DONOR ADVISORS AND PHILANTHROPIC STRATEGY · legal, tax and accounting issues). Donor Advisors and...

DONOR ADVISORS AND

PHILANTHROPIC STRATEGY

Thomas E. Backer, PhD & Lilli Friedland, PhDHuman Interaction Research Institute

April 2008

supported by a grant from the William & Flora Hewlett Foundation

Donor Advisors and Philanthropic Strategy

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Donor Advisors and Philanthropic StrategyExecutive Summary

Thomas E. Backer, PhD & Lilli Friedland, PhDHuman Interaction Research Institute

April 2008

At a time when philanthropy has enormouspotential to advance the public good, donors canbenefit from many kinds of assistance in makinggood decisions. Do advisors to the wealthy help theirclients shape philanthropic strategy, how do they do so,and how do advisors prepare for this work? Toprovide some answers, interviews were conductedwith 75 accountants, family office managers,philanthropic advisors, private bankers, trust andestate attorneys, wealth managers andinstitutional development directors, along with agroup of thought leaders in philanthropy. Aliterature review, including publications of theinterviewees, helped provide context.

The study took a psychological perspectivethroughout. Advising work, especially whenfocused on philanthropy, is inherentlypsychological – it involves clarifying deeply-heldpersonal values, identifying causes that mighthave personal meaning, and dealing with thecomplex human realities of families. Shaping aphilanthropic strategy requires attention to suchpsychological complexities. It also requiressupport for choosing appropriate philanthropicinstruments; and for connecting donors withknowledge and skill about philanthropy,nonprofits and the community.

Findings were interpreted in the context of thespecific work done by each of the seven categoriesof donor advisors, including similarities when thefocus is on philanthropy. Strategy was defined asthe operation of an enterprise by defining missionand values, setting forth a plan of action, andmeasuring outcomes to see if the mission isachieved. Donor advisor activities were placed inthe larger context of the overall philanthropiclandscape (foundations, infrastructureorganizations, and so forth).

Five main findings emerged from the study:

1 - Effective donor advising takes manyforms, but has four common characteristicsand eight key areas

The four characteristics common to effectivedonor advising are:

* building trust between advisor and donor

* finding a psychologically-based understanding ofdonor intent and behavior

* drawing on knowledge and experience withphilanthropy, the nonprofit sector and the community

* doing skillful research to provide data for donordecision-making

Beyond these commonalities, there is a great rangeof practice. For example, some advisors are pro-active, and have a well-developed, multi-stepmodel for building philanthropic strategy, whilebeing sensitive to client needs and preferences.Others are more informal and largely reactive.

Donor advisors interact with their clients in someor all of the following eight key areas:

* financial assessment - do I have the financialresources to be philanthropic?

* values clarification - what deeply-held valuesguide my philanthropic desires?

* family involvement - how and to what extentshould my other family members be involved, andhow are they likely to be impacted byphilanthropy?


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* structure - what philanthropic instruments fit mytax, financial and legal circumstances (as well asmy values), and how will the instruments I choosebe created?

* actions - what grants will be made or otheractions taken to fulfill my plans?

* learning & peer networking - what opportunitiesare there for me to learn more about philanthropy,either from direct experience or from interactionwith peers?

* collaboration - what opportunities are there for meto collaborate with other donors or foundations,and what are the advantages/disadvantages ofdoing so?

* evaluation - how do I define and measure thesuccess of my philanthropic activities?

Advisors might provide input on only one, onsome or on all of these. In some cases, clients mayhave several advisors providing them with inputrelated to philanthropy.

A particularly important characteristic of someadvisors emerged in this research. Dual passportdonor advisors are persons of wealth who alsoprovide professional service as advisors. At theirbest, they have natural authority and ability togenerate trust. This does not guarantee they willdo good donor advising work, of course, nor doesit mean those not from such backgrounds can’t beeffective. In addition, there may be connectionsbetween the advisor’s personal and familyphilanthropic history and their skill in donoradvising work. Both observations need morestudy.

Some donor advisors are not specifically identifiedas such, but instead work more informally behindthe scenes, on a compensated or uncompensatedbasis, with wealthy individuals, sometimes foryears. These represent another kind of “dualpassport” and also need further study.

Theme 2 - Donor advising in the U.S. is afast-growing cottage industry which has notyet fully developed a business model

Donor advising is a cottage industry with manysmall firms or individual practices, plus somelarger organizations in which philanthropicadvising is only one aspect of their work. Theinfrastructure for donor advising, both internallyand externally, is still limited. Some practices orfirms are set up formally and are well-linked tothe larger philanthropic world. Others are not.

It is fast-growing, particularly on thephilanthropic side, the subject of direct interesthere. It is growing because of client demand, withassistance on building philanthropic strategyincreasingly seen as adding value. That leadsclients to demand such assistance, and advisors toprovide it.

