Earlier this year, London-based New Philanthropy Capital (NPC) published a study on high-net-worth individuals and their need for advice on giving. Principal among its findings were: (1) donors want such advice and they are willing to pay for it, (2) the need is greatest in the donor’s ‘start-up’ phase, and (3) professional wealth advisers are not fulfilling their clients’ needs, although philanthropy is making small inroads into wealth-planning discussions and decisions.

These findings came as no surprise to The Philanthropic Initiative (TPI). TPI has been studying both donor and adviser behaviour for almost 20 years, both in its day-to-day client work and in more structured studies. NPC’s research reaffirmed our own experience: most donors need help and support to enter and ascend the learning curve of high impact giving. While there is more advice, education and learning experiences available to a growing cadre of donors, existing donor support resources are still inadequate to meet the need. A recent study of high-net-worth (HNW) individuals prepared for Bank of America by the Center on Philanthropy at Indiana University (October 2006) showed that among US HNW households (defined as those with incomes greater than $200,000 per year or assets in excess of $1 million), that need is especially acute. While such households represent only 3.1 per cent of US households, they accounted for $126 billion of the almost $300 billion in total giving in 2005.

So just how do donors learn about effective philanthropy and charitable giving and what else is needed?

What do donors need?

Almost eight years ago, TPI published What’s a Donor to Do? The state of donor resources in America today. Commissioned by a group of major US foundations, the report provided a survey and analysis of donor learning and giving needs, and the resources available to support them.

What do donors need to help them get going with their philanthropy and, beyond that, to make it sing? Among the needs identified in What’s a Donor to Do? – the same needs we see daily in our advisory practice – are:

• inspiration to give, through personal experience, peer influence and role models;
• advice on launching a giving programme, for example identifying key questions, tax and financial planning, and exploring personal and emotional issues like meaning and legacy;
• management, administration, technology – vehicles and tools for giving;
• education and experience in designing and delivering effective grants;
• advice on how to involve the family;
• support for continuing enhancement of philanthropic skills and engagement.

These needs are essentially unchanged over the last decade – though the quantity and diversity of resources available to support donors have increased. In the last few years, however, we have seen the emergence of growing interest in other areas of learning and services, including assessing the impact of charitable giving; ‘personal engagement’ – getting involved beyond simple monetary gifts; and learning in the company of peers. By way of example, to address the last of these, TPI recently conceived ‘The Master Class’,™ a unique working experience for a peer group of families and individuals who have demonstrated strong passion, commitment, and capacity to be transformational donors and social investors.

Do all donors need the same thing? Clearly not. Do donor needs change over time? Certainly, yes. In What’s a Donor to Do? TPI posited three stages of donor development:

• Stage 1: donors who are dormant but receptive.
• Stage 2: donors who are engaged and getting organized.
• Stage 3: donors who are committed and active learners.

What sources of support are these groups turning to?

NGO fundraisers and staff

The Bank of America study cited above showed that the first source of support to which donors turn is fundraisers and staff of NGOs (41 per cent of those surveyed). This stands to reason: fundraisers and planned giving officers have an obvious interest in assisting donors and donor prospects.

There is, of course, always a question about the ‘objectivity’ of such advice, whether it goes beyond mere facilitation of giving to the NGO in question. But a small number of fundraisers and planned giving officers do appear to be providing such advice and counselling donor prospects about their broader charitable interests.[1] Perhaps even more important, institutional fundraisers are also a primary source of education and information for financial and legal advisers, who turn to such ‘in-house’ personnel for tools and advice.

Peers and peer networks

The importance of peer learning was evident in all three stages. The Bank of America/Indiana study shows that with the exception of fundraisers, peers and peer networks are the most frequently utilized source of giving advice among HNW donors. The appearance almost ten years ago of Social Venture Partners (see below) was an index of this growth in peer learning in the US, a trend that has accelerated in the ensuing years.

