Five Questions to Decide if Philanthropic Advising is For You

The Signatry has an audacious mission to see revolutionary biblical generosity solve the world’s greatest problems. If you’re like me, you find this mission inspiring, but perhaps overwhelming. How do we as givers use our resources to play the part God is calling us to play in his big mission? I believe philanthropic advising is central to answering this question.

Philanthropic advising is a service for everyone, not just the wealthiest. This professional service is where the rubber meets the road for generous givers working to solve the world’s greatest problems.

Here are five questions to ask to see if you could benefit from a philanthropic advisor. If you are serious about your generosity and answer “no” to any of these questions, consider searching for a philanthropic advisor.

1. Do you have a philanthropic strategy?

The root words of “philanthropy” come from the Greek terms “philei” which means “love” and “ánthropous” which means “people.” A strategy is simply a plan of action. So, a Philanthropic Strategy is a plan of action to love people.

For this reason, when we at Simple Charity help clients craft a philanthropic strategy, we help them create a plan that goes beyond financial giving and includes embodied service and committed prayer. Giving, service, and prayer are three practices that form our hearts in Jesus-like love.

To make a difference in the lives of others is one of God’s greatest callings. And yet research shows that only 40 percent of affluent donors have a strategy for their giving.* This lack of intentionality results in a lack of action, stifling our collective opportunity to advance the gospel and serve the vulnerable.

2. Are you satisfied with your knowledge of philanthropy?

Sixty-three percent of affluent donors indicate they would like to grow in their knowledge of philanthropy. In fact, the more educated givers are about philanthropy, the more generous they are.

Those who consider themselves “knowledgeable” about charitable giving on average give 5x more than those who consider themselves “novices.” Those who consider themselves “experts” give 15x more! However, only 4 percent of affluent donors consider themselves experts in charitable giving, and nearly half categorize themselves as “novices.”

A philanthropic advisor can help you learn more about charitable giving and deepen your understanding of giving to solve complex problems. You’ll become a better giver and find more joy in the process as you grow in expertise.

3. Are you confident that your giving is avoiding mistakes and missed opportunities?

Whenever you give a financial gift to a charity, there are both risks and opportunity costs.

You may be familiar with some of the risks of giving. Perhaps you’ve read the books When Helping Hurts or Toxic Charity. Giving can go awry through program models that undermine the dignity and agency of beneficiaries, institutional mismanagement of financial resources, or moral failure of nonprofit leaders. Though there’s no such thing as risk-free giving, a philanthropic advisor minimizes risks by elevating their clients’ nonprofit due diligence process.

There are also opportunity costs with every grant. Some nonprofits can be 10x or even 100x more effective at solving a problem than others. Imagine you are passionate about addressing homelessness in your hometown. What if a $10,000 gift to one charity could have helped 10x as many people at a different charity?

To address the opportunity costs of allocating capital, professional investors aim to have good “deal flow,” assessing as many businesses as possible to find the best ones. Philanthropic advisors can improve your deal flow and help you find the most impactful charities working on the issues that you care about.

4. Is your giving having the impact you intended?

One myth about generous people is that they are motivated primarily by tax breaks. In reality, 97 percent of affluent givers say that making a missional impact is a key motivator for giving. Forty-four percent of affluent givers say that tax considerations have zero impact on their giving decisions.

Givers are motivated by impact. Do they see that impact? Unfortunately, no. The majority of affluent donors agreed that “I don’t know if my giving is having the impact I intended.” Four out of five of these donors say they do not monitor the impact of their giving. It’s no wonder why nearly 60 percent of givers find charitable giving “unfulfilling” or only “somewhat fulfilling.”

A philanthropic advisor follows up with charities to determine the impact of their client’s gifts and shares these results with their client. This closes a key feedback loop in the giving process, directs generosity toward more efficient problem-solvers, and results in more joyful giving.

5. Are you doing a good job managing relationships with nonprofit leaders?

It can be challenging to communicate your intentions with nonprofit leaders who rely on your donations. A philanthropic advisor can help you redemptively navigate these relationships.

For example, how do you stop giving to an organization you’ve supported for years? Or, how do you gracefully say “no” to a request from a new charity? If you decide to support a charity, should you make a restricted or unrestricted gift? And how do you clearly communicate your intentions to new grantees?

These are situations that philanthropic advisors are accustomed to navigating with wisdom and grace. Your advisor can provide wise counsel so that you can be a blessing to nonprofit leaders, even when you have bad news to share.

They can also play the role of intermediary by interfacing with nonprofits on your behalf, allowing you to choose how much personal information to share with the organizations you support. Jesus’s sermon on the mount warns us about the dangers of pride when giving—we must watch our hearts. A philanthropic advisor can continue communicating with nonprofits if you decide to give anonymously.

The potential energy of wealth

If you answered “no” to any of the five questions above, you could benefit from having a philanthropic advisor. Fortunately, there are a number of individual advisors and boutique firms. Check out 10:10 Strategies, Love Well Group, Excellence in Giving, or my ministry, Simple Charity, to start.

At Simple Charity, our philanthropic advising emphasizes putting biblical love into action. We are a mission-oriented nonprofit operating with the excellence of a business and designed to be affordable for people with any level of charitable wealth.

Wealth is a kind of potential energy, like a fully charged battery, that can be activated for redemptive influence and humble service for the glory of God. There are nearly $250 billion in donor advised funds, $1.5 trillion in foundations, and an additional $12 trillion that will be allocated to philanthropy over the next two decades of the Great Wealth Transfer. Philanthropic advising can ensure that the resources in the hands of Christians are given wisely, both locally and globally.

 

*The survey results shared in this blog post come from a 2023 nationally representative study from the Lilly School of Philanthropy and Bank of America. Find the full report: https://scholarworks.indianapolis.iu.edu/server/api/core/bitstreams/2fd1581e-c1a0-43de-a174-a3080d019fc2/content