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WealthyStreet Academy

Supercharge Your Charitable Donations

Michael Reid, CFA
Jul 7, 2020

Image - Blog Image - Mike - Supercharge Your Donor-Advised Fund- Electric Shock (color) - 7-7-2020Last year Americans individually donated more than $310 billion into the community chest. Toss in contributions from foundations, bequests, and corporations and the annual total swells to nearly $450 billion. And the $450 billion flowing into nonprofits? That’s just what can be easily counted. The official tally often overlooks thousands of grass roots campaigns organized through sites like GoFundMe, CrowdRise, Fundrazr, or Facebook that frequently fly well below the radar and escape detection. By some estimates, crowd sourced philanthropy added another $15-20 billion into the kitty.

Year after year, individual donations to nonprofits help sustain much of the high value infrastructure in health care, education, social services, recreation, environment, social justice, and the arts. If you are seeking a bit of good news, annual donations to philanthropic causes are at or near all-time highs. That shouldn’t be surprising given 12 years of economic expansion and a historic bull market. Sadly in a post COVID world, whatever we’ve collectively managed to scrape together in the past simply isn’t going to be sufficient going forward. In fact, it’s not even going to be close.

In these times, what’s needed is a way to supercharge our charitable donations. Fortunately it's not that hard. Here’s how to get started.

1.) Be Intentional

Effective donors almost always have one universal thing in common: they are intentional about their aims and strategies for giving. That means they’ve given serious thought to the types of causes that align with their values and they possess some vision of the world they’d like to help create. More than anything else, effective donors are disciplined when it comes to sticking by their priorities. If you haven’t taken time to crystalize your thoughts about where your philanthropic priorities lie (or how they might have changed), now is a good time get started. If the list you made three, five, or ten years ago seems a bit out of date with the tectonic societal shifts presently underfoot, maybe it’s time to revisit those priorities and see if a bit of realignment is in order.

2.) Leverage Social Media

Let’s be honest. Right now crowd sourced fund raising is the wild west when it comes to philanthropy. It’s direct, it’s immediate, and it’s largely driven by raw emotion. In far too many instances however, there’s a profound lack of accountability and transparency that leaves the door wide open for fraud and abuse. That alone shouldn’t discourage anyone. That’s because the stakes are usually small and nothing beats crowdfunding for rapid response and ease of use.

These days nearly every man, woman, and child in the U.S. has the ability to quickly transform their smartphone into a full function fundraising kiosk. More importantly, that phone is never more than an armlength away. The power of networks and reliable payment processing options coupled with the ability to create compelling multi-media stories means that nearly anyone can help propel a fledgling idea into viral campaign that has a tremendous social impact.

Unlike donors 50ish and older who’ve spent a lifetime being indoctrinated to shroud their philanthropic endeavors in a cone of silence, the prevailing sentiment today skews more towards public disclosure. While social networks were once largely determined by physical proximity, advances in communications, media, and telecomm have made every corner of the globe immediately accessible to almost everyone. That makes social media an alien life form unlike anything the world of philanthropy has ever encountered. Like it or not, it’s a transformative technology. Effective donors find ways to use social media and networking channels to amplify their signal.

3.) Lean-In on Your Employer

Excluding crowd-sourced campaigns, individual donors accounted for nearly 70% of all funds contributed to charities last year. That number jumps even higher assuming crowdsourced funding is entirely driven by individuals. Meanwhile, corporate contributions accounted for a paltry 5% of total contributions. That means individual giving outpaced corporate giving at a rate of 14:1. You don't need advanced probability training to figure our there's plenty of room for improvement in those numbers for corporations to up their game.

Effective donors actively seek ways to pair their contributions with other sources of funds to magnify the impact of their donation. Find out if your employer has a matching gift program and what you need to do to start leveraging as many of your qualified donations as possible. Is there an annual budget for charitable giving? How are those decisions made? Ask if you can get involved.

4.) Be Adaptable

Above all, effective donors are highly resilient to the inevitability of change and resistant to the false hope of a permanent status quo. It's their superpower lying just below the surface. They know individual circumstances and financial resources can be radically altered in the blink of an eye. That doesn't mean their commitments of time, talent, and treasure towards high value priorities are in any way transient or conditioned on an unbroken string of personal good fortune. It does mean that when faced with new information, the path forward won't be charted using maps that have become obsolete or outdated.

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Michael Reid, CFA is a Managing Director and Partner at Exchange Capital Management who, given a choice, would always pick the ability to fly as his superpower. The opinions expressed in this article are his own.