Formal and informal peer networks are increasingly a source of experiential learning and collaborative giving. For example, in the US the giving circle is growing in leaps and bounds. In a 2007 study, New Ventures in Philanthropy, a national philanthropy promotion initiative, identified more than 400 giving circles. A giving circle typically comprises a group of individual donors who pool philanthropic resources and learn together about a common interest or issue in order to leverage their impact. Such groups build community, increase the amount of philanthropic giving, and provide a powerful experiential education for their members.

Giving circles are at once among the oldest and the newest of giving vehicles, with roots in ancient Jewish, Christian and Muslim traditions. Today, they are often institutionally sponsored or affiliated, most frequently by a grantmakers’ association, a community foundation, a women’s fund, or even a university or hospital. From among the many possible examples:

• Social Venture Partners, a giving circle created in Seattle, now more than a decade old with 24 chapters in three countries.
• The Synergos Institute’s Global Philanthropists Circle, founded by Peggy Dulany and her father, David Rockefeller, comprises 70 multigenerational families from 23 countries who work together to eliminate poverty and increase equity worldwide.
• The Network for Social Change and its spin-off The Funding Network bring together donors in the UK. TFN is a member-driven giving network that provides a forum where donors meet effective social change organizations informally.
• Semillas, a learning/giving circle in Mexico, which has funded over 100 projects for nearly 70 women’s programmes in 18 Mexican states. For members who wish to practise higher engagement philanthropy, the organization creates peer learning opportunities with grantees.

Another emerging form of peer learning and group giving is diaspora philanthropy: immigrants to a new country learning and giving together to address social needs in their countries of origin. Distinct from remittances, which are mainly gifts from individual family members, diaspora philanthropy is typically a collective learning and giving effort. TPI has been a leader in exploring this intersection of collective giving and cross-border social investing.[2] Among the growing number of organizations working in this field, the recently established Asian Foundation for Philanthropy has been set up in the UK to promote engagement with grassroots development in India among the British Asian community, while the American India Foundation performs a similar function in the US for diaspora Indians and others.

Financial and legal advisers

For many new and emerging donors, the financial or legal adviser is the first source of counsel on philanthropy and charitable giving. Two major studies that examined the behaviour of almost 1,000 advisers in the US demonstrated that too few professional advisers ask ‘the philanthropic question’ and fewer still are able to support their clients’ learning and giving needs.[3] These discouraging findings point up two facts: too few advisers are trained in philanthropy counselling, and too few have personal experience in philanthropy planning beyond introducing clients to the mechanics of giving.

However, the picture is not entirely gloomy. Financial planners and insurance-focused planners, especially, are ‘asking the philanthropic question’ in greater and greater numbers. Planned giving and estate-planning councils are increasingly helping their members become conversant with the tools of charitable giving. Bar associations and other professional associations (the Financial Planning Association, for one) increasingly see the ‘intergenerational transfer of wealth’ as an opportunity for their members to become more adept at supporting client philanthropy. Cross-disciplinary organizations aimed at helping professional advisers better support their clients are emerging, like the International Association of Advisors in Philanthropy (IAAP). Similarly, New Ventures in Philanthropy is currently engaged in an effort to identify and make available to professional advisers everywhere existing educational resources to enable them to support donors in their philanthropy.

However, it is the private banks that are most determinedly wading into the waters of client philanthropy support. In the US, there is a long tradition of the boutique, old-line private banks taking seriously the opportunity to better support their clients’ charitable giving, and there have been many newer entrants over the last 15 years. These institutions – many with the assistance of front-line advisory organizations like TPI – are developing philanthropy-focused resources for advisers and clients, training their private bankers better to work with philanthropy-minded clients, and creating philanthropy advisers to support ‘line’ bankers and work directly with clients. Similar phenomena are evident in Europe, Latin America, Hong Kong, Singapore and Australia.

Philanthropy advisers

Professional philanthropy advisory services are popping up all over the globe. Sometimes described as a ‘cottage industry’, in the US the number of such advisers probably exceeds 200. Most are individual practitioners, although a few large firms of a dozen or more professionals do exist. As we wrote in 2000, ‘Very few consultants provide the full spectrum of donor services, tending to segment themselves into the fields of program design, family issues, or evaluation.’ No doubt this is changing.

