September 15th, 2018
This has been one of the most challenging pieces I’ve chosen to write. It emerges from hearing the same question too often recently and not having an easy answer.
What is the question? How can we persuade someone to be philanthropic if they don’t choose to be?
First, the context: For well over 20 years, most of my talks and writings have been about philanthropy. Depending on the audience, they might address emerging trends, or philanthro-ethics, or best practices, or decision-making in families and foundations, or any of a myriad of other related matters.
On the whole, my peer group and my audiences are funders. As funders, we are already committed to giving money, but not always sure about how or what will be the most impactful, or what will engage successor generations. That is where I come in – helping to make good, informed, and appropriate decisions. Until recently, I don’t recall ever being asked the question: how do we persuade someone to give?
Let me be clear. In the past, fundraisers have often asked me a related, but ultimately a different question: how do we influence or persuade funders? They are sure that my understanding of the thinking process of philanthropists and foundations will give them the magic code to unlock untold riches for their projects. [By coincidence, as I am writing this, I see that Guidestar has just published some advice for fundraisers from funders and SSIR has published an extended piece on altruism.] However, questions the fundraisers raise are built on the same starting assumption as my own – they want to appeal to those committed to being funders, not to those who don’t or won’t..
However, over the last few years, I have been asked to speak to more and more groups of investment and wealth managers, family office directors, and others whose field and expertise is more specifically on the money-making side and not the philanthropy spending side. It is an interesting contrast with my peer group where philanthropy is about giving money away. Put simplistically, money managers pay their bills based on money under management; philanthropy is money out the door. Their starting point and their bottom lines are different than the questions funders ask me. [Yes, I know that to give money, you must have it and I am not dismissing the importance of good investment decisions – but, except for impact and values-based investments, they are essentially a different set of questions.]
As I have become more visible in these settings, a number of wealth mangers have sought opportunities to speak to me privately about their clients. Most of the issues they raise are not surprising; family conflicts, succession uncertainties, determining how much is enough…. But some quite explicitly ask me how they can convince their few miserly clients to be philanthropic.
If the studies are correct, I suspect that many of these people are not hearing the full story from their clients. After all, even though the data shows some improvement, it appears that investors don’t think highly of the philanthropy advice they get from their wealth advisors. Some, as said above, are concerned that the wealth advisor is simply looking for another vehicle under management, but more likely they don’t think that their wealth advisors are very attuned to the practice of being a funder.
In addition, not everyone does or wants to do philanthropy in the American institutional style. Around the world, millions of people are generous, altruistic, and philanthropic, but they don’t express those behaviors in the vocabulary or structures the way the American philanthropic sector does. Some people do nothing, I am sure, but my experience tells me that that is very rare.
Nevertheless, I am sure that some percentage of their clients really are averse to being philanthropic by any definition, and the questions do come from a genuine belief that they should.. How then should one answer?
Let me quickly point out, as I have in the past, that avoiding taxes is a very inappropriate bottom line reason for someone to give. If lower taxes is one result of a healthy thought out philanthropy strategy, no problem, but to eliminate taxes as a goal is unlikely to be persuasive and, as I have written previously, morally wrong. Further, every study of which I am aware reinforces this perspective. When funders are asked about why they give, tax deductibility is usually # 4 or 5 on the list. [It may play an important role in how one structures a philanthropic gift but not whether to make one.] But none of these studies talk about a more basic underlying issue of why one should give in the first place.
As I mentioned above, research shows that being altruistic, the very act of giving, makes one happier. [viz., Jenny Santi’s “The Giving Way to Happiness.”] Philanthropic generosity is present in every society. Giving helps one go beyond oneself and serves to make us players in making the world, or at least someone’s world, a little better. This may begin to give us a clue to an answer, but this work shows how people feel when they are altruistic, not whether they can be persuaded to become so. They don’t answer the question these wealth advisors ask: How can they persuade their hoarders to share?
Some wealth advisors ask me to do what they haven’t been able to do – to talk to their clients directly about philanthropy. When that happens, unexpected things often come up. Many wealthy folks welcome the opportunity to talk to someone who doesn’t have hands in their pockets. Over the years, I have learned about ultra-high net worth families that are really angry at the advice that their famous private bank was giving; in other cases, I have been told of much deeper pockets than revealed even to their long-term wealth advisors. I have met with art collectors who have more difficulty deciding about the ultimate distribution of their art collection than how to endow their offspring; and many more. However, none has ever asked me to convince them to be a giver – only how to be.
Perhaps, though, the impact investment developments of these last few years may give us a clue to a possible answer I have been asked for my independent analysis of whether values based/impact investments are a fad or a movement. [I should underscore that I have no expertise as an investment advisor – only in helping people understand in non-jargon-y or self-interested ways what it all might mean to them.]
It is this last point that may lead to a possible answer to the question of why be philanthropic. How? Every investment has some implicit set of values: What we spend our money on is rarely neutral: we choose what we eat, what we wear, where we live, with whom we socialize, and so much more, based on some underlying value system. Not everyone makes those choices with self-awareness, but many of us do. Why not unpack our personal financial values system? Lots of folks aren’t so thrilled when they realize that their personal investments endorse environmental degradation, or underage child exploitation, or self-aggrandizing and excessive executive pay. Even choosing to say that financial returns matter more than where those returns come from is itself a decision.
Modern investment theory calls for some sort of balance in our portfolios – a.k.a. the prudent investment approach. Thus, by definition, something is going to earn less or more than another part of the portfolio. So, if that is true, there is nothing wrong with making values-based decisions on one’s investments. [Sure, some ESG [Environment/Social/Governance] or Socially Responsible Funds underperform, but many more outperform their benchmarks. It is no secret that some of the largest investment companies are seeing ESG standards as preconditions for long term results.]
Money itself may be value free, but where and how we use it and keep it isn’t. If so, why not consider having at least some of it reflect values one cares about? Asking the question this way may or may not lead to philanthropic giving, but it is likely to lead to more self-awareness of the underlying values of what one does with one’s money.
The final possible answer is that not everyone is ready to think about matters of mortality, the disposition of their estate or resources, or the needs of others at the time we decide to discuss it with them. Sometimes we simply must be there when that moment does come and to be open to understanding what people share at that time. We may well discover that our friends, family, and clients have been more self-reflective and philanthropically open than we ever imagined.