The philanthropic landscape

Long seen as exclusive activity for the ultra-high-net-worth, strategic philanthropy has now become a mainstream concept. For families and individuals involved in philanthropy, even at modest levels, conversations between donors and recipients are changing dramatically. Donors are evolving in how they view their philanthropic efforts and goals as they seek to have more of an impact on the causes that are important to them.

A new generation is challenging traditional views on philanthropy and family giving. These new donors are more diverse, more concerned with environmental and social issues, and more distrustful of traditional institutions — characteristics that are ushering in a new era of accountability for nonprofits. They believe philanthropy can — and should — be a catalyst for change.

Traditional donors often established long-term funding relationships with minimal oversight, but many new donors want to know more about what’s been achieved by the nonprofit, for example, what has been accomplished in the last one-, three-, five- and 10-year periods.

Newer donors want to know how the public charity operates — what works well, what needs improvement and how to measure success and risk. They also want to know specifically how their contribution will be used and help further their cause. As a result, nonprofits must be more intentional, transparent and strategic in their communications.

Donors often also want the nonprofit to show appreciation. This is typically demonstrated by a handwritten note with an example of how the funds were used. Nonprofits should use these notes to demonstrate the donor’s impact by sharing stories and experiences from people who are directly benefiting from its work.

The new donor generation is giving larger grants to select organizations, instead of spreading smaller amounts across multiple ones. Donors may take a greater interest and role in the organizations they give to and focus on those that have the greatest impact within their specific community, or those that address the issues they care about most.

Enhancing Family Unity

Establishing a strategic and flexible approach to philanthropy is essential for long-term family unity and legacy preservation. Allowing children and grandchildren to contribute to the family’s philanthropic vision can help foster trust and communication skills. It is a great way to ensure that the younger generations feel connected to the family’s values and makes it more likely they will preserve and maintain the family’s legacy. Young family members should get involved as early as possible. Philanthropic planning can educate them about the importance of entrepreneurship and how critical it is to growing and replenishing the family’s wealth.

It is rarely a good idea for the first generation to establish philanthropic goals on their own or to choose goals that are important solely to them. When it comes time for the next generation to take control, they may not be interested in maintaining what was started. The family unit often dissolves because the next generation has no stake in the core philanthropic values or in the methods of managing the foundation, which can result in abandonment of the philanthropic efforts. ●

Ronald Ambrogio is Regional President – Ohio at BNY Mellon Wealth Management

DISCLOSURE: The information provided is for illustrative/educational purposes only and is not intended to constitute legal, tax, investment or financial advice. The information discussed herein may not be applicable to or appropriate for every investor and should be used only after consultation with professionals who have reviewed your specific situation. BNY Mellon Wealth Management conducts business through various operating subsidiaries of The Bank of New York Mellon Corporation.

Ronald Ambrogio

Regional President – Ohio


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