Donor advising lacks well-developed businessmodels to drive growth, particularly as a serviceoffering of large business institutions that alreadyserve donors. What does philanthropic advicecontribute to retaining clients, or to getting assetsunder management – and what are appropriatefees, if any, to charge for it? In essence, what doesphilanthropic advising bring to the bottom line?

Theme 3 - More rigorous training and practiceguidelines for donor advisors are needed

Very few formal training programs exist, but sometraining materials and interventions do. Manyinterviewees had advice about how training ofadvisors can be improved. Organizationsproviding information and guidance to advisorsinclude Advisors in Philanthropy, Family FirmInstitute, National Center for Family Philanthropyand The Philanthropic Initiative. The AmericanCollege offers a certification program, leading tothe designation “Chartered Advisor inPhilanthropy” (though most of its training is onlegal, tax and accounting issues).


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A few academic institutions are beginning todevelop or at least consider advisor trainingprograms. At present, most of these are “one-shot” approaches like a seminar or workshop.Such events typically involve bringing in expertsfor a presentation on key aspects of donoradvising work.

On the job training is increasingly common. Insmall firms this usually takes the form ofcoaching, combined with follow-along mentoringto a junior person as part of an advisor team. Inlarge organizations, it may involve hiringsomeone with philanthropic experience to fulfill atraining role and to serve as the “philanthropicadvisor of record” for the firm.

In this fast-growing field, practitioners face anumber of challenges:

* confidentiality - advisors sometimes talk amongstthemselves too freely about their clients, despite ahigh desire for privacy among many donors.

* unqualified practitioners - anyone can callthemselves a philanthropic advisor, and if they arein the community doing shoddy work that affectsthe reputation of all.

* setting boundaries with clients - even though it maybe very tempting to go on the client’s yacht for theweekend, such boundaries are crossed atconsiderable risk, as they are in other kinds ofprofessional relationships.

* maintaining ability to disagree with clients -advisors need independence from their clients inorder to provide useful service.

* conflicts of interest - many advisors givingphilanthropic input have some conflict, e.g., theyare hoping to keep the donor in a particularinvestment vehicle or with a particular firm.

* recommending other advisors - good advisors willrecommend another advisor if there is somereason to do so, but some fear loss of control ifthey do.

* donors are getting more sophisticated - advisors whohaven’t kept up with the growth of the field arefairly easy to pick out, and are at a competitivedisadvantage.

Theme 4 - Providing opportunities for donorlearning is an important part of donoradvising

Already identified as a key activity, providinglearning opportunities emerged as of specialimportance because donors grow most quicklythrough direct learning experiences. This mayrange from site visits, to opportunities for pilottesting, to provision of data for feedback purposes.

In particular, peers are of great importance fordonor learning of all sorts. Donor learninggroups, for instance, provide a context in whichdonor decisions and response to donor advisingcan be organized.

Advisors need to know about these groups. Theycan then refer their clients to them whenever thatis indicated.

Some learning groups are free-standingorganizations. Some are affiliated with financialinstitutions or other advisor organizations, whichhelps them with quality control on behalf ofclients.

Theme 5 - Donor advisors can help inpromoting effective donor collaborations

Donor advisors regularly reported having done“matchmaking” to bring together two donors, ora donor with a philanthropic institution like afoundation. Intermediary organizations also canplay a powerful role in facilitating donorcollaborations.

Sometimes a donor advisor may operate alearning group or collaborative giving programthemselves. Donors come to them as clients partlybecause they perceive there is a good alignmentbetween their goals and philanthropic process


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with those of the group to which they will thenbelong.

Plans for dissemination and further study

This report will be disseminated to theparticipants in the study, who are in prominentroles in the donor advisor and philanthropicworlds. It will be placed on the HumanInteraction Research Institute’s website, and onwebsites of organizations that serve advisors.

The study also will be shared throughpresentations at national conferences such as thoseof Grantmakers for Effective Organizations andthe Council on Foundations. The 2008 FamilyFirm Institute conference and the 2009 Advisors inPhilanthropy conference are among the otherpresentations planned, along with guest lecturesat several universities.

To promote learning in the larger realm ofphilanthropy, a book based on this study isplanned. It can influence good practice andhealthy growth of this field, for donors as well asadvisors. Concise “learning briefs” will bedeveloped to share results with donors andadvisors, through networking and supportorganizations that target these audiences.

Topics for further research identified by this studyinclude:

* how younger advisors deal with donor advisingwork

* how experienced donors deal with philanthropicstrategy, and how advisors help or hinder them

* how advisors can serve as a bridge betweenindividual and institutional philanthropy

* dual-passport advisors and how their backgroundinfluences their work

* impact of personal characteristics like religion andgender on the donor-advisor relationship

* increasing role of technology in donor advisorwork

* media coverage of donor advisor activities

* relationship of this study to other ongoing research

* characteristics of donors who collaborate, and howadvisors can facilitate collaborations

* characteristics of advisors who are pro-active, andimpact of a more engaged approach

* how donor advisors can serve as agents of changewhile also serving their clients

* how advisors can help their clients shapeevaluation strategies for philanthropic activities.

