I find it useful to think about philanthropy as a series of concentric circles with increasingly expansive efforts to tackle a social problem: tactical activities treat symptoms of problems while strategic activities address root causes and transformative philanthropy impacts the entire system.

The boundaries are fluid and each set of activities is important but generally the time frame, sustainability and scale/scope of impact will increase at each level. The challenges will increase too – the complexity of issues, the need for collaboration, and the level and kinds of resources required.

Social Impact at Many Levels

Philanthropy has evolved into an amazing array of ways that you can work as an individual or leverage your personal resources – in an established institution or a start-up organization, and within and across public, private and nonprofit sectors – to solve social problems.

The optimal strategy will partly depend on how you frame the problem and what personal resources you can bring to bear including time available, expertise and experience, financial resources, and networks of relationships and influence.

Problem Solving Strategies (Illustrative)

Let’s take the environmental sector, as an example, keeping in mind those fuzzy boundaries.

At the tactical level, you might volunteer for a neighborhood park clean up, buy a Sierra Club membership or offer your grant writing services to the local Audubon Society. Good for you!

At a more strategic level, some people have funded marine reserves, championed the development of urban green spaces, launched venture funds for green transportation, started alternative energy companies… the list goes on and on.

Then there are individuals who aim for systemic change by, for example, lobbying for carbon taxes, founding a nonprofit for educating the public about climate change, or serving on national and international bodies – as a staff or board member – such as the Environmental Defense Fund.

What does this mean for you, as someone who wants to have an impact? We come back to our philanthropy survey respondent’s advice to dive in… at whatever level and in whatever form you can. Other advice: Start early and be intentional; set aside some time and money and evolve how you use it.

Smart Giving is part of a larger life story that often includes many efforts – overlapping and/or sequential – to make a difference. I believe that most people want to solve a problem but deciding which problem, when and how requires looking externally (problems/opportunities? options/alternatives?) and inwardly (values? priorities? resources?) and making choices.

Smart Giving Choices (Some Examples)

As a philanthropist, what you care about will change, perhaps in a predictable fashion (like getting involved in your child’s school) or perhaps not (like experiencing a cataclysmic event). But one constant, I would attest and many others would agree, is that more often than not it is a wonderful experience.

A growing body of knowledge in psychology and neuroscience suggests that altruism is good not just for the beneficiaries but also for the benefactors. The argument is that helping others makes us happy, and even leaves us healthier and able to live longer lives.[1]

I must admit to a certain amount of skepticism about some (well, most) of what happiness experts – yes, they exist – say. But I was impressed by the authors’ willingness to subject themselves to MRI scans to see what happens in the brain when people help others by donating to a good cause.

The experiment was conducted at the University of Oregon by Ulrich Mayr and Wiilliam T. Harbaugh, who have been studying the science of altruism for over a decade. It goes like this:

• The pleasure zones of the brain include the nucleus accumbens, the septum, the caudate and the insula. These hot spots, which are quite close together, respond to pleasure of all sorts.
• Research subjects’ brains were scanned as they were told they had received gifts of money and they were given the opportunity to voluntarily give money to charity.
• Parts of the nucleus accumbens showed more activity when gifts were received and adjacent parts lit up when people made donations.
• The results suggested that people vary significantly in the pleasure they derive from giving, and about half of the subjects seemed to get more pleasure from giving than receiving.

Interesting. Researchers now are trying to figure out why people feel happy when they give.

In particular, they are trying to distinguish between what they call vanity (gaining respect of others for being generous) as opposed to selfless altruism. My research on donor motivations hasn’t included any MRIs but I would agree that different people give for different reasons.

I believe that philanthropy offers the opportunity to satisfy each of the four dimensions that make us feel successful in life including, yes, happiness. The three others are achievement, significance and legacy. (See Figure 1)

I am somewhat uncomfortable attaching value judgments to any motivation for doing good, especially when one gift can supply more than one satisfaction (e.g., finding a cure for a disease afflicting a family member) and the impact – on both the beneficiary and the benefactor – tends to be cumulative.

Figure 1. Elements of Success

One study that I find interesting was conducted a decade ago by Jonathan Haidt, now a professor at NYU’s Stern School of Business. It suggests that we each have a preset happiness level, and that one of the few things that will actually raise it is to connect with a cause greater than ourselves.

A Path Appears describes other research including a study that followed 268 Harvard students from college to old age, and concluded that altruists aged more gracefully. Another study showed that giving reduces stress as measured by blood pressure. Conclusion: Give and you will be happier and live longer.

