26 February 2024
Please note: This article does not constitute advice. Barclays Private Bank does not endorse any of the companies or individuals referenced in this article.
The work of philanthropy often involves making difficult choices from a multitude of potential options.
Here, we outline some common choices and potential trade-offs, as well as the pros and cons you may need to consider.
When you’re deciding on cause areas to support, one of the most important considerations is often whether you would prefer to focus on singular issues or locations, or to address multiple (perhaps interconnected) issues across different locations.
Reflecting on your preferred approach at an early stage can help you make important decisions about your giving and will clearly be affected by the resources you wish to bring. For example, this choice could inform your level of funding, research and time commitment, or whether you visit the communities you wish to support in person. Either way, a solid starting point would be to do some analysis of the issue(s) you’re interested in. See our chapter Focusing your philanthropy for further ideas.
Risk is a big topic in philanthropy. One of the major criticisms of philanthropic giving is that it is often too risk averse, even though it is well-suited to taking on risk. For example, this could include funding research, experimenting with different models of giving, and funding over a longer time frame to address complex issues (such as climate change or poverty reduction).
Many donors initially gravitate towards the low-risk end. Trustees and legal advisers, in particular, may worry about jeopardising their foundation’s assets or reputation. While these are genuine concerns, it would be helpful to balance this against what may be lost by not being more ambitious.
As a middle ground, some donors adopt a ‘portfolio’ or hybrid approach – for example, funding research or systems change work alongside more focused programmes. You could also fund proven work, such as supporting a hospital or school but offer greater flexibility (unrestricted funding) to help charities plan long term, use the funds as they need, and adapt as situations evolve.
Considering how proactive you would like to be in sourcing your grantees is another important consideration. This typically involves deciding whether to respond to unsolicited funding requests or actively seek opportunities yourself.
Whatever approach you take, it is good practice to be open about what you will and will not fund, as well as your particular philosophy and interests. This will save both sides time and effort, and can be adjusted as priorities evolve. It is also wise to consider who you involve in helping you to assess and identify the right organisations to support.
Some individuals will be clear from the start that they want their philanthropy to be a personal or family endeavour. Conversely, others may outsource the management of their giving to professionals with appropriate skills and experience.
It is, of course, possible to achieve a blend of both – using external advisers, consultants and/or professional team members to complement personal giving. External involvement on the board and in teams may also bring greater credibility.
Rather than establish his own foundation, Warren Buffett has poured his charitable money into foundations run by others, notably the Bill & Melinda Gates Foundation1. In doing so, he sought to place his trust in people with similar values and avoid duplication of effort. Buffett is well-known for his philanthropy, so while he has relinquished control, he has not sacrificed impact or recognition.
Deciding how much you will give, and when, are important considerations. Some donors are clear that they wish their philanthropy to continue in perpetuity as part of their legacy. Others, however, prefer a more time-limited approach as they seek more ambitious change in their lifetimes.
Factors such as the problems you wish to focus on, their complexity, your risk appetite and your family’s level of involvement may inform the time frame of your giving. It’s also important to consider lifestyle and financial planning needs.
Bear in mind, these do not need to be binary decisions. One approach may be to start giving and learn from these early gifts, while making longer-term commitments in parallel.
Whether you would like details of your philanthropy to be widely known is one of the most personal decisions a donor needs to make. Although there are no hard-and-fast rules about how public you should be, there are both personal and strategic implications to consider.
If a donor establishes a charitable foundation, their giving is unlikely to remain entirely private, although this depends on jurisdiction. In the UK, for example, all registered charities are listed on a public register with accounts available online. If anonymity is important to you, a donor-advised fund may be worth considering. See our chapter Structuring your giving for further information.
The choices you need to make in your philanthropy will, of course, depend on your personal circumstances and chosen cause area(s).
And while there is no single right way to give, taking time to carefully explore any potential trade-offs could greatly increase your likelihood of making an impact
Our 12-chapter ‘Guide to Giving’ features inspirational case studies and key concepts to help you navigate the world of modern philanthropy.
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