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Supported by a grant from the William & Flora HewlettFoundation. To learn more and to obtain a downloadable copyof the full study report, contact [email protected]


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“The problem of our age is the proper administration of wealth.”- Andrew Carnegie, The Gospel of Wealth (1889)

In this time of exploding personal wealththroughout the world, people of means obtainmany kinds of professional advice about how topreserve, grow and transfer their wealth to theirheirs. Increasingly, advisors of all types also offerhelp with their wealthy clients’ philanthropy, sothat they can make better decisions and have moreimpact on the public good. These are hardly newchallenges, as the opening line of AndrewCarnegie’s 19th century treatise on the subjectmakes clear.

Private bankers, trust and estate attorneys,accountants, wealth managers, philanthropicadvisors, family office managers and institutionaldevelopment directors can play critical roles in thephilanthropic lives of wealthy people and theirfamilies. These seven types of “trusted advisors”(and others not studied here) often provideinformation, education, counsel and professionalsupport about various aspects of philanthropicstrategy – from making a simple decision aboutwriting a check to a particular charity, to settingup and operating a strategic, values-basedphilanthropic operation. Today such anoperation might be multi-faceted, including adonor-advised fund at a community foundation,a family foundation, participation in a givingcircle, and other options.

But how commonly do donors seek and receiveconsultation on philanthropy from these varioustypes of advisors, and how helpful is the advicethat is provided? What is the emerging profile ofdonor advisors, set into the larger philanthropiclandscape in the United States? This exploratorystudy conducted interviews with advisors in eachof the seven categories just mentioned (plus somethought leaders in philanthropy) to learn:

(1) whether and how advisors help clients makedecisions, and to develop an overall philanthropicstrategy (values, goals, environmental scans, choice ofphilanthropic vehicles, involving family members, etc.);

(2) whether and how advisors connect clients tolearning resources they may find useful, such as localpeer networking groups or national organizations thatoffer training programs and publications;

(3) whether and how advisors help clients developpartnerships with other donors or foundations;

(4) what training or experiences help advisors provideexcellent service to their clients;

(5) whether and how advisors build skills or getinformation about philanthropy they need to serveclients (such as through informal peer networkinggroups or more formal professional associations); and

(6) what additional training, technical assistance orinformation advisors would find useful.

These questions have been little studied. Inparticular, there has been little comparativeanalysis that can (a) identify similarities ordifferences among the seven types of advisors, (b)help donors learn how to get more usefulguidance from advisors about philanthropicstrategy, (c) help advisors improve theirknowledge and practice in this area, and (d) helpintegrate donor advisors in the largerphilanthropic landscape in the U.S.

Donors also may receive advice from staff of theirfamily foundations, or staff of communityfoundations where they have a donor-advisedfund. However, these relate to an institutionalrole that is not emphasized in the current study. Similarly, donors often receive advice onphilanthropic matters from family members,clergy or friends, but this important resource alsois not the major focus of this research.

Interviews were used to gather most of the studydata, since relatively little of these activities aredocumented anywhere. A simple interview formcontaining questions about the above six topics


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guided the interviews, most of which wereconducted by telephone.

Interviewees for the study were selected initiallyfrom donor advisors and philanthropic expertswho participated in previous research (Backer,Bleeg & Miller, 2006) by the Human InteractionResearch Institute (HIRI), and then by“snowballing” – asking interviewees to nominateothers they thought could contribute usefully tothe study. A representative sample was notintended, but rather a set of interviewees whohave long experience working with wealthyclients, and/or long-time experience observing thephilanthropic scene.

Such “greybeards,” to use one interviewee’s term,can more easily conceptualize principles ofpractice, comment on how advising fits into thelarger philanthropic context, and identifybenchmarks or good practices for further study.The advisors in this study (and the thoughtleaders as well) tended to be well-known to eachother and well-known in their communities. Theytypically obtained much of their business byreferral, and often were referred to (by each otherand by clients or community leaders) as “rolemodels.”

Some literature also was reviewed, particularly toprovide a richer historical and environmentalcontext about donor advising and its place in theoverall environment for American philanthropy(Ellsworth & Remmer, 2005; Gary, 2007; Hughes,2004; Ottinger, 2007; Remmer, 2000; Stone &McElwee, 2004; Williams & Preisser, 2007). Thisliterature included pioneering works on donoradvisors, plus other books and articles that touchon the subject. It also included study reports fromprevious HIRI research on such topics as donorlearning groups and donor practices ingrantmaking (Backer, 2004, 2006). Whereverpossible, writings of the interviewees werereviewed to supplement what was learned fromthe interview process.

