How to get started in giving

The correlation between satisfaction in life and income weakens the further up the earnings ladder you climb. The more financial success you have, the more likely you are to see diminishing returns on happiness.

Fortunately, there are other ways to be happy. Of them all, making other people happy through altruism is one of the most potent – with some studies even showing evidence of it optimising your business performance (see page 6).

But there’s a catch. For philanthropy to truly make you happier, your donated money has to make a difference you can see.

Many of those beginning their journey in philanthropy have found that dedicating themselves to a particular cause that resonates is key.

However, after selecting a cause, there are still other things to consider, such as:

• Who else is pursuing the same goals – and what can I learn from them?
• How involved do I want to be – do I include my family and how much time do I have to dedicate?
• Where in the world is the best place to address the cause I’ve chosen – and am I willing to travel there?

There’s no shortage of information online that seeks to answer these sorts of questions. But much of this material is scattered, confusing and inconsistent. So we’ve boiled down the things to think about before beginning your journey. What follows are the three areas you should consider before getting started.

Self-reflection

The best way to begin philanthropy is to ask yourself some crucial questions.

How can you turn passion into smart and effective giving? Do you know everything you’ll need to know?

Are you sure?

Virtually anyone with experience as a philanthropist gives some variation of this advice. One example comes from Sir Thomas
Hughes-Hallett, Founder of The Emily Hughes-Hallett Foundation, who puts it simply:

“I wish that at the start I had been more rigorous in determining what we were going to support,” he says.

If you’re moving into charitable giving for the first time, the best way to consider it is as though you’re making an investment.

“You want the money you invest to produce specific results – just as you would when investing in a company,” says Emma Turner, the Director of the Philanthropy Service for Barclays Private Bank.

“And if you were investing in a company, you’d do your research and due diligence on whether it’s the right fit for you. Give scrutiny to your charitable giving in the way you would with your private investments,” she advises.

The purpose of philanthropy is to address a need. But, chances are, whatever problem you’re addressing is going to be tough – so you need a strong plan of action.

Just as a meaningful mission statement and clear targets help to focus a new business, you should begin your philanthropy with a ‘theory of change’ – a definition of the difference you hope to make and the steps to achieve it.

Basically, you need a plan – a roadmap of sorts – that includes concrete goals, a realistic timeline and reliable ways to achieve impact.

To create a theory of change, you need to select a cause. Ask yourself what problem you want to help solve – and why?

During this initial period of self-reflection, you should take your time. And really be honest with yourself – because the difference you make in the world is your legacy.

Finally, at this stage, don’t be afraid to think big – for example, you might want to address ‘education, but not just a single school.’

That’s a fine place to start.

Defining your approach

The next step is to drill down on your direction.

If you’re broadly interested in helping through education, then you might start selecting a cause in this area by surveying the field of education. Granted, that’s an awful lot to look at. But let’s say you have, and you’ve selected university education in particular – specifically, on making it more attainable for more people. (Maybe you credit yours with your success and hope to give others the same opportunity). 

This is a good start, but your cause should be narrower still. So maybe you then choose to focus on university access in the UK.

Better, but still not honed enough.

After more consideration, let’s say you decide you’d like to see the top five British universities award more scholarships to a specific demographic, which is presently underrepresented.

Now you’re getting somewhere. You’re ready to talk to those universities about their own aspirations in this area.

Speaking more generally, no matter what your chosen cause, you need to rigorously assess where your money goes. Anyone you partner with needs to have goals that align with yours. And you need to ensure that they’re going to make good use of your donation.

So do some investigating. Dig deep. Ask questions, such as: are the finances of the charity not open to scrutiny? Is their financial reporting erratic? If so – find out why.

Let’s say you’ve already done this due diligence. You realise that, ultimately, the change you want to see is that these top five universities offer 33% of their places to the less privileged.

That’s the sort of specificity you’ll need. To measure success, you first need to define it.

Engage your family

A study completed in the US – by an organisation called 21/64 at Grand Valley State University in Michigan – found that, of 310 wealthy 21-40 year-olds, around a third gave to causes significantly different from those funded by their parents. The younger generation, the majority of whom had inherited their wealth, preferred pursuing causes such as civil rights and the environment over the arts, for example.

If you plan to involve your children in your philanthropy, or if you intend for some of their inheritance to go towards charitable giving, you need to decide whether you wish for them to dedicate themselves to the same cause as you.

There are a lot of options. In some cases, family members are given total freedom to carve out their own philanthropic efforts, but still share some of their parents’ charitable structure, such as administrators or advisors.

For one point of reference, in the UK, the Sainsbury family endows each member with a personal trust to pursue their own charitable goals – in terms of both the cause and geography – but they all share some functional resources and services.

If you plan to involve your children in your philanthropy, you’ll need to figure out exactly what your operational set-up might look like.

You should, for example, think about their preferred degree of privacy. If your family name is well-known, for example, there may be a benefit in lending your name to your Trust or Foundation – whether to clarify a cause or to attract funding.

Every individual is different just as every family is. So there are no hard-and-fast rules to follow at this stage. But once you are set to identify the charities you want to work with, Barclays Private Bank can help you help others – today and tomorrow.