‘Spray-and-pray’ approach to charitable giving not the most effective

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It was a touching moment: Celebrities Drake and LeBron James gave an unsuspecting Toronto high-school athlete’s mom $100,000 last month.

While the musician and basketball star’s gesture may inspire others to give impulsive gifts, strategizing before giving might allow philanthropists to feel more connected to their giving experience, organize their charitable activity for longer-term giving, and better set an example for future generations, experts suggest.

Here, three philanthropic advisers offer their perspectives on how high-net-worth individuals can better navigate the impact of their charitable investments.

Sharilyn Hale, President of Watermark Philanthropic Counsel

Is impulse giving beneficial in any way, other than for the recipient?

“The impulse to give and help when we witness the needs of others is a beautiful human response. Whether that is helping a neighbour or a stranger, or donating to an organization, our lives and communities are richer when we care, and participate. It is important to be aware when we are moved to be generous, and then consider the best way to respond to ensure our giving has the intended benefit.”

Why might strategic or planned philanthropy be a wiser option for high-net-worth individuals?

“Savvy philanthropists and those with significant charitable assets are well served to think about how to give well and responsibly. In my work with generous families, I’ve seen how giving with intention helps philanthropists feel more connected to their giving, be more organized in their approach, involve their family, and see more easily the impact of their charitable investments.

“It also helps to manage the risks associated with large-scale giving.

“Having a plan should not exclude the chance to respond to new or unanticipated giving opportunities. I encourage my clients to build space into their approach for social and fun giving as well as honouring obligations, but help them shift the balance of giving from those reactive one-off donations to gifts of purpose, passion, and transformation.

“The charitable landscape is more complex and nuanced than ever, and giving well is best not left to chance. Giving with intention gives opportunity for philanthropists to explore with humility the connections between their interests and values and what communities say they actually need, so their giving hits the mark.”

Should donors look at giving through a broader lens, such as community needs-based systemic giving?

“There are different roles giving can play in making communities and our world better: responding to immediate or recurring needs; empowering others for success; strengthening the charities and groups making change; and tackling the root causes of the most pressing issues. I invite my clients to consider at what level they want their giving to intervene on the issues they care about most – whether that is giving at all levels, or focusing on only one or two. These insights help bring greater clarity about the kind of change they aspire to see, and how that change happens.”

Arundel Gibson, Family advisor, philanthropy and impact, KPMG Family Office

Is impulse giving beneficial in any way, other than for the recipient?

“Many philanthropists have a discretionary fund, which is usually a percentage of the annual philanthropy budget, set aside to make unplanned donations. This allows them to respond to ad hoc requests that fall outside their focus areas and offer support in times of environmental and humanitarian crises.

“Most donors give to registered Canadian charities to receive a charitable tax receipt and some private foundations will fund what are technically referred to as non-qualified donees. This is an emerging issue and we may see change ahead with Bill S-216, the Effective and Accountable Charities Act, sponsored by Senator Ratna Omidvar. The bill proposes to amend the Income Tax Act to enable charities to establish equal partnerships with non-charities, especially empowering the voices of Black Canadians, Indigenous peoples and People of colour, while still ensuring accountability and transparency.

“Gifts made directly to individuals should not be confused with a charitable donation. They offer no tax advantage to the donor and determining the actual impact of the gift can be difficult.”

Why might strategic or planned philanthropy be a wiser option for high-net-worth individuals?

“Having a philanthropic plan allows donors to define their vision for change and evaluate impact. It can be a great way to engage family members, creating a lasting legacy for future generations. Many people find a philanthropic plan helps with decision-making. For example, donors are often inundated with funding requests and the response ‘I’m sorry, your cause is not in my plan this year’ can make a difficult decision a little easier.

“When I support families on their philanthropy to impact journey, we cover topics including defining their philanthropic values, their vision for change, decision criteria, family involvement, charitable giving options such as Donor Advised Funds and evaluation of impact. This exercise helps philanthropists to focus their philanthropic priorities and create a plan to guide their giving in a meaningful way that demonstrates impact.”

Should donors look at giving through a broader lens, such as community needs-based systemic giving?