The Psychological Point of View

This study was guided throughout by apsychological perspective on philanthropy and onthe donor advising process. Such a perspective iscritical because much of the work donor advisorsdo is inherently psychological – clarifying deeply-held personal values, identifying causes that mayhave personal meaning for clients, and dealingwith the complex human realities of familiesengaged in philanthropic activity.

For instance, many donors are shy aboutdiscussing money in general or their philanthropicactivities in particular, and must have assistance inovercoming that hesitance. As part of the processthey need to feel a certain level of comfort with theadvisor (related partly to the perception ofcompetence, but also partly to the perceivedpersonal character of the advisor).

Of course, there are many elements of donoradvising, especially those regarding wealthpreservation, growth and transfer, that are notpsychological in nature. Some aspects ofphilanthropic strategy are not primarily of apsychological character, such as setting up afoundation or a donor advised fund. But evenhere values and complex human nature weigh in.For instance, choosing a family foundation over adonor advised fund may have legal or taximplications, but may also reflect the donor’sgrasp of important psychological elements (e.g.,how much the philanthropic activity will allowreaching important personal goals and provideemotional fulfillment to the donor).

Only one advisor interviewed for this study hadformal training in psychology. A number ofothers regularly refer clients to psychologists,especially those with family systems training, whoare able to more effectively handle the complexfamily dynamics that surround family wealth andfamily philanthropy.


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Family systems psychologists have expertknowledge about how families function as a socialgroup, and about how life stages of individualsimpact the family. They work with families onpersonal issues, with family businesses, and withfamilies or their philanthropic institutions (like afamily foundation) on philanthropic issues.

Many other advisors, while not trained inpsychology, nonetheless have considerablesophistication about psychological concepts andapply them to work with clients. These dynamicsoften center on family issues which reachexpression in discussions (or conflicts) aboutphilanthropy, but which reach far beyondcharitable decision-making. They may focus onexpectations family members have aboutinheritance, sharing of power, partnership withother family members, and many other issues.

The family dynamics of wealth managementconstitute a whole separate field of practice,including but extending far beyond philanthropy.Hughes (2004) sees philanthropy as the family’ssocial capital, helping family members, isolated bytheir wealth, to connect with the larger issues ofthe world and find a place in it.

Philanthropy includes not just giving of money,but of time, reputation and intellect as well. And“family” may mean not just children but siblingsand other relatives, life partners or even friendsand employees of the wealthy individual.

The “viewing lens” of psychology was aninstrumental part of this exploratory research.The study’s authors are both licensedpsychologists, and so brought this point of view toboth how study questions were defined and howthe results have been interpreted. Though bothwere trained as clinical psychologists, thepsychological perspective referred to here is notabout psychopathology, but rather about complexdynamics of individuals and groups as they affectthe donor advising process and the shaping of aphilanthropic strategy.

Advising on philanthropy is an intimate activity,because it requires sharing of personalinformation about values and hopes. Oftenphilanthropy begins with the honoring ofsomeone who has recently died, which sets upother possibilities for psychological complications.Of course there are wide differences, as we willsee, in how donor advisors do or do not deal withthese potentially uncomfortable subjects.

One of the authors also has specialty training infamily systems, and this area of psychology hasparticular relevance for the donor advising field,because so many philanthropic activities involvefamily members and their interactions. This alsorepresents a point of view brought to the study:that understanding and skills in working withfamily dynamics is critical to success in donoradvising, and that these skills are learnable.

Again, this does not always mean formal training,as the backgrounds of many intervieweesindicates, but it does mean the commitment topaying attention to family issues as part of theadvising work. And as will be discussed later, asthis field grows, development of more formaltraining on psychological aspects of advising ingeneral and dealing with complex familydynamics in particular, will be critical toimproving practice.

The other author has conducted research onvarious aspects of philanthropy, particularly thoseinvolving foundations. In these realms,philanthropy also has important psychologicaldimensions (Backer, 2004). Since their financialresources are small compared with government’s,foundations stimulate change through the leveragethat comes because they can use resources withfew constraints, and, through the ability to convenethe community for planning or action-taking.

Perception and persuasion are bound up in boththe leverage and convening processes, sophilanthropic strategy is inherently psychological,from the era of Rockefeller and Carnegie to today.Moreover, philanthropy is psychological because


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both foundations and individual donors can setany “bottom line” they desire.

History of Donor Advising

There have been donor advisors as long as therehave been donors. Many advisors in history werenot so designated, and did their philanthropicadvising in the context of another role, for instanceas advisors to royalty or religious leaders.