I will leave it to you to judge for yourself. I don’t know if I’m fully convinced but it does make me feel even better about both my giving and my fundraising. Perhaps we technology-enabled 21^st century folks are just catching up with the wisdom of the ages….

Some Happiness and Giving Quotes

If you want happiness for an hour, take a nap.
If you want happiness for a day, go fishing.
If you want happiness for a year, inherit a fortune.
If you want happiness for a lifetime, help somebody.
– Chinese proverb

They who give, have all things; they who withhold have nothing.
– Hindu proverb

The happy man lives well and does well.
– Aristotle

For it is in giving that we receive.
– Francis of Assisi

I slept and I dreamed that life is all joy. I woke and I saw that life is all service. I served and I saw that service is joy.
– Kahlil Gibran

I don’t know what your destiny will be, but one thing I do know: the only ones among you who will be really happy are those who have sought and found how to serve.
- Albert Schweitzer

Since you get more joy out of giving joy to others, you should put a good deal of thought into the happiness that you are able to give.
– Eleanor Roosevelt

[1] A Path Appears: Transforming Lives, Creating Opportunity, Nicholas D Kristoff and Sheryl WuDunn, Vintage Books, 2015, page236.

“A philanthropist is anyone who gives anything – time, money, experience, skills, and networks – in any amount to create a better world,” says Giving 2.0 author Laura Arrillaga-Andreessen, founder and chairman of Stanford PACS (Center on Philanthropy and Civil Society). We heartily agree! Giving 2.0: Transform Your Giving and Our World is a call to action and a comprehensive guide to giving for individuals of every age and income level. It is complemented by online tools and resources.

Joining a Board: What You Need to Know is written by two business school professors; Marc Epstein (Rice) and Warren McFarland (Harvard). It offers people who take their business experience and serve a nonprofit useful information on a variety of topics including the role of board members and the structure of the board, financial strategy and board oversight, philanthropy, the complex relationship between the chairman of the board and the CEO, performance management, and much more.

Now, let’s say that you want to get philanthropically involved in a health-related cause. Where to start? Here are some questions to ask yourself.

1. What is motivating me?

The health sector is rife with problems to solve and opportunities to be seized. Your motivation often may be personal and likely will lead to one of four key areas:

• Your local hospital: When one man’s father died in a makeshift rural medical clinic, he personally raised the funds to build a full service regional hospital with top notch facilities and staff.
• Curing a disease: The examples are many of individuals and families who commit themselves to research and development targeted to a disease afflicting themselves or a loved one.
• Patient care: Unmet social needs – homelessness, for example – directly impact care needs and outcomes. One woman founded an initiative – Health Leads – to provide a solution.
• Systemic reform: Some people take a big picture view, and want to get engaged in public policy research or advocacy.

2. How much am I able and willing to commit, for how long?

This one is about time and talent as well as treasure. You have to be realistic. Maybe you can’t fund a new cancer wing but you can sponsor a garden where patients and families can relax. Maybe you are willing to make a one-time contribution but not a ten-year pledge. Maybe you lack the time (or skills) to serve on a board but can volunteer for a day of service or a specific project.

3. Who can I work with, and should I?

Who else is working on this issue? There may be one or several organizations out there already committed to your cause. You can support one or all of them. You may find like-minded individuals who are interested in pitching their dollars in with yours, too, for greater impact. Due diligence will be required, of course. External rating agencies can provide a starting point. (see our How trustworthy are external ratings blog)

Is this a well-functioning organization? There is a danger of only backing winners. You may have an even greater impact by helping a mediocre organization with a powerful mission to improve, but that may require rolling up your sleeves rather than just going along for the ride.

What if you can’t find anyone? Rare diseases, for example, often attract little or no attention. Some medical philanthropists, often people with business experience, decide to launch a new venture dedicated to their specific cause. (More on that, in another blog.)

4. How do I measure success?

There are two levels to the question. First, there’s the organization that you choose to support. As we’ve discussed before, performance measurement is hard. Accountability and transparency on the part of leadership is as important as the metrics, which will depend on the problem you are trying to solve and organization’s mission.

At a broader level, the question is: How satisfied am I with my philanthropy? Most people support more than one organization or cause, and your philanthropic portfolio probably will change over time.

It comes back to Question 1: What is motivating you to be philanthropic?