“Much of my role involves educating donors about emerging issues in philanthropy. For example, trust-based philanthropy recognizes the power imbalance in philanthropy and the need to move from a donor-centred fundraising model to community-centred fundraising. While donor-centred fundraising tends to focus on the donor and aims to make that person feel good about their giving, the community-centric fundraising movement is grounded in social justice and prioritizes the community over individual donors. Donors are cautioned not only to remove bias but also to trust and empower the communities they aim to help to identify and address their own needs.

“A key element of trust-based philanthropy is unrestricted funding. In the traditional model, many donors are reluctant to fund overhead and administrative costs, which imposes an outdated belief these costs should be kept low. I encourage donors to instead focus on impact, trust charity representatives to identify and address their own needs, while holding them accountable for impact.”

Bri Trypuc, Principal advisor and founder of Trypuc Philanthropic Office

Is impulse giving beneficial in any way, other than for the recipient?

“Impulse giving is a spray-and-pray approach to philanthropy. It can result in a hit for sure, but oftentimes the outcome can prove doubly unfortunate or result in unresolved feelings of dissatisfaction that comes from a mismanagement of intentions and expectations.

“Is it beneficial to the donor? That depends on several factors: What does the donor value? What is their motivation(s) for giving? What are the areas of focus for their giving? How do they believe change will happen? Based on the answers to these questions, if there’s alignment between their intentions and expectations, the donor will feel impulse giving was beneficial to them.

“On the flip side, does impulse giving benefit society and the planet the most? In most instances it does not. Most knee-jerk reactions are emotionally driven and don’t result in the level of satisfaction and impact we’d achieve had pause, reflection, and purposeful direction been applied to making those same giving decisions. What’s often overlooked is there’s also an opportunity cost to not making an informed and effective giving decision. $100,000 may have resulted in a much more beneficial outcome, and one that’s better aligned with the donor’s goals and intentions, had it been reallocated toward a more cost efficient, effective solution with a track record of positive results.”

Why might strategic or planned philanthropy be a wiser option for high-net-worth individuals?

“Clients most often come to us because they’re pleased but not satisfied with their giving. They equate the size of their philanthropic gift with effectiveness, not realizing that how they give, not how much they gave, was the biggest issue leading to their frustration of feeling their giving is simply too insignificant to make an impact. A $10,000 gift can create more measurable impact than a $100,000 gift.

“Relying only on emotional appeals to make gifts and good intentions alone to support important or well-meaning organizations doesn’t enable donors to pinpoint how the charitable issue being addressed has changed or been impacted because of their involvement.

“Once motivations and focus on giving has been identified, the next steps are creating a giving roadmap and strategy which will help donors to navigate and evaluate on an ongoing basis whether they’ve made a difference – or not – with their funding.

“Doing your homework and having a strategy with any investment or purchase decision you intend to make is always a wiser option. ‘Strategic philanthropy’ (which ‘planned philanthropy’ is a part of, involving things like giving vehicles, wills, estate tax, etc.) identifies a challenge or obstacle in society and invests resources to focus on that problem in a measurable, targeted way.

“Where a donor or impulse giver may only hope that their donation advances a cause (but remains relatively unsure or unsatisfied with the answer), a strategic philanthropist thoughtfully designs their giving efforts, and understands how they contribute to, and advance a cause. Strategic philanthropy shifts from making whimsical, charitable donations, to a thoughtful grants program with an expected and measurable level of social return.

“A philanthropic strategist can aid individuals with their decision making, and recommend charities or alternatives proven to meet the highest standards in effectiveness so they can better align their philanthropic intentions and expectations with outcomes of their giving.”

Should donors look at giving through a broader lens, such as community needs-based systemic giving?

“If the question is ‘How is applying a social equity lens strategy to giving, beneficial?’ then it’s more helpful, once this is decided, for the individual to narrow the focus of their giving. Broadening the scope and landscape doesn’t assist in strategic giving. Once this is done, they can target their funding specifically toward an evidence-based solution within the area they want to help support and look at all of the potential charitable giving or investment options and solutions available to them that best reflect their individual intentions.”

Responses edited for clarity and length.