John Bussel, Hewins Financial Principal and family-based foundation specialist, will be presenting this week an advisor’s take on high-impact giving and other issues discussed in Give Smart.
If you missed it yesterday: Philanthropy that Gets Results | Part 1
Q: One of the main themes of the book is accountability in philanthropy, but also how self-accountability is the most prominent type. External accountability is practically nonexistent according to the authors. In your capacity as an advisor, how can you encourage donors to be a steward for the public good?
When it comes to philanthropy, there aren’t the typical obvious measures of success. In business you’re either selling your product or not. Either you’re taking market share from competition or they’re taking market share from you. Retail companies can track this to the minute in terms of realizing how their business is doing.
When you’re deciding to give dollars away to try to address a particular issue, and that issue has a broad nature to it, like improving education for example, it’s not as black and white as money would suggest but can actually be rather abstract. You need to decide on the proper assessment tools.
It’s the donor’s responsibility to want to properly account for his/her dollars. They should want to have a realistic set of expectations, to consult with experts in the field, and to come up with some set of measurements for success. These are important steps from the outset, but many people don’t do this. Many times the giving has already taken place before the donor has realized it hasn’t gone as expected. They may understandably become frustrated that they’ve wasted precious dollars.
Before you substantially address a problem or issue, you must be accountable to yourself. As an advisor, it’s something that I really want to encourage. It’s very similar to work in investment planning. I like to do as much planning as I can, to play out a whole variety of scenarios before actually investing money on behalf of investment advisory clients. It requires a lot of thinking and planning ahead of time. How donors properly monitor their investment(s) is very similar to how they should monitor their giving. Once you as a donor settle on a pathway for accounting to yourself and for your actions, you can then account for your funding. At that point it’s up to you and whoever is working for you-outside advisors, employees, family members-to properly evaluate the work that is being done.
Q: The book reiterates that philanthropy at its core is both visceral and pragmatic. As an advisor, how do you balance the values and beliefs with the data and research that comprises what the book would call “due diligence?” Similar to different investment scenarios, how does this framework operate in family foundations?
The book mentions the example of Warren Buffet’s children and his gift to the NoVo Foundation. The authors describe how much time the foundation spent just evaluating what problem or problems in the world they’d like to address. After consulting with a number of experts from different fields, the foundation sensed a pattern of issues in the world related to gender and women’s empowerment.
So—advisors need to help donors deal with the enormous question of what problem(s) to address. How do donors begin to sort through it? As a donor, you’re probably not going to get a clear sense of accomplishment by giving small amounts of money to a number of foundations, with perhaps nothing to note but your participation with a variety of organizations. You probably won’t be able to look at one significant issue and develop an in-depth strategy around it, and you likely wouldn’t have the opportunity to work with institutions and other philanthropists in the field to solve the problem or alleviate the concern.
Even one of the largest foundations in the world, the Gates Foundation, has just a few areas of focus- primarily education in the US and disease around the world.1 Despite the size of the Gates Foundation, they too have narrowed their mission to be able to have a sense of accomplishment and impact.2 For everyone else, it’s probably even harder, assuming they have fewer resources than Bill and Melinda Gates to address an issue, and as such must likely be much more specific in addressing their area(s) of focus. Sorting through everything that’s out there takes time and is serious work. You need to talk to a lot of people. Advisors can help facilitate that process. It’s not an advisor’s job to instill values and beliefs in people, but rather to help them develop a process to discover what’s in themselves, and explore what would really drive them, get them most excited, and instill passion and commitment within them.
It’s something that I think advisors sometimes don’t think they can be helpful with. But we actually can, at least as far as developing a framework for this discovery, and creating a structure to help clients look for these hard-sought answers.