“To give away money is an easy matter and in any man’s power. But to decide to whom to give it and how large and when, and for what purpose and how, is neither in every man’s power nor an easy matter.”
– Aristotle, Greek philosopher.
Across the globe, there are examples of individuals who have chosen to give strategically without instituting formal foundations. There are also similar examples in the African context. This article explores this theme and aims to serve as a practical guide to strategic giving without a foundation.
There are three common mechanisms for giving which philanthropists often utilize. They: (1) establish foundations solely focused on giving; (2) create teams within their existing companies or non-profit organizations that provides grants and/or execute initiatives directly; and (3) provide funds directly to causes without any formal structure. Each of these methods has its advantages and disadvantages.
While the first two mechanisms are more visible, by nature of their design, the third option has been gaining prominence in recent years. For instance, Warren Buffet, one of the most charitable billionaires in the 21st century has engaged in philanthropy through the pooling method. He has given away more than $46 billion since 2000, 71% of his $65.5 billion fortune. Buffett’s approach to philanthropy has largely mirrored his approach to business – investment and delegation. In 2006, Buffett pledged 85% of his net worth through annual gifts from Berkshire stock to five charities, valued at $37 billion per charity at the time. Since then, Buffett has largely stood back and let the five foundations manage the money he has donated, merely offering thoughts about how to effectively focus the funds. In both business and philanthropy, he leaves much to manager discretion.
Like Buffet, some African philanthropists may not have the time or capacity to create and sustain their own foundations or Corporate Social Responsibility (CSR) initiatives. For them, partnering and collaborating with credible local organizations who have a shared vision and strategy, is often considered the most effective way of giving. “Strategic philanthropy is essentially a bet on the value of rational decision making”.
Choosing to give strategically, without a formal foundation or team, requires that the philanthropist establish a clear area of focus – in terms of sector of interest (e.g. health, education, the arts, science & technology etc.), intervention area (e.g. by geographic area (e.g. your hometown, the city where you live, your country etc.) or demographic focus (e.g. children, youth, women, the elderly etc.). Focus areas can evolve and change, based on the philanthropists’ experiences and passions. However, through the giving journey, the philanthropist must commit to constant learning, monitoring, evaluating and, when necessary, adjusting and reconfiguring his/her intervention.
Once a focus area has been determined, the philanthropist must sift through the numerous requests the he or she receives and actively:
Who Gets the Credit?
Strategic giving without a foundation often garners less public credit than other forms such as creating a foundation or trust. This reality was further reinforced in the caselets included in the sidebar of this article, as receiving credit and public recognition for philanthropic work was not the primary motivator for why these philanthropists give. In fact, some philanthropists, motivated by religious reasons, actually believe that not getting public recognition gives the process more meaning. Others are simply are not motivated by the notion of who receives credit. The act of giving should be done without the need for public praise as a return investment. “Real generosity is doing something nice for someone who will never find out.” – Frank A. Clark
Unlike the business world, when it comes to strategic giving – beneficiaries are not customers. As such, the management and funding of one’s philanthropic work can prove difficult, especially as the giving levels increase. Research has shown that in most cases, the most sustainable way to engage in strategic giving over a long period of time is through institutional or structural mechanisms that still hold the same values that the donor does, while ensuring structure and continuation. These mechanisms include setting up living trusts that consists of a deed that sets out the conditions of your giving; a will or legal testament that instructs your executor to continue giving to specific causes after your death; or a family foundation to continue your giving. The side bar title “”giving mechanisms” provides some of the advantages and disadvantages of each mechanism. However, it is important to note that there is no right or wrong route to ensuring your giving is sustainable. Like most aspects of philanthropy, the decision is based on one’s personal preferences and values.