic strat­egy, 2015 was a great year for phi­lan­thropy. This trend will con­tinue in 2016. In­creas­ingly, lead­ers in busi­nesses, foun­da­tions and fam­i­lies un­der­stand that phi­lan­thropy is more than the merely trans­ac­tional act of writ­ing checks to fa­vorite non­prof­its. To­day, phi­lan­thropy is seen as a strate­gic in­vest­ment that is trans­for­ma­tional for both so­ci­ety and the donor.

In the com­ing year, ex­pect to see:

The in­creas­ing im­pact of women

Women con­tinue to demon­strate in­no­va­tion and lead­er­ship in the field of phi­lan­thropy — and with big im­pact. Women now con­trol more than half of the pri­vate wealth in the United States.

Look­ing for­ward, women are ex­pected to in­herit 70 per­cent of the $41 tril­lion in in­ter-gen­er­a­tional wealth trans­fer that will take place over the next 40 years. By 2025, women will com­prise 60 per­cent of U.S. bil­lion­aires.

More than ever be­fore, women are flex­ing their in­di­vid­ual and col­lec­tive phil­an­thropic mus­cles — and achiev­ing greater out­comes. For more in­for­ma­tion about women’s ef­forts in the phil­an­thropic arena, see Women’s Fund­ing Net­work.

A grow­ing em­pha­sis on im­pact in­vest­ing

Im­pact in­vest­ing is the hottest topic in phi­lan­thropy. To­day, nearly $1 tril­lion sits in U.S. foun­da­tions and donor-ad­vised funds, ded­i­cated to one pur­pose — to en­hance the pub­lic good. Owned by 501(c)(3) or­ga­ni­za­tions, this money is sep­a­rate from its donors, who have en­joyed gen­er­ous tax de­duc­tions.

Un­der cur­rent tax law, foun­da­tions must do­nate only 5 per­cent of those as­sets — or roughly $500 mil­lion — to char­ity in any given year. (There is no such re­quire­ment for donor-ad­vised funds.) The re­main­ing $950 bil­lion is in­vested — usu­ally for the “sin­gle” bot­tom line of growth. All too of­ten, th­ese in­vest­ments con­tra­dict, and rarely ad­vance, their donors’ mis­sions.

Im­pact in­vest­ing dra­mat­i­cally trans­forms this tra­di­tional ap­proach by com­mit­ting in­vested phil­an­thropic cap­i­tal to the “dou­ble” bot­tom line of growth and so­cial im­pact — thereby un­leash­ing bil­lions of dol­lars for greater po­ten­tial pos­i­tive global im­pact. Forty­one per­cent of foun­da­tions re­cently sur­veyed cur­rently prac­tice im­pact in­vest­ing.

The in­creased use of PRIs

Us­ing pro­gram-re­lated in­vest­ments, foun­da­tions can lend money to, or in­vest in, non­profit or for-profit or­ga­ni­za­tions that fur­ther their mis­sions — while also pro­vid­ing a pos­i­tive fi­nan­cial re­turn.

Au­tho­rized by the IRS, PRIs use mar­ket-based tools to help non­prof­its solve so­cial prob­lems. Plus, they en­hance donor im­pact by grow­ing and re­cy­cling at least a por­tion of phil­an­thropic as­sets for fu­ture use.

The de­but of in­no­va­tive struc­tures

In 2015, Mark Zucker­berg and Priscilla Chan made head­lines when they pledged to give 99 per­cent of their Face­book shares — cur­rently worth about $45 bil­lion — to char­i­ta­ble pur­poses. How­ever, no char­i­ta­ble do­na­tion was made.

In­stead, the cou­ple pledged to trans­fer own­er­ship of the shares to a new LLC: the Chan Zucker­berg Ini­tia­tive. This LLC will sell the shares and do­nate the pro­ceeds to char­ity, in­vest in other for-profit en­ti­ties, con­trib­ute to political ef­forts and de­ploy funds in other ways to “ad­vance hu­man po­ten­tial and pro­mote equal­ity.”

“By us­ing an LLC in­stead of a tra­di­tional foun­da­tion,” said Zucker­berg, “we re­ceive no tax ben­e­fit. In­stead, we gain flex­i­bil­ity to ex­e­cute our mis­sion more ef­fec­tively.” So­phis­ti­cated phi­lan­thropists are look­ing for sim­i­larly in­no­va­tive ways to de­ploy cap­i­tal to achieve their char­i­ta­ble goals.

Phi­lan­thropy be­com­ing de­moc­ra­tized

Over the past sev­eral years, crowd­fund­ing (us­ing on­line tools and so­cial me­dia to raise money for non­prof­its) has grown ex­plo­sively. Events like the ALS Ice Bucket Chal­lenge and Giv­ing Tues­day — as well as sites like Net­work for Good, Crow­drise, Ra­zoo and In­diegogo — have en­cour­aged and en­abled smaller donors to raise bil­lions of dol­lars for non­prof­its. The av­er­age do­na­tion at such sites is less than $100.

Strate­gi­cally driven do­na­tions

De­vel­op­ing a thought­ful phil­an­thropic strat­egy that ben­e­fits both donors and their com­mu­ni­ties helps donors achieve more in­ter­nal and ex­ter­nal bang for their char­i­ta­ble bucks.

Ef­fec­tive, trans­for­ma­tional phi­lan­thropy goes well be­yond the check­book. It re­quires care­ful strate­gic plan­ning to achieve its goals. This recog­ni­tion has fu­eled the growth of phil­an­thropic con­sult­ing in fi­nan­cial and pro­fes­sional ser­vices firms as well as the rise of phil­an­thropic strate­gists as key ad­vis­ers to busi­nesses, fam­i­lies and foun­da­tions. The re­liance upon and in­flu­ence of th­ese ad­vis­ers can be ex­pected to grow.

Best wishes for a happy, healthy — and phil­an­thropic — New Year! Bruce DeBoskey is a Coloradobased phil­an­thropic strate­gist work­ing with The DeBoskey Group to help busi­nesses, fam­i­lies and foun­da­tions de­sign and im­ple­ment thought­ful phil­an­thropic strate­gies and ac­tion­able plans. He is a teach­ing fel­low with Bos­ton Col­lege’s Cen­ter for Cor­po­rate Cit­i­zen­ship and a fre­quent speaker at con­fer­ences on phi­lan­thropy. Visit de­boskey­group.com

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