Probably the first well-documented example of aphilanthropic advisor is Frederick Gates, who wasengaged by John D. Rockefeller Senior to help himmanage his philanthropic activities in 1891. Hecontinued this expansive role until 1923. Gateswas a Baptist minister, and got acquainted withRockefeller when he helped reorganize theUniversity of Chicago, under funding Rockefellerprovided.

Gates worked with “Senior” and a handful ofother people to manage one of the world’s greatfortunes, and also helped Rockefeller shape anenduring philanthropic legacy. That includedboth assistance with individual philanthropicdecisions and setting up infrastructures like theRockefeller Foundation. Gates stayed on to helpRockefeller with philanthropic decision-makingafter he left his job as business advisor. Part of hisphilanthropic influence stemmed from hisbusiness acumen; he was, according to Mr.Rockefeller, “the greatest businessman ever”(Baick, 2004).

While advising to wealthy donors has continuedsince the time of this early example, most of it hasbeen quite low-key. Each of the categories ofdonor advisors studied here has a long history,and some of our interviewees have themselvesbeen doing this work for more than 30 years.However, many of the advisors and advisoryfirms focused on philanthropy in particular aremore recent in origin, at least for the samplestudied here.

A new wave of activity in donor advising ishappening just in the last several years. This hasmeant tremendous growth in the number of bothindividual consultants and firms. The number ofhigh-net-worth and ultra-high-net-worth donorshas grown, and so has interest in philanthropy byliving donors (stimulated in particular by therecent $30 billion gift made by Warren Buffett tothe Gates Foundation).

This will only increase, as the projected $12 trilliontransfer of wealth in the U.S. occurs over the next15 years, including $2 trillion earmarked forcharitable contributions (Social Welfare ResearchInstitute, 1999). A transfer of as much as $41trillion has been anticipated by some observers.

On the larger front, there has been a more generalgrowth of infrastructure for philanthropy since the1980s. As the number of foundations in the U.S.has increased greatly, many associations andresource organizations have sprung up to supporttheir needs. So too have organizations supportingthe networking and learning needs of individualphilanthropists.

Two studies of American donors’ philanthropicbehaviors shed some preliminary light on thetopics of interest for this research. First is a studyof donors in California (Stone & McElwee, 2004),which interviewed 32 donors about what theywould like to enhance their philanthropicactivities. These donors were willing to pay forlegal and financial advice, but were reluctant topay for philanthropic advising because they didnot believe that the “feel good” activity ofphilanthropy required this sort of professionalinput – and that money spent on donor advisorswould then be unavailable for direct charitabledonations. Moreover, because there is so littletraining or certification for philanthropic advisorsat present, the donors interviewed in this studysaid they had difficulty determining whichadvisors had competence to assist them. In somecases, this increased their reluctance to useadvisors.


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The second study, funded by the Bank of Americaand conducted by the Center on Philanthropy atIndiana University (2006), involved a much largernational sample of 30,000 high net-worthhouseholds in the U.S. They found that a numberof donors do consult advisors:

* 41.2% - fundraisers and nonprofit staff* 35.9% - peers or peer networks* 26.6% - accountants* 16.6% - financial/wealth advisors* 16.4% - attorneys* 15.2% - foundation staff* 12.3% - others* 8.7% - bank or trust company staff* 7.1% - brokers* 3.7% - executive coaches

These results provide the best platform againstwhich to evaluate the results presented here. Theysay that a significant minority of donors in theU.S. (especially high net-worth donors with morethan $200,000 in annual income or assets of morethan $1 million, about 3.1% of the totalpopulation) do frequently consult with others onphilanthropic issues.

All of the categories studied here except familyoffice managers and specialized philanthropicadvisors are represented in this sample. It alsoshould be noted that the Bank of America studycasts a fairly wide net, rather than restricting theirsample to the ultra-high-net worth donors whoare the typical clients of many of the intervieweesin this study (they most often are clients with $50million or more in investable assets).

Interestingly enough, the only research identifiedthat specifically focused on donor advisors wasconducted in Australia (Madden & Newton, 2006).Based on responses of 115 professional advisors,the study shows a marked increase in interest toprovide philanthropic advice over advisorsqueried in 2002. An increase in the number ofadvisors actually consulting on philanthropicissues also increased significantly, as had theirwillingness to raise this topic with clients. The

researchers are about to conduct their third surveyof advisors.

Definition of Philanthropic Strategy

Strategy is defined in the business world asoperating an enterprise by defining mission andvalues, setting forth a plan of action, andmeasuring outcomes to see if the mission isachieved. Bolduc et al (2007), in a study of howfoundations use strategy, refer to “a frameworkfor decision making that is (1) focused on theexternal context in which the foundation worksand (2) includes a hypothesized causal connectionbetween use of foundation resources and goalachievement” (p. 2). Their research determinedthat while some foundations are quite strategic,many foundation leaders do not use strategyconsistently in their organization’s philanthropicwork.

