We all know that feeling when we’re compelled to support the causes that truly touch our hearts, right? It’s a part of being human, a way to show empathy and kindness. I know this all too well! I personally co-founded the 501©3 Clear Lake Ladies Night Out in League City, Texas because I wanted to get all the ladies around me as excited as I am to “get involved and give back in their community.”
Not to mention, my husband was patient long enough with me personally trying to fund every local need and/or cause from our personal account. Apparently, we have bills to pay and kids to feed too?! Who knew! I have had many tell me that I would be homeless and living in a box and give away my box if someone needed it. I guess there are worse things to be said about a person?! I can’t seem to help it; I am pretty sure God embedded it in my soul to help others. I am so thankful for a husband that balances me out!
All kidding aside, have you ever wondered what sets charity apart from philanthropy and when that line becomes clear? Well, let’s dive into this world and break it down together.
The Heartwarming Act of Giving
Charitable giving often starts when our emotions connect with a cause that speaks to us on a deep level. Can you believe that in 2022, the generous folks in America collectively donated a whopping 499.33 billion dollars!* It’s a testament to the incredible kindness of everyday people.
But within this world of giving, we’ve got both charitable donations and philanthropic efforts. They’re kind of like two peas in a pod, but there are some sneaky differences that set them apart.
What’s Your Motivation?
Now, here’s where things get interesting. The motivation behind your actions makes all the difference. You see, philanthropists have a knack for embracing charitable giving, but they do it in a more organized and purposeful way. They often treat their contributions as a ‘social investment,’ expecting a concrete ‘social return’ on their efforts. So, where does the shift from charity to philanthropy begin?
When Life Throws a Curveball
Sometimes, a big life event can be the catalyst for a shift towards more strategic giving. This could be anything from inheriting a sum of money to selling a business. It’s totally natural to feel the urge to make a lasting impact with your newfound wealth, but it’s also essential to take a step back and reflect. CALL YOUR FINANCIAL ADVISOR!! These are literally the types of things you have hired them for. The National Endowment for Financial Education (NEFE) did a study stating that 70 percent of lottery winners end up bankrupt in just a few years after receiving a large financial windfall. So, I repeat CALL YOUR FINANCIAL ADVISOR!
Many of the world’s pressing issues have been brewing for decades, even generations, and they’re not likely to disappear anytime soon. In the KPMG report,**philanthropists share their journeys, which often involve seeking advice from fellow philanthropists, visiting projects, and applying the same dedication they had in their corporate roles. Taking 12 to 24 months to decide on a course of action is quite common, highlighting the thoughtful process involved.
Finding Your Place on the Spectrum
Now, for those of you starting your philanthropic journey, it’s crucial to think about how you want to be involved. Some folks might assume that setting up a family foundation is the best route, but keep in mind that running foundations can be pricey and time-consuming. They can also narrow the scope of your philanthropic activities with their rigid focus.
So, where do you fit in? There are alternative options like donor-advised funds, social enterprises, family councils, and simple charitable giving. These provide flexibility while ensuring your impact is meaningful. For those with busy schedules, donor-advised funds, where you can donate cash to charities, might be a perfect fit. Many charities are open to involving significant donors in decision-making processes if you want to be more hands-on.
On the flip side, if you’re looking to create and manage specific programs or projects over the long haul or involve your family in your philanthropic journey, then foundations might be your jam. There are various ways to engage the next generation, whether through structured methods or more casual approaches.
Let’s not forget you can make giving a part of your Estate Planning as well! It can be part of your Will or Trust to have a Legacy Donation like a scholarship awarded yearly or a one-time gift to your favorite charity and/or organization. There are so many options!
In a Nutshell
Whether you prefer to give through charitable donations or structured philanthropic initiatives, there’s no one-size-fits-all approach. The key is to stay flexible, allowing future generations to explore causes close to their hearts while adapting to the ever-changing landscape of philanthropy. It’s an ongoing conversation that keeps evolving.
While you’re on this journey, don’t hesitate to reach out to your Financial Advisor or CPA for support. They can be real lifesavers. Think about what you want to achieve, the purpose behind your philanthropic activity, how much time you can invest, and how you’ll measure your impact. These questions, and many others, will shape your unique path from charity to philanthropy. Happy giving!
OneAscent Financial Services, LLC (“OAFS”), d/b/a Provident Oak Financial, is a registered investment adviser with the United States Securities and Exchange Commission. OAFS does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by OAFS or any unaffiliated third party. OAFS is neither an attorney nor accountant, and no portion of the presented content should be interpreted as legal, accounting, or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.