Collectively, Americans gave $360 billion to charity in 2014. Given such a large number, it isn’t surprising that most people automatically think that the bulk of giving comes from foundations or corporations. In reality, however, individuals accounted for 72% of that giving. Your philanthropy makes a difference.
While we have a strong culture of giving, I continue to receive questions from individuals and families about how to understand and be more in control of their giving patterns. When you reflect on last year’s giving, how much of it did you plan ahead for and how much was in response to a request from others? We give for a variety of reasons and they are all legitimate. Understanding your motivations behind each gift will help you give smarter in the future.
Increasingly, researchers are trying to figure out the science behind why people give. At a high-level, it’s easy to bucket giving by altruistic intent – (1) “pure altruism”- giving because you believe in what the charities are doing, (2) “impure altruism”- giving because you like the way you feel when you contribute to making the world a better place, or (3) “not altruistic” – giving because you like seeing your name associated with giving. But, if you are anything like me, your giving is much more complex than this
We are motivated to give by many factors – sometimes because we believe in the cause and other times because we feel obligated to give. Mark Kramer, co-founder at FSG, wrote in article in 1998 about these mixed motivations that still holds true today. He argues that there are three main reasons why people give:
- To fulfill obligations to your community: giving to your church, schools, or neighborhood associations
- To honor relationships: donating to causes that are near and dear to your friends and family’s hearts
- To see change in a social problem: giving to a cause that you care about and where you seek a specific result
All of these reasons are meaningful and legitimate. It’s important to honor your community and relationships as much as it is to give in order to realize change in an area that you feel passionate about. The first step in understanding and being more in control of your giving is to organize your past gifts into these categories. In which area did you contribute the most last year? Determine whether your past allocation mix is aligned with how you want your philanthropy to be, or if you need to make adjustments. You can think of this as you would your financial planning – creating a philanthropic portfolio of gifts across these categories. What percentage of your annual gifts do you want to be to your community? To your relationships? And finally, to the causes that you care most about? When you have a clear philanthropic portfolio, then it will be easier to respond thoughtfully to requests for gifts and plan in advance so you can give how much you want to your causes. You can change your portfolio as you learn and grow in your philanthropy and as your life stages evolve, just as you would when your financial situation changes.
Being more strategic in your giving will help you be more organized and have the impact you want to have – on your community, in your relationships, and on today’s social problems.