In discussing activities of individualphilanthropists, Brest & Harvey (2008) assert thatstrategic philanthropy is about maximizing the“social return on investment,” and that strategy isa design for achieving this goal. Helping donorsto understand these concepts and to apply themcorrectly is an important part of the work of donoradvisors, they say.

The interest in this study is in more than“checkbook philanthropy,” or setting up afoundation or donor advised fund primarily fortax purposes. Donor advisors can help with theseperfectly legitimate tasks, of course, but the focushere is on advising that helps donors with the “artof strategic giving,” as it is termed by Frumkin(2006).

Definition of Donor Advisors

The seven types of donor advisors interviewed inthis study are defined as follows:

* private bankers - private banks are units ofbanking institutions that provide morepersonalized and extensive services to wealthy


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clients. Most US banks now have a privatebanking division intended to attract high-net-worth clients. Banks also have philanthropicdivisions that manage philanthropic assets of bothindividual and institutional clients. They oftenget referrals from other parts of the bank withexisting clients, including the private banks.

* trust and estate attorneys - these attorneys helpclients prepare the legal path for passing theirestate along to heirs or to philanthropic causes, orboth. They prepare wills, set up trusts andprovide other legal services, all of which can havephilanthropic implications. Legal practitionersincreasingly see these relationships aspsychological in nature, as indicated by theexistence of an American Bar AssociationCommittee on Emotional and PsychologicalAspects of Estate Planning.

* accountants - accountants and accounting firmshandle the tax reporting and financialmanagement needs of wealthy clients, which mayagain bring them into contact with philanthropicinterests and activities.

* wealth managers - both individual advisors andlarge financial institutions take “assets undermanagement” from wealthy clients, helping themmake investment decisions intended to preserveand grow their fortunes. They may also providephilanthropic advice, especially where this mayhave implications for wealth management.

* philanthropic advisors - these individuals andfirms specialize in advising wealthy clients ontheir philanthropic activities, helping them designand implement philanthropic strategies, learnabout charitable causes and about the process ofphilanthropy, and network with other donors andthe larger nonprofit community.

* family office managers - increasingly, wealthyfamilies have their investment, financial andaccounting needs handled as a group by a familyoffice (the model for this is the Rockefeller FamilyOffice which has existed since the 1920s). Family

offices also may provide advice about or directlytake on the management of the family’sphilanthropic enterprises.

* institutional development directors - bothuniversities and large nonprofit organizationshave staff whose job it is to recruit donors to giveto the institution. Often these developmentdirectors serve as philanthropic advisors towealthy individuals who are the institution’smajor donors.

This is an exploratory study, so no pretense thatall categories have been included. For instance,the study did not include financial planners, asinitial information seemed to suggest that theseprofessionals work less with high-net-worthclients, who are more likely to have financialplanning included as part of services in othercategories, but this may not always be true. Norwere staff of family or community foundations,whose advice is focused on grantmaking, thoughof course they may also provide more generalguidance on philanthropic strategy (and bothwould be good subjects for an expanded inquiry)

Also, the study did not include family systemspsychologists, family wealth consultants, or familybusiness consultants, all of whom frequently playa role in the shaping of a wealthy donor’sphilanthropy. One interviewee was included whoadvises on issues related to publiccommunications about the donor and his or herphilanthropic work, but advisors offering othertypes of specialized expertise were not.

Still, the array of donor advisors interviewed isquite broad, as are the backgrounds and contextsin which they provide philanthropic advice:

1 - Some of those interviewed are individualpractitioners, some part of small boutique firms,some part of large professional practices or hugecorporations.

2 - Advisors in fields like banking, law, accountingand wealth management (including the wealth


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management function of family office managers)are to some extent regulated by law. However,philanthropic advising is not regulated, and thereare no restrictions on who may provide advice inthis area.

3 - Many if not most wealthy individuals havemore than one advisor, each of which may beproviding elements of philanthropic advice. Thismay include more than one private banker orwealth manager, “sharing the wallet” of a wealthyclient.

4 - Some advisors have specific ties (or at leastinformation about) particular religious groups,take a progressive or conservative socialviewpoint, or are focused on a particular cause, asare the donors they work with. Many are specificto a particular geographic area.

5 - The advisors come from a broad range ofpersonal and professional circumstances. None ofthose interviewed were originally trained to bedonor advisors, all had done (or continue to do)other types of work in addition to the advisingwork.

6 - They come from a variety of family andreligious backgrounds. In some cases, thispersonal background influenced both theirdecision to do donor advising work and how theyshaped their practice. Some of those interviewedhad an academic background (historian,medievalist) that they felt helped to develop theskill set needed to do this kind of work. Othershad previously been school principals, businessexecutives, entrepreneurs, or foundation directors.

