Beyond the Accountant: What a Philanthropy Advisor Does


Since I last wrote about philanthropy consulting in 2015, the business has grown further. Recently, the Chronicle of Philanthropy printed an opinion piece indicating that better advice is needed for wealthy donors. The article noted that in 2015, approximately $3.3 billion in donations were made by individuals whose donations were $100 million or more. In that year, there were more than 1,000 donations in excess of $1 million.

Although the population of professional advisors serving these wealthy donors is continually increasing to include wealth managers, trust companies, trust and estate lawyers, private banks, etc., there was a concern expressed in the piece that donors are still getting inadequate advice regarding their charitable donation(s). That is because the professionals surrounding the wealthy are typically focused on tax and investment issues. Regardless of the people who lament the unfair tax code, the first advisor retained by the wealthy is usually an individual or firm whose job it is to minimize the tax bite taken out of their earnings. And right behind them are the advisors promising to multiply those after-tax dollars for generations to come.

Philanthropy, of course, is part of the overall tax strategy. The challenge is to assist the wealthy (or every) donor of a major gift to make the best use of their money. The press is littered with stories of charitable donors and recipients struggling over significant disagreements regarding the use of donated capital. The thought is that with a little better advice prior to making the gift, major gift donors would develop clear intentions, collaborate more closely with the charitable recipient relative to the size and purpose of the gift, and craft a better gift instrument. The result would be a beneficiary and donor with clear expectations and restrictions and no turmoil.

The group of advisors noted above are likely not disposed to speak to their clients about issues other than the tax and technical aspects of philanthropy. This is usually beyond their area of expertise, and an area that may be so intimate for the donor that the advisor is uncomfortable taking their professional relationship in that direction. This is when the donor needs to retain a philanthropic advisor.

What does a philanthropic advisor provide? Such a professional teaches and empowers his clients to effectively direct their philanthropic resources consistent with the donor’s deepest values. Effective philanthropy is time consuming and complex. The philanthropic advisor is a specialist with the tools and know-how to turn a donor's vision into reality. This may include identifying opportunities, information gathering, strategy and program planning, and even grants management in a multi-year giving program. It should also include follow-up to ensure that the gift(s) have their intended result or that the donor learns from mistakes. It need not include investing advice or governance and administration of a private foundation—necessary tasks for which there is already a large body of providers.

Where is such advice available? You can search the Internet for philanthropy advisors and review the web sites of a number of companies entering this field. Many of these companies are foundation managers, family offices and others who have gained experience in dealing with charities as an adjunct to their primary business, which is usually investment management or foundation administration. There are also individuals from multiple disciplines—accounting, legal, fundraising, etc.—who have gained vast amounts of charitable organization knowledge and experience over the years in their primary professions and are now willing to share that tangential knowledge with donors.

Philanthropic advisors should probably work on an hourly basis for specific projects. If one is compensated based on assets under management or other measures based on the size of a private foundation, they are not primarily philanthropic advisors. In addition, their compensation arrangement may actually represent a conflict of interest to your philanthropic goals and objectives.

Philanthropy should be an enjoyable and rewarding experience. My past posts contain stories of a number of gifts gone wrong or donor wishes ignored. A philanthropy consultant can help you make sure that your philanthropy is satisfying, rewarding and enjoyable.