Wealth Management of Philanthropic Capital

Tactical Philanthropy is a wealth management issue. Philanthropy as a whole is not a wealth management issue, just as life is not a wealth management issue. Nevertheless, once you have decided to become a philanthropist – once you have decided to engage in the “passionate giving of capital resources” – you need to think about the best tactics to achieve your overall strategy. These tactics will entail the efficient management of all your capital resources.

All of the assets that you accumulate during your life can be thought of as falling into two buckets. The assets that you use to finance your own lifestyle or those that you pass on to your heirs are your personal capital. The assets that you give back to society – either by default through the tax system, or proactively through direct transfers to nonprofits – are your social capital.

Most people understand the need to manage your personal capital proactively. There are numerous websites, books, advisors and other resources that encourage the tactical management of personal capital. Newspapers regularly run financial planning columns, you can maximize the efficient use of your personal capital through software programs like Quicken, and there is a general understanding that personal capital deserves a lot of attention. What is often missing is any kind of strategy for personal capital. Why are you accumulating all of this money in the first place? What are your goals in life? How are you going to use your personal capital to truly benefit yourself and your heirs? There are certainly plenty of philosophical, self-help and spiritual resources to help guide your way. However, people rarely address the strategic goals and the tactical decisions around personal capital collaboratively.

Social capital suffers from the opposite condition. Lots of people and resources encourage us to utilize one strategy over another. The very act of deciding which nonprofit to fund is a strategic act, so every donation solicitation can be understood as an appeal for you to decide on a specific strategic direction. However, few people think of their social capital tactically. When tactics are discussed, they are generally viewed as a way to reduce the distribution of your social capital in favor of your personal capital. Most people think of the tax break from giving as a way to retain personal capital, rather than understanding its ability to redirect social capital away from the tax system and to your favored nonprofits.

My expertise is in tactically managing personal and social capital collaboratively. At the tactical level, personal and social capital are identical – they are fungible financial resources. At the strategic level, personal and social capital may be used quite differently. However, at their root they come from the same pool of financial resources. How you dip into this pool and allocate your capital to personal or social projects is a strategic decision. Tactically, your personal and social capital is one and the same. You must manage all of it as a comprehensive whole.

I believe that strategy and tactics are different disciplines. There may be a rare, enlighten being who has strategic vision and tactical expertise. But, as a rule, strategies for both your personal and social capital should be formulated in collaboration with a strategic advisor. Your tactical advisor should understand your strategic goals and the integrated nature of personal and social capital. You should utilize a tactical advisor to ensure that your tactics are working in service of your strategy.

Money is just a store of time and energy. It makes no distinction between whether that time and energy is spent in service of personal or social goals. When you realize that your financial resources are a store of time and energy that can be used to fuel both personal and social projects, you are well on your way to a more comprehensive approach to the tactical management of both your personal and social capital.


  1. Phil says:

    Examples of tactical philanthropy? Case studies? What are you talking about? Portfolio management for CRTs and Foundations? What are you paid to do? How?

  2. Phil says:

    Are you presenting yourself as a money manager with expertise in the management of funds inside charitable vehicles? Do you do estate and financial planning? Do you provide grantmaking advice?

  3. * “Examples of tactical philanthropy? Case studies?”

    It will take quite a while to walk through everything I have to say about Tactical Philanthropy. Examples and case studies will certainly be explored.

    * “What are you talking about? Portfolio management for CRTs and Foundations?”

    I’m trying to establish the fundamental underpinnings of my approach. Money in our society is often understood to represent personal capital as I’ve defined it. My point is that social and personal capital come from the same source and the tactics that you engage in when practicing philanthropy affect both your personal and social capital. There is not a separate personal capital pocket and social capital pocket. Portfolio management for charitable vehicles is one part of managing social capital.

    * “Are you presenting yourself as a money manager with expertise in the management of funds inside charitable vehicles?”

    As my bio states, I am a principal at Ensemble Capital Management. Ensemble “provides families both traditional investment management and a unique, specialized approach to advancing their philanthropic interests.” So yes I am a money manager. But I define “money” as both personal and social capital.

    * “Do you do estate and financial planning?”

    No. Ensemble provides investment management services and philanthropic planning. We often work with estate planners. Financial planning is part of the investment management process, but I am a CFA and CAP, not a CFP.

    * “Do you provide grantmaking advice?”

    No. Grant making advice is part of the strategic side of philanthropy. I believe that strategic and tactical advice should be unbundled. We work in conjunction with strategic consultants.

    * “What are you paid to do? How?”

    Like most investment management firms Ensemble charges our clients a fee based on a percentage of their assets under management. Much like financial planners who provide planning advice for free and charge for the investment management, we provide philanthropic planning for free and charge for the investment management.

    All of that being said, this is my personal blog, not Ensemble’s corporate blog. I’ve made my professional affiliation clear so that everyone understands any bias I may have. But this blog is a place for me to discuss the broad philanthropic landscape, the practice of an emerging discipline I call Tactical Philanthropy, and the cultural phenomenon I have labeled The Second Great Wave of Philanthropy.