7 - Advisors often have taken multiple paths to getto their current work. For example, one was a taxattorney, turned investment advisor, turnedChartered Financial Analyst, turned philanthropicadvisor with a Certified Advisor in Philanthropydesignation.

Definition of the Larger PhilanthropicLandscape

Individual donors and families, and the advisorssupporting them, are just one part of the overallphilanthropic infrastructure in the U.S. Thisinfrastructure also includes private, family,community and corporate foundations. And itincludes various instruments individual donorscan use in addition to setting up a foundation -various types of trusts, donor advised funds (bothat community foundations and private financialinstitutions), and instruments provided by bothsome philanthropic advisors and by intermediaryorganizations.

Increasingly, donors (especially those in the ultra-high-net worth category) may have a portfolio ofphilanthropic instruments, as already mentioned.Nonprofit organizations, including intermediariesthat help to bring together work in a particularfield, may also serve in an advisory role withwealthy individuals, helping them to makephilanthropic decisions.

Professional and trade associations exist for eachtype of advisor, including a few orientedspecifically to philanthropy, or even to donoradvisors. For example, the Seattle PhilanthropicAdvisors Network (SPAN) brings together donoradvisors in the Seattle region, for educational andnetworking events. A recent meeting of thisgroup featured Bill Gates, Sr. as a luncheon guestspeaker.

Peer networking organizations are becomingincreasingly common for learning and giving forwealthy individuals – many of which were startedby individuals of wealth. They help donors learnabout causes, learn about the role of philanthropyin family life, and learn about strategies for giving,including collaborations. Giving circles, althoughfocused on combining philanthropic resources,also can serve an educational function for donors.


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Other parts of the philanthropic universe includeacademic organizations studying philanthropyand independent researchers on the same subject.The Center on Philanthropy at Indiana Universityhas a graduate degree program in philanthropy,though this is more for training of academics thanpractitioners. In addition, there are a few entitiesoffering training specifically in philanthropicadvising, often through limited, one-shot seminarsoffered by financial institutions such as banks.

New models of philanthropy are emerging all thetime. For example, the Pew Trusts, originally agrantmaking foundation, recently converted intoa public charity so that it can receive funds from avariety of donors and collaborate with them onprojects. Pew now will design a philanthropicprogram specifically for a donor-client, or willoffer opportunities for a donor to invest inprograms they already have operating, throughpooled charitable investments.

Some geographical environments are richer thanothers. In the Pacific Northwest, for example, theresources are very extensive. There is a strongcommunity foundation with tremendousoutreach; there also is Social Venture Partners (oneof the first and the most effective giving circles),the Women’s Foundation (which has its owndonor education program); and individualconsultants such as Frank Minton, a particularlywell-known philanthropic advisor. There is anetwork of CPAs and financial planners, and therealso is the Seattle Philanthropic AdvisorsNetwork, mentioned above. Other resources inSeattle include the Washington Planned GivingCouncil, and Philanthropy Northwest, thenetworking organization for foundations in theareas.

Study Findings

The 75 interviews conducted for this study tookplace between February 2007 and January 2008.As mentioned, most were done by telephone.Interviewees were promised that they would notbe identified by name in any of the results

presented, but that they would be acknowledgedcollectively in a list of interviewees (given at theend of this report).

Analysis was undertaken independently by thetwo researchers, identifying major themes,recommendations and best practices that thenwere woven into the study report. All conclusionsand themes are very tentative because the study’sinterview sample was both small andopportunistic rather than representative. Theresults are just beginning to delve into thecomplicated practice of donor advising aboutphilanthropy.

To increase the accuracy of the findings andconclusions from them, interviewees were allprovided with a draft of the study report for theirreview and commentary, and their input wasincorporated into the final version. Responsibilityfor all interpretations made, of course, rests onlywith the study’s authors.

A total of five major findings emerged from thestudy:

Theme 1 - Effective donor advising takes manyforms, but has four common elements and eighttypical activities

Theme 2 - Donor advising in the U.S. is a fast-growing cottage industry which has not yet fullydeveloped a business model


Theme 4 - Providing opportunities for donorlearning is an important part of donor advising

Theme 5 - Donor advisors can help in promotingdonor collaborations

Each of these is discussed separately in theremainder of this section of the study report,including quotations from the 75 interviewees.None of these quotes are attributed, sinceinterviewees were promised anonymity.


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Theme 1 - Effective donor advising takesmany forms, but has four core elements andeight typical activities

There was a remarkable consistency amongst the75 interviewees about the core elements ofeffective donor advising. Though these tookdifferent forms for different advisors, in both theirdepth and formality, all figured importantly in thework of the advisors we interviewed. The fourcore elements are:

* building trust between advisor and donor

* finding a psychologically-based understanding ofdonor intent and behavior

* drawing on knowledge and experience withphilanthropy, the nonprofit sector and the community

* doing skillful research to provide data for donordecision-making

The donor advisors interviewed interact with theirclients on some or all of the typical activitiespresented below, each of which is expressed herealso as a question the donor asks him or herself,and which the advising process helps to answer:

* financial assessment - do I have the financialresources to be philanthropic?

