Giving with Purpose

Tips for effective, strategic and purposeful philanthropy with maximum impact
by Cathy S. Butler, CFP, CRPC, Morgan Stanley
Cathy S. Butler

Historically, charitable giving rises about one third as fast as the stock market. In 2017, Americans gave over $410 billion to charity, with the majority of charitable dollars going to religion, education and human services. Among high-net-worth households, approximately 91 percent give to charity.

Engaging in philanthropy—as an individual or as a family—can be one of the most meaningful and transformational aspects of life. The benefits of charitable giving extend far beyond the dollars you donate or the financial benefits you may receive, such as tax savings or cash flow from charitable gift vehicles that provide distributions. When charitable giving is tied to issues—values and causes that are important to you and your loved ones—it becomes more than a gesture or a transaction. It enables children, parents and grandparents to join together and work toward addressing real problems in your community or in the world at large. In this way, giving becomes a family affair, or even a family tradition, that is passed from one generation to the next. 

Getting Started with Effective Philanthropy
Every dollar you put into the world has an impact, but how do you ensure your charitable giving aligns with both your values and the change you hope to see in the world? Here is a quick roadmap for practicing strategic giving and maximizing your impact.

Step 1: Find your philanthropic passion. The first step in your giving journey involves finding your philanthropic passion. Start the process of purposeful philanthropy by considering what matters to you and what you hope to accomplish. Ask yourself the following questions:

  • What fields of interest would we like our philanthropy to address? 
  • What criteria will we use to identify which organizations to support? 
  • How important is having control over how our gift(s) are used?
  • How will we measure our impact?

Creating individual or family mission and vision statements around philanthropy helps ensure that your giving is guided by a consistent set of values and goals. Once you’ve established these guidelines, you will want to identify causes, issues and organizations that you would like to support. Charity-ranking organizations such as Charity Navigator or BBB Wise Giving Alliance can be useful for assessing a nonprofit organization’s financial health, operational transparency, and accountability in reporting on progress.

Step 2: Choose ways to give. There are many ways to give back, whether you choose to give money directly to a charity, create financial vehicles to facilitate giving, or donate your time to volunteering for a nonprofit organization. Each of these ways has their advantages and disadvantages, and your financial advisor can help you determine which method(s) of charitable giving will allow you to practice
purposeful philanthropy while still pursuing your other financial goals. 

Step 3. Practice strategic giving. You want your giving to count, and you want to know your charitable dollars are making a meaningful difference. To maximize your impact, consider pooling your giving with that of other like-minded individuals and families who support the same cause. Or, you can choose to tie your gifts to specific programs or initiatives so you can track the effectiveness of your philanthropic dollars. It is also a good idea to stay engaged with the nonprofit organizations you support by requesting impact reports or communicating with their leadership to understand their progress. 

Taking the Leap to Investing with Impact
Your philanthropic potential is not limited to the gifts you give to causes and organizations that are important to you. The way you choose to invest your wealth can also help you achieve meaningful philanthropic outcomes. Impact investing—also known as investing for the three Ps: people, planet and profit—involves seeking environmental, social and governance benefits alongside a financial return. If you are interested in learning more about how you can align your investment portfolio with your purpose, talk to a financial advisor with experience in impact investing. PM

Cathy Butler is a financial advisor at Morgan Stanley Smith Barney LLC in Peoria. She can be reached at cathy.butler@morganstanley.com or (309) 671-2873. For more information, visit fa.morganstanley.com/ccg.

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