Financial advisors can help their clients get more out of their charitable contributions through “high-impact giving,” says the head of a not-for-profit association that specializes in this type of philanthropy.
High-impact giving brings more accountability into the philanthropic process and helps guarantee gifts will be used for the purposes the donors intend, says Phil Shaw, general manager of the Juvenile Diabetes Cure Alliance.
Financial advisors who can help their clients implement this type of giving will stand out from their peers and provide their clients with a better service, says Shaw.
The Juvenile Diabetes Cure Alliance provides donors with tools to assure that their gifts go toward the most promising cures for Type 1 diabetes. But the concept for high-impact giving is applicable to any charity or not-for-profit, he says.
High-impact giving is based on four “S’s,” says Shaw: Strategize, Select, Structure and Substantiate. Since the financial meltdown of 2007-2008, donors are becoming more demanding about how their charitable donations are used and high-impact giving can provide that, he says.
Advisors should start by strategizing with their clients about exactly who or what they want to give to and specifically what they want to accomplish. What part of the community or the world do they want to have an influence on, and do they want to give to a general fund or to a specific line of research or a particular program?
The second step is to select the recipient of the donation, followed by structuring the gift, Shaw says. Donors can request that money be used for a specific project, such as short-term research on a particular type of cure for a disease or for a building project.
An important follow-up is to substantiate the results achieved by the gift at the end of a specific period of time, such as a year, he adds.
“This is somewhat more relevant for large donations, but anyone who has made a substantial contribution can pick up the phone or send an e-mail to ask how the money is being used,” he says. Specifics should be written into the agreement beforehand, stipulating how the donor will verify the outcome and whether future gifts are contingent upon how the initial contribution is used.
In this way, “donors consider themselves shareholders and financial advisors can help them ‘invest’ in a charity, as they would in any other company or fund,” Shaw says. “It builds a partnership between the donor and the charity or nonprofit.”