APF

This article aims to help the next generation of African philanthropists better understand the importance of continued philanthropy, how to set up their own charitable giving and avoid the pitfalls of the past. This article will provide prescriptive advice for the first generation of wealth accumulators in Africa on how to create and sustain their own philanthropic legacy.

Historically, individuals and families at a high net-worth level have created long-lived family foundations, but the current generation of millionaires and billionaires are focusing on a shorter time horizon and the sustainable impact of their giving. They want to eradicate the world’s problems one by one and do it fast. However, there are questions that one must ask themselves before-hand: Why are you giving? What do you want to achieve? How do you think change will happen? How will you assess progress? Who will join you?

The majority of givers have stated that the motivation to give spurs from their personal values and the desire translate their vision to better communities into reality. Another aspect of giving and philanthropy is to leave a positive and impactful legacy for oneself and their family for generations to come. Legacy refers to the reputation and contributions for which we are most remembered. Building a family’s legacy can be very exciting; however, depending on the family’s internal dynamics, it can be fraught with complexity. Family, particularly within Africa, holds several definitions ranging from a nuclear family to the entire community. As a first/second generation wealth accumulator who wants to strategically give; regardless of how you define family, whether by law, bond or blood, it is fundamental to strategically execute your philanthropic goals. There are key areas to be considered when starting your philanthropy journey no matter the type of philanthropist you are considering. In this article, we will identify important aspects that will be beneficial when undertaking the journey ahead.

While donors give via their personal foundations and their personal bank accounts this alone does not constitute as philanthropy. Philanthropy centers on giving for the love of humankind. Philanthropy, whether it’s generational, strategic or high impact, does not respect structure. Great grant-making and/or social investments does not require a family office, a trust, or a foundation. Philanthropy through grant-making requires focus, knowledge and learning, active listening, commitment and partnership, and trust. 

• Focus: If you and your family seek to make long-term or sustainable impact, select a few key areas on which to focus. No one can do everything well.
• Knowledge and Learning: After you have identified key focus areas, learn and understand the depth of the issue(s). You cannot fund or invest in what you do not understand. Begin by speaking with those individuals and organizations who deal with the issue on a daily basis. Importantly, read books and articles about the issue; but to begin contributing a solution to a problem, speak with and listen to those directly affected by the problem.
• Active Listening: After you have identified the experts who regularly deal with the issues, initiate a conversation. It is important that you are doing very little talking and simply listening. Ask questions. Do you have some level of knowledge and expertise that you can bring to the solution table? Absolutely. However, listening enables you to understand the issues, and the value of your own experience or wealth might bring to the solution table.
• Commitment and Partnership: High impact or monumental change takes resources and time. Time is often the aspect where many donors get stuck. Many wealthy donors often want to make a “big change” but become discouraged by the amount of time it might take to complete. Some of our most challenging problems cannot be solved with wealth alone. Many issues are significantly impacted by political and public will, or human beings making a change in long held habits. That is why learning and listening are critical. Learning and listening enables donors to build partnerships. Partnership is a key ingredient to great outcomes and solutions. Donors operating in isolation rarely bring about great change. Partnerships, both big and small, are a key to solving our greatest global challenges.
• Trust: This means admitting that you do not have the answer, or that the solution is unknown. After you have learned all you possibly can, spoken with several experts and advisors, you must act. No matter how much information is gathered, no one can anticipate every potential issue that may arise. So long as you follow the steps above, you are not being reckless or unwise. Instead, you are taking a calculated risk.

While formal structures can carry out your philanthropic vision and goals, a structure, entity or institution alone will in no way guarantee it. A structure or entity cannot operate itself. The more structure you create, the more systems and leadership you will require. Take heed: depending on your country’s laws, it can be more challenging to dissolve an entity than it is in creating it. There are situations in which an entity, whether a foundation, a trust, or a fund by a grant-making organization, can be ideal. Before you and your family create an entity, there are a few critical issues to consider:

• Is a foundation the right fit for you and family and your philanthropic goals?
• If you are considering establishing a foundation, determine the size of the permanent endowment. Depending on your country’s tax laws, how much money are you willing to invest in perpetuity?
• Do you have a solid and committed decision-making body, such as a formal trustee board or, informally, at least three (3) trusted family members to help you with your decision making?
• What it will cost to manage the entity’s annual accounting, administrative and/or legal filings required in your country?
• Depending on the size of the endowment and your annual giving o investment goals, will you need a philanthropic advisor or a staff person(s) to help you thoughtfully and strategically make your grants each year?
• Would establishing a fund or a giving account at a larger community foundation such as African Philanthropy Forum carry-out your same goals?