Coherent philanthropy: Six key lessons for families

Philanthropy is “coherent” when it is logical, well-organized, well-planned and sensible — as well as easy to understand and articulate.

Over the years, I have helped dozens of families, foundations, businesses and family offices achieve coherence in their philanthropy. In the realm of family philanthropy, here are six key lessons. (In a future column, I will discuss key lessons for businesses.)

1. Philanthropy can be externally impactful and internally transformational. Most people approach philanthropy by asking the important question: “What difference do I want to make in my community, nation or world?” An equally important question is: “What difference do I want to make for myself or my family?”

Taking the time to thoughtfully answer the second question helps individuals and families become much more effective in answering the first question.

2. Wealth-creators accrue enormous gains when they share control of philanthropy. In family philanthropy, the adage “he who pays the piper calls the tune” simply doesn’t work — especially when an important internal goal is to engage other family members in a meaningful effort.

Spouses, siblings, children and grandchildren want, need and deserve their own places at the philanthropic planning table. Otherwise, wealth-creators will lose the engagement of family members, as well as their valuable insight and input. Different family members see life through different lenses — derived from varied life experiences, values and goals. Following this approach weaves a rich family tapestry and helps achieve a family’s internal and external objectives.

3. Viewed holistically, philanthropic capital has power far beyond grant-making. Money donated to a private foundation or a donor-advised fund has already left the donor’s balance sheet and is legally owned by a 501c3. It cannot be reclaimed. Between 5 to 15 percent of this money goes to grants. The rest is usually invested for income — often without regard for impact.

Bizarrely, such capital can be invested in companies that directly oppose the donors’ mission. A foundation promoting health, for example, might invest in tobacco. A donor-advised fund devoted to girls’ empowerment might invest in manufacturers that employ girls in foreign sweatshops. A foundation fighting climate change might invest in coal companies.

Philanthropic capital should be invested not only to avoid contradiction with mission, but also to help achieve mission. Viewing capital holistically, investing it for impact and financial return, can unleash billions of dollars toward improving the world.

4. Focus and strategy are key elements of coherent philanthropy. The “peanut butter” approach to philanthropy accomplishes little. Spreading assets thinly over a wide range of causes rarely moves the needle on any of them. Instead, by focusing on just a few carefully selected issues, donors can deploy a strategic approach and go deep rather than wide.

5. Philanthropy is best seen as “risk capital” that drives innovation. Government efforts are increasingly constrained by political gridlock and financial limitations. Private investment is motivated by financial return — and therefore often avoids much risk.

Solutions to humanity’s most intractable problems will require innovation, necessarily involving risk. Dedicated to a purely social return on investment, philanthropic capital may well be the most effective and final stronghold for true risk-taking.

6. Philanthropy is inherently optimistic — especially in divisive and disheartening times. Philanthropy expresses the belief that we can have a positive impact on our own lives, on the lives of others and on vital societal issues. It also serves as a line of defense to protect democratic values like equality, opportunity, fairness, inclusiveness, and freedom of speech and thought.

I have seen charitable acts empower many donors to see the glass as half full — finding cre- ative, exciting and promising ways to marshal resources to tackle societal challenges headon. I have seen good people with a wide range of political, religious and philosophical viewpoints stand shoulder-to-shoulder to meet those challenges through giving and volunteering.

With these key lessons in mind, I move forward — grateful for the opportunity to write, speak, learn and help others set and achieve their philanthropic goals. Making coherent philanthropy a cornerstone of life helps people find the joy and meaning of living.

Bruce Deboskey, J.D., is a philanthropic strategist working across the U.S. with The Deboskey Group to help families, businesses, foundations, and family offices design and implement thoughtful philanthropic strategies and actionable plans. He is a frequent keynote speaker at conferences and workshops on philanthropy. Visit deboskeygroup.com.