Many factors may come into play: family values/legacy, religious faith, gratitude and a desire to give back, public recognition, a sense of duty, tax incentives, wanting to have a significant impact, personal experience with a problem, altruism or simply the good feeling that comes with giving.

Philanthropy, as we’ve said before, is an intensely personal thing. You must develop your own scorecard, and ask yourself from time to time: How satisfied am I with my philanthropic activities and what they are accomplishing? And, is this a personally satisfying experience, to me?

[1] 2015 BNP Paribas Individual Philanthropy Index, Forbes Insights

Each of us has our own story and aspirations, and will have a different answer to the question “Why do I want to give?” In studying donors, however, we’ve come to see that there are four sets of motivations that can explain most giving decisions: achievement, significance, legacy and happiness.

We’ll use National Public Radio (NPR) donors as a case study. NPR donors have one important thing in common; they listen to public radio. But why did they choose to part with their hard-earned cash in support of NPR?

Some people were motivated by a sense of achievement, but that meant different things to different people. Some people got a lot of satisfaction from an on-air mention during phone-a-thons, and would wear a giveaway NPR t-shirt with pride. Others liked having their name published on a major donor list.

Others felt a sense of accomplishment from what they learned by listening to NPR. Still others were drawn by the opportunity to lead a fundraising team, or serve on the board. And some were eager to get an invitation to NPR events.

(Examples abound among other donor groups as well. Educational institutions count on the loyalty of alumni, and class competitions are a common fundraising ploy. Some non-ballet lovers will support the local ballet in order to gain social access or acceptance.)

Some NPR donors gave so that they could be of significance and have a positive impact on someone or something they cared about. They felt obligated to provide intellectually honest news and noncommercial cultural content to the nation, and thereby support an informed public debate.

(People also will respond to urgent needs. Dire circumstances brought about by some sort of catastrophe, in particular can motivate people to step up, as evidenced by outpourings of support after the devastating earthquake in Haiti or Hurricane Katrina in New Orleans.)

Some people were inspired by the desire to do something that will matter when they were gone, to leave a legacy. NPR offered an opportunity to sustain a type of information and cultural experience that they valued, and felt others should be exposed to.

Joan Kroc is a good example. She believed in the power of public radio, and had enjoyed NPR programming over the years. As she began to plan her bequests, she approached NPR regarding a gift. NPR executives were startled—and understandably delighted.

Extensive due diligence was required to satisfy Joan that her gift would be well managed and her intentions honored. NPR evidently passed the hurdles. When Joan died in 2003, NPR received more than$200 million, and an additional $5 million went to a member station in San Diego.

Last but not least, there is happiness.

For some NPR donors, it was about the feeling of being “among friends” in the virtual community of the airwaves. Tuning in to NPR while making the morning coffee or driving to work was a familiar part of their routine and “Guess what I heard on NPR!” was a great conversation starter.

(Most donors just plain feel good when they give. What some call payback and others call gratitude can be a factor; many scholarship students later return the favor. Sometimes the giving experience can be downright fun; witness the huge success of the ALS Ice Bucket Challenge.)

So, why do you want to give?

The answer may be some combination of the four motivations, and may depend on the giving opportunity or the amount of money (or time) you are thinking of giving. “Checkbook” gifts are very different from something that represents a major portion of your philanthropy.

Our research shows that checkbook gifts often reflect a passing interest or a quid pro quo (your friend gives to your cause, so you reciprocate). You may make a lot of them but they represent only 5-15% of your giving.

Something that is a personal priority – have you asked yourself, “What problem do I want to solve?” – is likely to garner a more significant portion of your dollars and time. And a true passion – like finding a cure for a loved one’s disease – can lead you to devote a major part of your philanthropy to one project.

Timing is a factor too. When you’re starting out, you may have more time than money, and contribute through volunteer work. The young bucks are more often motivated by achievement, while those in their later years are thinking about legacy.

“What do I hope to accomplish?” is another good question, closely followed by “Do my means match my ambitions?”

Finding a cure for cancer may be your passion; there are many ways to help. A few people can fund a major drug discovery and development initiative; more can build a wonderful, peaceful garden at a cancer treatment facility; and many show up to participate in walkathons.

Giving is an intensely personal act. Take the time to think through why you want to give, and you are more likely to feel good about the good you are doing in the world.

From an economic perspective, I think of giving as one of the dynamics of wealth. If wealth is the accumulation of a pool of assets (my definition), the flows in and out of that pool matter. There are lots of choices, and tradeoffs are involved because, as a friend put it, “One dollar can’t serve two purposes.”

