Philanthropy is defined as “goodwill to fellow members of the human race; especially an active effort to promote human welfare”. In today’s world the concept has become broader and is significantly influenced by personalities, passions, taxes and the desire to make an impact.

In 2013, individuals represented 72% of all gifts, the largest single source of charitable giving. Foundations, bequests, and corporations accounted for the balance of all charitable giving. With charitable gifting topping more than $330 billion in 2013 (more than a 4% increase from 2011), it’s no surprise that philanthropy in the United States represents nearly 2% of GDP and therefore should not be considered lightly.

The “Foundation Source” identifies five key forms of giving:

  • Checkbook philanthropists who provide critical unrestricted support
  • Responsive Funders who actively solicit proposals if they are of interest
  • Venture philanthropists who strengthen nonprofits for sustainability
  • Result based philanthropists who narrow their focus to address root causes
  • Collaborative funders who partner with other philanthropists to enhance the process.

Whether it is wealth planning or philanthropic planning, approaching both strategically ensures you will achieve your goals long-term. Strategic wealth planning is a goal based process that needs to consider financial, tax, social, generational, and legacy desires. Philanthropic planning plays a key role in a person’s legacy and in the societal impact one wants to leave on the world. While often tax discussions become the catalyst for charitable planning, we typically find that as one ages, the “footprint” one leaves becomes a more important part of their legacy planning and goals. For clients who have the resources and desire to make an impact and leave a “footprint,” the best way to do so is to convert their annual charitable giving into a strategic philanthropic process.

Strategic philanthropy takes the giving process and converts it into a disciplined approach that combines defined goals with the resources and the desire to have an effective purpose so that a specified outcome can be achieved.

The process includes the following:

  • Determine why you want to give and the criteria you use when giving.
  • Come to a consensus with key stakeholders including family and beneficiaries to understand what you really care about and what you want to accomplish by giving.
  • Based on what you want to accomplish, establish goals and processes to make your giving more effective.
  • Do not rush the process; strategic giving is a different process than just writing checks. Strategic giving is really about making the allocated resources more effective and impactful with one’s passions and legacy as the driver.

There are many paths to giving, and the steps outlined above are really focused achieving specific goals. However you choose to give, you should always give strategically based on your goals and aspirations. The key to strategically giving is to think about your actions and how you can improve the desired outcome

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PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. This commentary is a matter of opinion and is for informational purposes only. It is not intended as investment advice and does not address or account for individual investor circumstances. Investment decisions should always be made based on the client's specific financial needs, goals and objectives, time horizon and risk tolerance. The statements contained herein are based solely upon the opinions of Telemus Capital, LLC. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Information was obtained from third party sources, which we believe to be reliable, but not guaranteed.

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