Donors must be thoughtful about every step of their giving process to create effective philanthropy. That includes how they determine their focus, find and fund grantees, evaluate their efforts, and more.
The philanthropic landscape has changed a great deal in the past two decades. It's now more data-driven and rigorous; foundations are looking for ways to reduce barriers and speed up grantmaking. To create an effective philanthropy, you need to be clear about what is most important to you and how your giving can best make a difference. Consider the people, places, problems, pathways, or philosophies most meaningful to you and your family. Identifying your focus will help determine who else will be involved in your philanthropy and how it can contribute to its success. It can also help you get a clearer view of the challenges that must be addressed. You might begin by identifying the big issues that are most compelling to you, like poverty or climate change. These are often too large to be tackled by a single donor alone but can provide you with many opportunities for research and collaboration. A mission or goal statement is important in creating effective philanthropy. It can help your organization focus its giving and set goals for future funding. In a mission statement, you want to be clear about the problem your nonprofit is trying to solve. This could be an individual or group, animals, the environment, or a specific issue. You also want to be specific about the outcomes you hope to see from your philanthropic efforts, such as education and health. This helps you determine how long it will take to achieve your desired results. After crystallizing your philanthropic priorities, consider which giving vehicles are best for carrying out your vision. This could involve creating a new platform or integrating mission-driven activities into your investment practices. In addition to a private foundation, a donor-advised fund or a charitable remainder trust can be a viable option. These types of trusts allow donors to control distributions and invest the money in tax-advantaged ways. Whether you create your vehicles or use complementary vehicles to achieve your philanthropic goals, a holistic approach will help you maximize the impact of your giving. Ultimately, defining this process is up to you and the people involved with your giving. As a foundation, you want to ensure that your grantees are effective and can deliver the results you expect. That means conducting research and due diligence to identify the most promising organizations. Often, this can be done by simply asking the right questions. You need to understand whether or not the organization's mission aligns with your own, what its history looks like and how well it can work together. This type of research is known as nonprofit due diligence. It is a critical step in any philanthropic process and can make or break a successful collaboration. In complex family philanthropy environments, such as family foundations or other joint philanthropic efforts, creating written decision-making processes that make sense for everyone can help reduce potential tension between generations. Having all members of the family (or, if using a foundation, foundation board members and family advisors) participate in this process can also reduce misunderstanding about roles and responsibilities. Many factors influence a foundation's decision-making, including global and local policies and priorities, leadership and staff, donor motivations and foundation structure. In addition, a foundation may adapt priorities, goals and strategies over time to address evolving needs.
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