This phenomenon is also taking hold elsewhere. In the UK, the established Charities Aid Foundation (CAF) has been joined by New Philanthropy Capital, the Institute for Philanthropy, and Philanthropy UK. In continental Europe, there is wise partnership in Switzerland and the Forum for Active Philanthropy in Germany. CAF has offices all over the world. In Australia there is Philanthropy Australia; in Canada, the Tides Foundation Canada; in Brazil, the Institute for the Development of Social Investment (IDIS); in Asia, the Asia Pacific Philanthropy Consortium, and so on. Such providers will surely multiply in the years ahead.

What services does a ‘full service’ advisory firm provide? They might include basic consulting on philanthropy needs; facilitating family philanthropy/foundation meetings; strategic planning and governance consulting for foundations; research, design and implementation of philanthropic programmes; strategies for identifying philanthropic opportunities; all aspects of grantmaking from reviewing proposals to monitoring and evaluation of grants; and philanthropic education for donors and foundation boards.

As evidence of the growth in the number and sophistication of the professional philanthropy advisers, the National Network of Consultants to Grantmakers (NNCG) was formed in 2006. Its mission is ‘to increase the quality, effectiveness, and capacity of grantmakers by mobilizing and strengthening the work of knowledgeable, ethical and experienced consultants.’ (See http://www.nncg.org.)

Community foundations

It is community foundations that arguably have the greatest potential to serve donor learning and giving needs worldwide. There are more than 1,300 community foundations around the globe, with most concentrated in the US (700 plus), Canada, Germany, the UK and Mexico. Community foundations are ideally positioned to educate and support donors in ‘place-based’ social investing and philanthropy. They are well placed to understand community need, and many if not most donors are interested in supporting their communities. In the US, the Silicon Valley Community Foundation aims to link donors with other community foundations, in the US and overseas, while the Community Foundation Network in the UK is working with Coutts Bank Philanthropy Services to help Coutts’ clients identify opportunities to invest in their local communities.

While community foundations originally conceived of their mission as community development organizations investing the philanthropic bequests of dead donors, the enormous growth of donor-advised and other living donors’ funds has prompted them to address a broader range of donor giving and learning needs, individualized advisory services, and resources and educational opportunities. There are a growing number of Philanthropic Services Officers at community foundations, a position that did not exist ten years ago. Over the last three years, some 20 US and Canadian community foundations have participated in an Excellence in Family Philanthropy initiative, created to support the development of a training curriculum, tools, and a peer learning agenda for staff who work with families. A new effort to help community foundation staff move to the next level is now under development.

The future

In 2008, the donor in search of learning, tools, mechanisms and like-minded peers is fortunate to have an array of available options, and this is true whether home is Singapore, São Paulo, Gütersloh or Santa Barbara. The changes that are occurring in the donor learning and donor services world are both quantitative and qualitative. Donors can increasingly turn to a wide variety of advisers and they can engage with their peers in collaborative and experiential learning experiences.

But despite the progress over the last decade, yawning gaps remain. The ‘learning systems’ that were proposed in What’s a Donor to Do? have yet to materialize. While ad hoc efforts are under way to educate legal and financial advisers on better supporting their clients’ philanthropy, they are few and far between, and too often institution-specific. Community foundations are gaining traction, but most are doing so slowly. At least a handful of established foundations (Casey, Gates, MacArthur, Pew Charitable Trusts) are providing limited advice to other donors, but they are a distinct minority. The need and the opportunity remain great and the stakes remain high – for donors, for civil society, and for the ultimate beneficiaries of thoughtful giving worldwide.

1 See, for example, D Peebles (May 2002) Ivy League Advice, wealth.Bloomberg.com.

2 See, for example, P Johnson (2007) Diaspora Philanthropy: New roles and emerging models, TPI.

3 Doing Well By Doing Good (2000) and Doing Well By Doing Good in California (2003), TPI http://www.tpi.org

Stephen P Johnson and Ellen E Remmer are Vice President and President of The Philanthropic Initiative, Inc. Emails sjohnson@TPI.ORG and eremmer@TPI.ORG