How More Women Can Become Philanthropists
You don't need a fortune to make an impact on your favorite charities
Kerry Hannon has spent more than 25 years covering personal finance for Forbes, Money, U.S. News & World Report and USA Today. She is the author of What's Next? Follow Your Passion and Find Your Dream Job in Your Forties, Fifties and Beyond; Great Jobs for Everyone 50+ and Suddenly Single: Money Skills for Divorcees and Widows. Her website is kerryhannon.com. Follow her on Twitter @kerryhannon.
I don’t give away a lot of money, but I do feel a genuine loyalty to the half dozen groups where I’ve donated or volunteered for years. While I don’t consider myself a philanthropist, after attending a webinar run by the Women’s Philanthropy Institute at the Center on Philanthropy at Indiana University, I realized that I actually am. And I came away believing that more women need to think of themselves as philanthropists and get more strategic in their giving so their donations will have the maximum impact. I’ll show you how shortly.
Women Are More Generous Than Men
I suspect you already give away some money each year, even in a potluck sort of way. A recent Next Avenue article reported that boomers are more charitable than any other generation. And boomer women are more generous than men, according to a recent study by the Women’s Philanthropy Institute.
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As Debra J. Mesch, the author of the study, wrote in a Next Avenue article, research has found that "women tend to score higher on empathy and caring than men, factors that affect giving to charity. Similarly, women have been shown to be more altruistic than men, and their giving is frequently motivated by the desire to make a difference in peoples’ lives.”
That’s why I give.
6 Ways to Become a Philanthropist
So how can you be more strategic in your generosity and make the biggest impact on groups and causes you care about? Here are six ways:
1. Give strategically. Instead of donating haphazardly, focus your giving on a few organizations and set a five-year philanthropic goal.
I earmark a certain percentage of my income — say, 8 to 10 percent — for my designated charities, like the American Society for the Prevention of Cruelty to Animals. But it’s fine to start with 1 to 2 percent of your income. (If you have a job, check to see if your employer will match your charitable contributions for an even bigger bang.)
You might give to causes that directly impact your life, like breast cancer or Alzheimer’s research. Or perhaps you’ll want to help a group that’s making a difference in your community, like a hospice or homeless shelter. Many people tithe to a faith-based group that jells with their religious beliefs.
Giving strategically has three advantages: You won’t be distracted by charity solicitations that arrive unexpectedly, you won’t spread your giving too thinly and the recipients will value your loyalty, perhaps even recognizing it (if you’re agreeable). And there's a bonus: Knowing in advance who you'll be helping and how much you'll give will help you avoid the year-end mad scramble for deductible charitable contributions.
2. Do your research. Before making contributions, spend some time carefully learning how to become a philanthropist with an impact. You need to do your homework first, the same as if you were considering an investment in mutual funds or stocks.
Like investing, philanthropic giving is a process, says Patricia M. Annino, an estate planning authority and partner at the Boston law firm Prince Lobel.
There are droves of resources to help you ramp up your learning curve. I especially recommend visiting the site of the Washington Women’s Foundation, a group whose mission is to “change the course of women’s philanthropy through the power of collective giving.” The site's Philanthropy Reading area has a deep list of helpful books, articles and links to other worthy sites.
3. Vet any charity before you make a gift. This will help ensure that the money you donate will be put to good use and not line the pockets of a nonprofit’s executives.
You can check out charities at these three free watchdog websites: Charity Navigator, the Better Business Bureau's National Charity Report Index and Guidestar. If you want more information about large U.S. charities than these sites provide, send $3 to CharityWatch and you’ll receive its Charity Rating Guide of roughly 600 groups.
(MORE: How to Check Out a Charity Before You Give)
4. Start or become a member of a giving circle. This is a group whose members pool their money to make grants to local organizations, realizing that one large contribution can be especially effective.
“Joining or creating a giving circle — also called a ‘social investment club’ — is a terrific way to connect with likeminded women to share ideas about how to make an immediate difference in your city or community, says Joanna Krotz, a women's philanthropy consultant and author of The Guide to Intelligent Giving.
Giving circle members choose the level of participation that’s right for them. Some are happy to vote for grant candidates at the circle’s annual meeting. Others prefer to visit applicant organizations. Still other circle participants seek board leadership positions at the groups that will receive the grants.
Many cities have women’s giving circles and you don’t need an invitation to join one.
My sister, Pat, recently became a member of Impact100 Philadelphia. At this giving circle, at least 100 women in Philly donate $1,000 each and pool their contributions to make one or more $100,000 grants annually to nonprofits they collectively choose. (The model comes from the original Impact100 group in Cincinnati, which has donated nearly $2 million.)
At the Washington Women’s Foundation, more than 500 women contribute $2,500 apiece each year, making annual grants totalling nearly $1 million.
(MORE: Giving Circles)
5. Invest through a donor-advised fund. Think of this as your own private foundation. A donor-advised fund lets you create a charitable account — at least $5,000 to $25,000, typically — through a financial services firm, like a mutual fund or brokerage. You distribute grants to charities of your choice under an umbrella name, like the Smith Family Fund, and can avoid the costs and hassles of creating a foundation.
A donor-advised fund gives you an immediate charitable deduction. If you’ll be donating securities that have appreciated in value, you won’t owe the capital gains taxes that would be due if you sold the stock and donated the proceeds, and your deduction will be larger this way, too. Some donors set up the funds as legacies, with the expectation that the next generation of their family will distribute the money in years to come as they see fit, says Christine Fahlund, a senior financial planner at T. Rowe Price in Baltimore.
You’ll want to consult a financial adviser before setting up a donor-advised fund.
6. Give more than money. “Don’t just write a check to a local nonprofit," says Jackie Norris, executive director of the Points of Light Corporate Institute, part of the national volunteering group, Points of Light. "When you do that, you are delegating to the group all responsibility for devising and implementing solutions to social problems.”
Instead, Norris says, think about playing a bigger role. Can you serve on the group’s board? Volunteer there regularly? Offer your skills to help the nonprofit do its job more effectively and efficiently? By donating your time and expertise, you can be a philanthropist of the highest order.