The end of the year tends to be a time for reflection—though this year may be one you’d rather forget. Yet beneath the obvious health and social issues lies a silver lining. An increasing number of donors are stepping up to help those in need. Grant giving, for instance, rose by 30% this year.* Will this uptick in generosity carry over to next year?

A Changing Pattern?

Giving patterns have shifted in response to the pandemic and social justice movements this year. But while many donors responded bigheartedly to the crises, a recent survey revealed that only 20% believe the COVID-19 pandemic will significantly influence their giving in 2021 and beyond. In other words, most donors plan to stay the course when it comes to their past giving behaviors.* The reason? Donors expect life—and their philanthropy—to return to normal.

Did you undertake more ad hoc giving to fulfill short-term relief needs this year, but plan to restore your typical giving next year? If so, consider proactively putting some concrete guidelines in place now. Some donors already have an established philanthropic plan. But those who don’t might give some thought to how they want to spend their charitable dollars. Start by identifying values and crafting vision and mission statements.

Establishing a Charitable Plan

Donors with an established philanthropic plan often fear straying from it. But sometimes circumstances arise that compel a shift in thinking or strategy. Consider Jerome and Natasha Goode, who worked with their financial advisor to craft a charitable giving budget in 2019. In doing so, they made a large contribution of appreciated stock to their donor-advised fund (DAF), which they plan to use as their primary vehicle for making future grants. This year, they arrived at their 2020 budget using the following approach:

Designing Your Philanthropic Plan

 

The Goodes decided to focus of their philanthropy on supporting the arts, education, faith, and animals, both locally and nationally. They were excited about their plan—but then 2020 hit and the pandemic prompted them to rethink their approach.

Shifting Focus

Like many charitably inclined investors, the Goodes mobilized quickly. To make an immediate impact, they contributed cash to COVID-19 pandemic relief efforts, generously supporting charities that previously fell outside of their defined budget. The events of 2020 also opened their eyes to other causes, eliciting a passionate response to calls from racial justice charities where they could have a long-term impact. After conferring with their advisor, the Goodes decided to reallocate their charitable budget and make grants from their DAF to racial and social justice causes in 2021 and beyond.

Structure with Flexibility

Creating a flexible philanthropic budget allows donors to pivot in response to a crisis or current events. Importantly, having a formalized governance structure allows for swift action when time is of the essence and the desired impact is crucial.

Often, other family members weigh in on a giving strategy. It’s essential to define the rules and expectations of the giving policy and reflect the inspirations and passions of each member. As the Goodes learned, plans may evolve as the environment changes or, oftentimes, when the next generation becomes involved. Building latitude into a charitable program allows for temporary—or permanent—shifts in giving without foiling the entire plan.

Is Your Charitable Plan Ready for Prime Time?

As 2020 draws to a close, take time to reflect on your philanthropy. Is there anything you’d like to do differently next year? If you have an established plan, think about your vision and mission as you consider the following questions:

  • What are the values and catalysts that inspire your philanthropy?
  • Are your values connected to the causes and organizations that you want to impact?
  • What is working well, and what can be improved?
  • Have you achieved your intended impact?

Find Happiness Through Giving

Bernstein recently spoke with David Rubenstein, co-founder of the Carlyle Group, about his Giving Pledge. Explaining the impetus behind his Pledge, he noted, “…when you give away money, you’re happy. When you do things for other people, you’re happy…”

2020 has thrown so much at the world and has left many people searching for happiness. In response, some individuals like Mr. Rubenstein have found joy in helping others. So, as you consider your charitable intents for 2021 and beyond, think about how you’d like to impact the world and make your money meaningful.

Authors
Jennifer Ostberg
Director—Wealth Strategies Group

*https://www.fidelitycharitable.org/insights/how-donors-plan-to-approach-giving-at-2020-year-end.html

The views expressed herein do not constitute, and should not be considered to be, legal or tax advice. The tax rules are complicated, and their impact on a particular individual may differ depending on the individual’s specific circumstances. Please consult with your legal or tax advisor regarding your specific situation.

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