1. Identify the issues your client wants to address

It’s a common assumption that the first step in developing a giving strategy is to identify charities to donate to. But with hundreds of thousands of charities operating in the UK alone, a more strategic approach would be to identify the cause area first.

Complicating matters is the fact that most cause areas are complex and have multifaceted drivers behind them. Take the issue of childhood obesity. This is a health-based problem, yet there is a positive correlation between childhood obesity and poverty. Obesity also has a fundamental link to bullying, a further social concern.

So there are many potential angles to tackling a seemingly simple problem. We recommend first adopting a high-level approach to understand the issues important to your client, and its drivers. It will then be easier to narrow down the solutions they most connect with.

2. Factor in attitude to risk

The second step is to determine the method of solving the issue. Should your client focus on a specific location, or are they thinking more nationally or internationally? Do they want to try to change an entire system or help solve a problem for a specific group of people?

Understanding the difference your client wants to see will help to determine potential routes forward. Grassroots organisations generally work within communities. Whereas organisations working to create systemic change aim to address the root cause of an issue and alter the mechanisms that hold the problem in place, to create long-lasting change.

Systems change is harder to achieve and so a better fit for donors with a higher appetite for risk. Creating such high level change is also an opportunity for philanthropic leverage. This is the use of philanthropic capital to influence how others (donors, governments or corporates) give to good causes. If successful, there can be enormous impact.

There is value in both approaches and it may be worth adopting both approaches to tackle an issue from multiple angles.

3. Consider how to give to chosen charities

There are different ways to support a charity. For example committing to funding a charity for several years to allow the organisation to plan, or making larger one-off donations to different organisations every year. If your client wants to support a range of organisations, a hybrid approach might be a good idea.

While there’s no right or wrong way to give to charity, it’s worth considering: 

  • Supporting the running costs or overheads of an organisation, so that they’re not restricted in their ability to perform, can operate more effectively and can plan for the future. 
  • Speaking to the charity beforehand to understand what type of funding, and over what time period, would be most useful to them. 
  • Making multiyear commitments to charities that align with your client’s giving strategy, alongside smaller one-off donations to humanitarian issues or personal causes.

4. Map a timeframe

How long does your client want to keep giving for? Do they wish to give all their money away in a matter of years, or do they see the next generation continue giving beyond their lifetime? This may affect how much they give away now to factor in the longevity and sustainability of their giving.

When thinking about a timeline for a giving strategy, consider the nature of the issues being addressed. Many issues facing the world today could be solved by a concentrated release of philanthropic capital. So, should funds go to charity now or be held back to solve future issues? 

It’s difficult to predict the needs of a future world, but if your client would like to set up their giving to continue after their lifetime, then future-proofing their strategy with enough flexibility to be relevant to future generations should also be considered. 

5. Consider investing philanthropic capital

Investing some of the capital to preserve the levels of the philanthropic pot is also worth considering. At CAF we’re not regulated to give financial advice, but you may want to think about:

  • Aligning investments with your client’s values or chosen cause areas, ensuring any investments don’t contradict the missions of the charities due to benefit from these funds.
  • Determining if it’s even worth making investments, depending on the volume and speed at which funds pass through their donor advised fund. Alternatively, a social investment loan can achieve a social as well as financial return.

How to convey these steps to your clients

Our Giving Toolkit sets out how to develop a strong giving strategy and much more, to help guide the conversation on philanthropy with your clients. Use the toolkit to discuss key considerations around your clients’ charitable giving to ensure they take an informed and impact-led approach.

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As the UK’s leader in donor advised giving, we help advisors meet the philanthropy needs of their clients. Contact us to explore how we can support you and your clients find the right solutions for their needs.

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