My wife, Fredi, and I have given to and served on the boards of many charities over the years.  We have similar beliefs about philanthropy, and respect our sometimes different views on which causes to support. Important point: It’s incredibly important to discuss such things with your spouse.

With all that as a backdrop, I’ll take a stab at briefly answering the 6 W’s of Smart Giving.

1. Why do I give?

Giving back is a value that was instilled in me at a young age by my parents and community. Also, I knew I couldn’t change the world but I wanted to serve the needs of society in areas that I found important, and where my contribution could have an impact.

That said, everything doesn’t have to fit neatly into a box. Sometimes I write a check simply because a friend asks me to, or join a board because I know and respect the other people involved. I was a grateful scholarship student at Stanford and HBS, and feel an obligation to pay it forward.

And, finally, there is the sheer joy of it; giving back is one of the most satisfying things I do.

2. What do I give?

Time, talent and treasure all have come into play, though in different measures at different times in my life. When I was starting out, for example, I didn’t have much money but I discovered that my real estate expertise was valued by land conservation groups.

During what I call the “go-go years” of peak family and career responsibilities, my wealth was increasing while my time was at a premium. These days, now that I am retired (or so they tell me), I find a significant portion of my time being spent on my philanthropy or helping others with theirs.

3. Where do I give?

Some people pick one cause and run with it. As with investing, I prefer a diversified portfolio. I write a lot of checks but my giving patterns are in line with the “importance categories” that we described in Getting to Giving. 

A quick analysis of the past several years showed that my top 5 gifts typically represent half of my charitable giving, the next 20 account for 40%, and the last 50 or so add up to only 10%. The causes represented in core and priority categories can change over time, however.

Some of the causes that I care about reflect my heritage, and are quite lasting. My grandfather passed on his passion for land conservation to me, and I am proud that my sons continue the tradition. Others reflect changing circumstances; I didn’t know I cared deeply about cancer until my wife was diagnosed with it.

4. Who do I give to?

The intended beneficiaries of my giving vary depending on the cause. Land conservation tends to involve regional issues and groups. I support organizations that enhance quality of life in my community, such as the Boston Ballet. Others have a broader scope; NPR contributes to a healthy and just nation.

Not surprisingly, I do my due diligence on any organization where I am considering making a significant gift. Yes, once again, the four questions: Is it doing work that is important to me? Is it well managed? Will my gift make a difference (but not make it dependent on me)? Will the experience be satisfying?

5. How do I give?

I have not chosen to set up a permanent family foundation or tried donor-advised funds. My contributions have been to organizations that I believe in. As I’ve said in previous blogs, I believe in providing multi-year support but favor spend-downs over endowments.

In 1993, I set up a charitable trust.  It allows me the luxury of disconnecting giving from tax considerations  It’s a smart move for estate planning, I believe, and has proven a useful vehicle for Fredi’s and my giving.

I hasten to add that, unlike some trusts, we actually give away significant portions of it. We are not intending to build a large corpus.  We hope that our example will encourage our children and grandchildren to be charitable for whatever causes they choose.

6. When do I give?

Some people prefer to wait until they are older (or dead) to make their gifts, figuring that their biggest contribution will be their ability to grow the pot. I was raised to believe that giving is a lifelong responsibility plus I prefer to give now and be personally involved, for impact and fun.

Pension assets are an exception to that philosophy, given our current tax laws. (They would be subject to ordinary income tax and the estate tax, if given to my heirs.)  Several big gifts in my estate plan involve pension assets; the charities will get the same amount, and the impact on my kids’ inheritance will be much less.

Now that you have embarked on your philanthropic journey, you have an opportunity to learn from your experience. I would argue, in fact, that even the most sophisticated philanthropist should do that on a regular basis. 

So, start there: Take a good, hard look at your current giving, and be ambitious but realistic about what you can do in the future.  Try using the 6 W’s – that basic journalistic device – for both reflection and planning.

Each of the W’s involves many choices. There is no “right answer,” of course.  Philanthropy is a personal thing; you must decide what is right for you, and be prepared to reassess as time passes and circumstances change.

Here are some examples of the kinds of questions that you should ask yourself, as you look back and plan forward.

Smart Giving Questions – Some Examples

We will be exploring each of the 6 W’s in more depth in future newsletters, and looking at how they can help you formulate a coherent and – yes – strategic philanthropic plan.