Once you’ve decided which areas to target with your philanthropy, now comes the fun part: bringing your vision to life. Your objective here is to figure out how you can best support and engage with nonprofits. 

“Knowing a nonprofit’s strengths and areas for improvement can help target the best way to support it. Doing your homework is critical, and I think the biggest challenge faced is how to begin this homework assignment. Learning as much as you can about the focus area you want to support is a good first step.” 

– Karen Kardos, Head of Philanthropic Advisory at Citi Private Bank

You could begin by consulting with experts in the space you’re targeting to make sure you have a solid understanding of the issues you’re trying to solve. Make sure to look at what’s already covered by existing nonprofits in the space to see where the funding gaps are.

“Engaging with like-minded funders so you don’t have to ‘reinvent the wheel’ can provide a special learning experience, knowing what worked and probably more importantly the lessons learned from what didn’t work.”

– Karen Kardos, Head of Philanthropic Advisory at Citi Private Bank

How you choose to help can shape your nonprofit’s impact on society – and there are many ways to lend support. Most nonprofits covet “general operating support”: it gives them the most discretion on fund use with no requirement to track and report. 

In contrast, the use of “programmatic support” funds is restricted as to the purpose, typically one or a few specific programs, and therefore the use of the funds must be tracked. 

Capital campaigns revolve around a physical structure and building improvement, and fund use is limited to a construction project. If you fancy naming rights, this could be a requirement of your capital grant. Galas and benefits are other popular approaches, but these can have additional tax implications. 

You could also provide extra support through “grant matching”: where you match funds raised by your nonprofit at a specific rate over a certain time period. This has the added bonus of giving your nonprofit a financial incentive to raise more funds, find more donors, and become self-sustaining.

Lastly, private foundations have an additional tool in the kit - program related investments which aim for a below market capital return– coupled with a charitable purpose.

Once you’ve figured out the best way to provide support, you need to decide how you go about giving – and you have some options to choose from. 

You could give directly, aka “check-book giving”, or indirectly through more formal vehicles like donor-advised funds (DAFs), private foundations, and charitable trusts. 

Private foundations, which can be set up to cease operations within a certain amount of time, will typically offer your family more involvement and control over investment decisions, but they’re usually less tax advantageous and provide less privacy than DAFs.¹ 

As you can see, you’ll need to consider how involved you’d like to be in investments, the role of your family in the process, and your need for privacy.

If you’ve decided to set up a foundation, you’ll need to figure out how you’re going to operate in order to achieve results. 

The way your foundation sees its role in society, for example, will drive the initiative it takes – does it prefer to create solutions or take a more supporting role? Is there enough predictability in day-to-day operations that decision-making can be centralized? 

You’ll also need to decide if you’d rather concentrate your resources on the breadth or depth of your social agenda. 

As you can see, there are number of parameters you’ll need to set – around resourcing, flexibility, and relationship-building, to name a few – in order to create a clear culture and guide your operations going forward.