Guidelines for Strategic Philanthropy

Today, philanthropic individuals and established foundations are engaged in a greater range of activities than ever before. Many are operating direct programs, making debt and equity investments, and in some cases, extending credit via subsidized or interest-free loans.

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Some have extended their social impact to their investments too: socially-conscious investors are considering the purpose and social value of a potential investment — blending the financial return expectations traditionally used in investment selection with social impact indicators.

With all of the choices available, remaining focused can be a challenge. Many philanthropists say they are confused by the array of options and uncertain about the impact of their efforts.

Organization is key, whether you are just getting started or a seasoned donor. Below are some guidelines for developing an effective plan for strategic philanthropy.

Focus on your values and vision.

The first step to strategic philanthropy is identifying your foundational values which will guide your future actions. What are your most closely-held beliefs? What moves you to action-- A sense of justice, commitment to religious principles, the plight of those in need, concern for the environment? If you don’t yet know, consider what you care about, and your vision for a changed world. There is no right or wrong answer here—it is entirely personal to you.

Many families choose to explore and codify their values together, using a series of exercises that can highlight similarities and explore differences. This organized approach can be achieved during a facilitated family meeting.

Develop a clear mission statement.

Clarity of purpose is critical. Even the largest foundations have clear missions that guide their activities and inform decision making about charitable grants, impact investments, and other activities. This mission is particularly important when giving together as a family or other group and when multiple individuals may be fielding funding requests simultaneously.

We recommend using your values and vision to formulate your mission statement. For those setting up a defined charitable giving vehicle like a family foundation, developing a mission statement is an essential part of the set up and structure, and becomes part of the publicly-available information about your foundation. Even individual philanthropists can benefit from having a clear mission statement. Not only can it help guide your actions, a clear mission statement can also help potential grantees or partners identify you as someone with similar interests.

Define success in advance.

Your approach to strategic philanthropy should have some pre-determined notion of what success means to you. After all, how do you know if your time, energy, and funds have been useful if you don’t know what success looks like?

A definition of success can be overarching, as a natural outflow of your mission statement, or it can be project-specific. Depending on how you define success, you may find opportunities to broaden your activities beyond traditional charity. Many philanthropists today are turning to impact investing strategies to direct capital into companies or industries which are in alignment with their values and also provide financial returns.

Measure success, and don’t be afraid to shift course if necessary.

After taking an action, be prepared to measure the actual outcomes against your definition of success to determine whether your action was effective. Which outcomes are most important to you, and what are you most interested in understanding?

Measurement tools that involve both qualitative and quantitative information can provide the most meaningful understanding of success. For example, if you are working to help an impoverished community achieve increased employment, you might use a number of different measures, including: census data that covers the entire region, but is only produced each decade; interviews with local community members who were previously out of work, but are now full-time employees; or you might request data on the number of unemployment insurance requests from your local Department of Labor office.

If you aren’t satisfied with results, or discover a new approach, be willing to change your strategy. Much can be gained by doing. Most experienced philanthropists say that they shaped their focus over years of engaging with philanthropic projects, and many adjust their approach along the way. The best way to do strategic philanthropy is to simply get started.

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