Philanthropic Consultants
/On one level, charitable giving can be simple and self-directed — just decide what you’re passionate about, figure out which nonprofits are doing the best work and send the donation. It’s easy to think you can and should do this straightforward work yourself. But many major donors who are interested in dedicating their resources to complex issues realize it can be analogous to a home renovation: Just because you have a clear idea of what you want the outcome to be doesn’t mean you can achieve it without expertise and a fair amount of highly skilled labor to work through the process.
To be an effective philanthropist requires research, technical know-how and a solid theory of change. Philanthropic consultants can help with all of that. Billionaire MacKenzie Scott works with consultants from the Bridgespan Group, which also advises legacy foundations like Ford and Gates on special projects. Lots of other people with significantly more modest wealth work with philanthropic advisors, including consultants or specialists working within law firms, financial institutions or stand-alone philanthropic advisor firms. Rockefeller Philanthropy Advisors, TCC Group and Arabella Advisors are big names in the philanthropy consulting sphere. Community foundations and donor-advised fund management firms also offer varying levels of advisory services, sometimes with additional fees.
Why would I work with a philanthropic consultant?
You may have a general idea of what kind of donor you want to be. Maybe there is an issue on which you know you want to make an impact. But where to begin? How can you be sure you’re giving in an effective way, or that the organizations you’re funding are well-aligned with your values and priorities? Which giving vehicle is best for you — should you set up a family foundation or a DAF or a philanthropic LLC? How are you going to keep track of your giving?
It’s possible to find the answers to all of these questions on your own, but that takes considerable time and effort. Maybe there are other things you need to spend your time on, or you simply don’t want to reinvent the wheel when there are people who already have information and expertise in these areas. A philanthropic advisor, or consultant, can help you answer these questions, point you toward nonprofits that align with your values, and conduct due diligence to be sure these nonprofits will use the money you donate to make the kind of impact you’re hoping for.
Consultants can also help you create a giving plan or grantmaking strategy and keep you accountable to your plan. They can keep track of your giving, providing reports to you and your accountant, and making sure you receive any reports you request from grantees.
Specialized advisors can sometimes handle technology, legal issues and accounting, but here are some of the common reasons donors hire philanthropic consultants:
You want expert advice or technical support but you don’t want to hire a staff. You don’t necessarily need a full foundation staff to be an informed, effective philanthropist. Consultants can help with research, planning and more while keeping your philanthropic operation lean and flexible.
To clarify your values and philanthropic mission. Consultants can guide you in reflecting on the values that guide your philanthropy and can even help you craft a giving plan or grantmaking strategy shaped by those values.
For philanthropic or issue-area expertise. You can find a consultant who specializes in the issues on which you want to focus as a philanthropist. They’ll know the nonprofits working in that field from their own research and relationships. They can also conduct additional research on your behalf.
For technical expertise. A philanthropic consultant can advise you on which giving vehicle is right for you and how to set it up. They can also answer questions and provide guidance on other technical and administrative aspects of giving, such as reviewing gift agreements and making sure you have the records you need for tax deductions.
To conduct due diligence work. If it makes sense to have an application or vetting process, they can plan and execute it. You want to be confident you’re giving to vetted, effective nonprofits. You can do the due diligence yourself, or you can hire a consultant to do it for you.
For gift or grant management. A consultant can keep track of your giving, sending you quarterly or annual reports of your donations. They can also follow up on expected reports from grantees and even guide your evaluation process.
To provide administrative support for your philanthropy. From tracking donations to filing thank-you letters, there are all kinds of administrative tasks associated with philanthropy. A consultant can help with these.
Key Considerations
Similar to the home contractor analogy, bringing in experts to help with your philanthropy can save you from disaster, but can also lead to ever-expanding projects that cost more than you expected. These are some considerations to keep in mind:
Time and expense. Philanthropic consulting firms are usually staffed by people who are highly credentialed and have decades of experience in the social sector. These professionals are paid in ranges similar to accountants and lawyers, sometimes working at hourly rates between $200 and $500, but more commonly within a set project amount or on retainer. Like any paid advisory service, there is a natural tendency for the consultant to expand their scope and deepen the work to continue their income stream.
Formulation v. execution. Many philanthropic advisors prefer to stay at the strategy level and have lower-level workers handle the execution, or leave that for other people hired by the donor. Some firms are full-service; others specialize in one piece of the puzzle. It can be hard for a donor to know at the outset exactly what services they will need, so speaking to other donors who have used advisors for the kind of work you want to do might be helpful.
May not question your assumptions without prompting. Philanthropic consultants are in a service industry and the business model is to say “yes” to their clients. But the most valuable philanthropic advisor is one who will help you question your own assumptions and beliefs, help you explore new possibilities and examine your values in relation to making real social change on the issues you care about. You may need to say directly that you are looking for that kind of pushback or you may not get the deep, challenging engagement you need to do your best grantmaking.
Biases and blind spots. The philanthropic consultant may have worked extensively in the philanthropic sector, but probably has never run a homeless shelter, arts organization or grassroots advocacy organization. The consultant may come out of a McKinsey-type planning background that is all analysis with no practical knowledge of the grassroots. The ranks of philanthropic consulting firms have also tended to be populated by older white people of considerable privilege, although this is changing slowly. Relying on consultants can skew which groups get the most funding. “Consultants at places like Bridgespan are setting the menu of what philanthropists can and should do,” Megan Tompkins-Stange, an assistant professor of public policy and scholar of philanthropy at the University of Michigan told the New York Times. “The organizations that are stamped with the managerial brand are more likely to get funding.”
Taking Action
Finding a philanthropic consultant who’s a good fit for you can take time and effort. You want someone who’s aligned with your values and has availability to work with you at a cost you can afford. These are some tips to find a consultant who is right for you:
Talk to a few philanthropic advisory firms. Beyond such well-known firms as Arabella Advisors or TCC Group, there are a growing number of small boutique firms, some that have particular specialties, such as social justice giving.
Consider an individual consultant. These advisors have often previously worked for foundations or other philanthropic organizations, and can have different areas of expertise.
You can identify both firms and individual consultants through Exponent Philanthropy’s directory of philanthropy advisors. Compass Giving also has a directory, as does Stanford PACS. And don’t forget to check out IP’s consultants directory.
Ask other donors you know for referrals.
Look to philanthropy-serving organizations or intermediaries in the subject area where you want to give — they may have information and support to share, including referrals or directories of consultants.
