Practical Ways to Turn Your Philanthropic Dream into a Reality

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There’s a common misconception that you need to be a multimillionaire to be a philanthropist. This isn’t true at all.

Philanthropy isn’t always about donating huge amounts of money. It’s about taking a more strategic approach toward supporting the causes or organizations that matter to you. It’s about defining what you’d like your charitable activities to achieve, and then developing a plan to carry it out.

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It’s the difference between giving reactively to a fundraising campaign posted on Facebook and proactively deciding how to best use your “time and treasure and talent” to make the world a better place.

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The first step in your journey is to define different aspects of your philanthropic personality, such as thinking about the way you give today. One guiding question you may want to use when you’re thinking about your own philanthropic priorities is:

What is my vision of a better world?

In other words, look inside yourself to envision a world where something you do makes it better. If it’s not clear, one way to do this might be to ask yourself, “What things do I see, hear or read make me sad or angry or inspire me to make a positive impact on issues I care about?”

It doesn’t have to be a global initiative. It doesn’t have to make life better for everyone. It doesn’t even have to change things (i.e., your vision may focus on keeping something the way it is).

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In fact, you can have many different visions of a better world, each one with a specific action plan for making that vision a reality. Together, these become philanthropic mission statements.

Creating philanthropic mission statements

Once you’ve defined your visions, you can move on to the next step of formalizing them in one or more philanthropic mission statements.

There are many different formats. But one that is relatively simple to use is a “Mad Libs”-style template that starts with a vision and ends with an action plan. Here’s one example:

One of my visions of a better world is one where _______________ [describe the vision]. I wish to work toward fulfilling this vision by ___________________ [define an action plan].

Most people will find it relatively easy to describe their visions but more difficult to define their action plans. A philanthropic adviser or a community foundation can help you identify nonprofit organizations that can help you fulfill your intentions.

Describing the vision

Each of your visions can be broad in scope or very narrowly targeted. Here are some hypothetical examples, each starting with the statement: One of my visions of a better world is one where:

Replacing fossil fuels with renewable energy sources worldwide dramatically reduces the impact of climate change.
Threatened habitats in the Amazon are fully protected from development.
Homelessness in Springfield is eradicated by providing permanent shelters, substance addiction treatment programs and job training for homeless people.
Academically advanced yet economically disadvantaged students wishing to attend my alma mater, Lincoln College, will receive financial support to fully pay for tuition and room and board.
The Franklin Veterans Museum will always have enough funding to continue its mission of telling the stories of Franklin residents who served their country in military conflicts.

Defining an action plan

Once you’ve defined one or more “visions,” it’s time to decide how you will help make them a reality. Some action plans may be general, some may be very specific. Some may have one action, others may have several.

Here are some examples of action plan statements (each connect to the vision statements above), starting with the statement I wish to work toward fulfilling this vision by:

Making annual donations to nonprofit organizations that support global efforts to transition nations from non-renewable to renewable energy sources.
Setting up a bequest to donate all remaining assets in my IRA to charities that are dedicated to establishing protected land conservancies in the Amazon.
Making donations to and volunteering 10 hours a month at a homeless shelter or soup kitchen in Springfield.
Setting up an endowment fund with Lincoln College to provide scholarships to deserving students in financial need.
Partnering with the Central State Community Foundation to set up a donor-advised fund to provide annual contributions to the Franklin Veterans Museum and other local cultural preservation nonprofits.

So, for example, a competed philanthropic mission statement using example #5 could be:

One of my visions of a better world is one where the Franklin Veterans Museum will always have enough funding to continue its mission of telling the stories of Franklin residents who served their country. I wish to work toward fulfilling this vision by partnering with the Central State Community Foundation to set up a donor-advised fund to provide annual contributions to the Franklin Veterans Museum and other local cultural preservation nonprofits.

Certainly, the easiest way to act is to simply make cash donations or volunteer. But there may be other factors you may want to consider when thinking about how and what you will give, such as:

Tax considerations, such as using donations of highly appreciated assets to avoid paying capital gains when they’re sold or IRA distributions to avoid the taxable income altogether.
Legacy considerations, such as figuring out the best way to continue to provide financial support to charities after you’ve passed on.
Volunteering considerations, such as figuring out what kinds of activities would be most enjoyable and make the best use of your time and skills.

Considerations like these often require donors to develop a more strategic approach to philanthropy that aligns with their overall financial objectives. That’s why you might want to begin by defining your “visions” and then meet with an accountant, estate attorney and financial adviser who can recommend appropriate charitable giving strategies or vehicles that can help you complete each mission.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice.

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Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Chris Gullotti, CFP®, is a financial adviser and partner at Canby Financial Advisors in Framingham, Mass. He has an MS in Financial Planning from Bentley College. He brings a big picture view to each client's situation and works cooperatively with his clients' other financial professionals, including family attorneys, tax professionals and insurance advisers.

Advisory services offered through Canby Financial Advisors, an Investment Adviser registered with the U.S. Securities and Exchange Commission. SEC registration does not constitute an endorsement by the SEC nor a statement about any skill or ability.