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Transformational Philanthropy: A Way to Use Wealth Wisely

Selecting the right charity can be overwhelming. Learn how transformational philanthropy can change the way your clients donate before and after they pass.

A jar of coins with plant sprouting out of it and a hand holding more coins.

The world of charitable giving has evolved far beyond the days of writing a cheque or willing a lump sum to a charitable organization. In the past decade, the global wealthy population (individuals with a net worth of $1 million or more) expanded by over 50%, with wealthy individuals controlling nearly a third of global private wealth in 2019. This is a total of $104 trillion, compared to $69 trillion in 2010. This major growth in wealth has expanded the charitable giving space, increasing the number of gifts, as well as their size.


Regardless of how much donors have to give, most recognize that social issues are not only numerous, but increasingly urgent. The pressing needs of so many worthy social issues can be overwhelming, for both donors and advisors. That’s why financial advisors, estate planners, and charitable advisors should all be familiar with the charitable giving space — and the different approaches to giving. The amount of issues can be discouraging, leaving donors feeling lost and unsure where they can have the most impact.


Traditional philanthropy may be holding your client back, preventing them from meeting their charitable giving goals. This is where transformational philanthropy comes into play. By applying the principles of transformational philanthropy in your practice, you can maximize your client’s donations and bequests. This will benefit donors, nonprofits, and social issues at large.


So, what is transformational philanthropy?

Transformational philanthropy invests in issues and ideas, not in specific organizations. It uses a top-down approach; look at the issue someone wants to fix, and then decide how they’re going to get there. This could look like a major investment in a single organization, smaller donations in multiple organizations, or funding an initiative.


For example, your client may be passionate about climate change and reducing our world’s overall carbon footprint. Depending on the size of their gift, donating to a multi-million dollar global charity, may not yield any visible results. However, if your client refocused their efforts locally — say, by funding an eco-friendly lunch program for local schools — that same gift could have a far more visible and sizable impact. This would still work towards their goal of reducing overall carbon footprint, but would be much a more fulfilling and impactful use of their generosity.


Transformational philanthropy works towards a result, instead of a price tag

Transformational philanthropy is an integrated, diverse, and holistic approach to traditional charitable giving. It transcends social issues and includes all groups involved in the charitable giving process. It is more important than ever for everyone to be fully involved in the charitable giving process.


In her book Inspired Philanthropy, Tracy Gary explains the importance of an integrated approach to charitable giving:

"Just as all sectors need to cooperate to address these enormous problems, all parts of the nonprofit sector need to come together as well. We cannot afford to have donors in one corner, nonprofit leaders in another, those we are serving in another, and advisors elsewhere."

Transformational philanthropy is about making sure that both the donor and recipient receive the most benefit out of the donation. In a world with so much need, ensuring that your clients’ funds are used effectively is of utmost importance.


Making the switch to transformational philanthropy

Making the switch from traditional to transformational philanthropy starts with you. As you guide your clients through the giving process, consider asking them questions that get to the root of their goals.


Here are a few to get you started:

  1. What is your goal with this donation? Do you want to see a direct impact?

  2. Is there a cause or charity you’re connected to that you want to see continue? Do you want to support ground-level work or create upper-level change, such as policymaking?

  3. Try to break down the larger issue into multiple sub-issues. Is there a smaller issue that your gift can resolve? Would focusing on the smaller issue have a bigger impact than focusing on the broader issue? Sometimes going smaller yields bigger results.

  4. Will education play any role in your giving? How will you support the longevity of your gift?


When it comes to charitable giving, everyone has different goals and wishes. Some wish to remain completely anonymous, while others like to be involved as much as possible. Your client may want to make one large donation and give the receiving charity complete control over how they use the funds. Others may have specific wishes for how their gift is used.


There is no right or wrong way to give. As an advisor, you hope to get the best results for your client, but that doesn’t always have to mean maximizing tax benefits. Charitable giving can be just as much about the soul as the financial profits.



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While we’re passionate about all things estate planning, we’re not professionals. We recommend speaking with your lawyer or financial advisor when putting together an estate plan. Follow us on LinkedIn, Twitter, Facebook, and Instagram!


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