Donor Advisors

Phil Cubeta writes with clarity on a topic close to my heart in his post, “Advisors as Gate Keeper, Door Opener, or Partner for Planned Giving People?”:

Ultimately, I think the big win here is to see advisor, donor, and nonprofits as co-conspirators for the good. Getting to that point requires that each party to this partnership see the world through the eyes of the other two parties, and that each cut the other some slack…

…the advisor is paid to manage assets and can’t do that to the extent the donor gives them away. The donors by the same token have to recognize that if the process is flawed and the results sub-optimal that they have no one to blame but themselves; they are the boss. They lead; advisors follow. If they are passive, or fail to articulate their ideals, they may not like the result. As for the charity, they would do well – very well, I think – to adopt the philosophy of, say, Charles Collier at Harvard, their Senior Philanthropic Advisor, who will say that he has raised more money for other causes than for Harvard, because he instills philanthropic passion, keeps an eye on family dynamics, and works as a peer with advisors. The net result of which is that the donor’s total giving during lifetime and at death rises dramatically, and Harvard gets a big share.

Lucy Bernholz, writing on a separate topic, brings together another thread:

According to planned giving research, donors – now more than ever – have foundations AND DAFs [donor advised funds] AND checkbooks…

…Much more needs to be done, for both donors and nonprofits, to make sense of these "giving portfolios." Donors need to think about why they have each tool and how they complement each other. Nonprofits need to learn how to ask about each one, find access, and make a case that fits each pool of resources (or some of them). And vendors – e.g. Tides, community foundations, financial firms – need to help donors know what to use when and why.

Professionally I work with major donors to construct the giving portfolios that Lucy refers to; planning the most effective combination and then creating and running private foundations, donor advised funds and charitable trusts. When I wrote yesterday about “harnessing innovation to wisdom”, I was talking about the way that big foundations or other philanthropic entities approach the art and science of giving. But I also think that donors in general are desperately in need of a philanthropic advice industry that “harnesses innovation to wisdom”.

Too often, donors find a strategic advisor who shares deep wisdom with them about enlighten giving – people like Peter Karoff, Charles Collier and Tracy (you can hear my interviews with each of them in my Podcast collection) – but then find themselves turning to “advisors” who sell them giving “products” or worse yet, attempt to convince them not to give. On the other hand, many donors work with sophisticated philanthropic planners, only to be find that what they are actually receiving is tax planning, with only a nod towards the donor’s values and passions.

The only way for the Second Great Wave of Philanthropy to fully develop and realize the tremendous potential that it holds, is for the web of donors, advisors, products and change agents (nonprofits and social enterprises) to be rewoven. Realigning incentives and reframing the act of giving as an act of sophisticated passion, drawing from the heart and the mind, harnessing innovation to wisdom.