* values clarification - what deeply-held valuesguide my philanthropic desires?

* family involvement - how and to what extentshould my other family members be involved, andhow are they likely to be impacted byphilanthropy?

* structure - what philanthropic instruments fit mytax, financial and legal circumstances (as well asmy values), and how will the instruments I choosebe created?

* actions - what grants will be made or otheractions taken to fulfill my plans?

* learning & peer networking - what opportunitiesare there for me to learn more about philanthropy,either from direct experience or from interactionwith peers?

* collaboration - what opportunities are there for meto collaborate with other donors or foundations,and what are the advantages/disadvantages ofdoing so?

* evaluation - how do I define and measure thesuccess of my philanthropic activities?

These can be considered the activities most likelyto be engaged in by donor advising onphilanthropy. Advisors might provide input ononly one, on some or on all of these. In somecases, different advisors may provide input ondifferent elements.

Beyond this, there is a great range of practice. Forexample, some advisors are pro-active – they reachout to their clients to discuss philanthropy as anoption, as part of financial and estate planning.Others are largely reactive. Such advisors respondto a client’s expressed desire to develop some sortof philanthropic strategy, but do not bring up thesubject unless the client does (philanthropicadvisors are engaged only if philanthropy alreadyis expressed as a client’s desire, but they too candiffer in their degree of pro-activeness withclients).

Many interviewees reported conducting orobserving advisory work that focused only onfinancial, legal or fundraising issues, even whenmention was made about “helping clients leave alegacy” or otherwise engage in philanthropicendeavors. Many others reported being deeplyand actively engaged in helping to shape clients’philanthropic strategies.

Finally, advisors focus on whatever is the nature oftheir practice – legal, financial, fundraising orphilanthropic (the four types of activities thatwere the concentration of this study). Theinterviews revealed a great range of styles andspecific methods used to carry out that focus.


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For the pro-active advisors, or for the reactiveadvisors whose clients ask about philanthropy, thesteps that follow may be small and informal, orlarge and overtly strategic. In many cases, thewhole purpose of the donor advising is to helpdonors become more strategic in their giving.Said one advisor: “We turn them from accidentaldonors to intentional philanthropists” and anothersaid “We move them from checkbook to strategicphilanthropy.”

Each of the four core elements and eight typicalactivities will now be discussed separately.

Core Element 1 - Trust The single most common word people used todescribe the source of success in donor advisingwas trust. This was true no matter the type ofadvisor, or the type of advising work being done.Based upon personal relationship, referral fromtrusted others, and/or community reputation,advisors who can generate a trustful relationshipwith their donor clients have the psychic rawmaterial to develop an effective advisingrelationship. Sometimes the trust factor is also afunction of social familiarity – people who comefrom the same social milieu as the donor have anedge in terms of a “looks like us” sort of trust.

Often the trust has developed through somespecific activity the advisor completedsuccessfully for the donor. For instance, a trustand estate attorney who’s done a good will ortrust, a wealth manager whose investments haveperformed well, a banker who provides financialinformation or services – these, said numerousinterviewees, help to create a climate of trustwhich can generalize to asking the advisor forphilanthropic advice and action.

There were some caveats. People who are trustedare not necessarily competent, said a number ofour interviewees. Once trust is established,donors are inclined to take advice even though itmay not in fact be coming from well-informed,experienced judgment on the part of the advisor.

This may particularly be a problem for advisorswho are truly quite expert in legal or financialmatters, but don’t have a background inphilanthropy. They may have entirely honorableintentions, but not know the “edges of their owncompetence,” to use a term of Berkshire-Hathaway’s Charles Munger.

Moreover, many donors don’t have thebackground to judge competence so they mustrely on whom they trust. Said one interviewee:“What’s troubling is that people of wealth have noidea how to set things up – they find their way toan estate planner or attorney they trust, but whodoesn’t explain all the complexities or regulatoryburden and they are often frustrated later.”

Another interviewee provided an example: “For awealthy retired physician, an accountant set up afoundation. But the physician didn’t really haveenough money to do this, and as a donor was notinterested in that kind of more engagedphilanthropy.” Thus, the foundation was not asuccess, and the donor’s philanthropic ambitionswere somewhat thwarted.

Also, there is some suspiciousness of advisors whocharge fees for their philanthropic services. Somewealthy individuals, interviewees said, areperfectly comfortable paying for legal or financialadvice, but not for philanthropic input, which theysubjectively feel should be free.

For those advisors not specializing inphilanthropic advising, the provision of somephilanthropic input may be done without fee, butthis is changing as the demand for this serviceincreases. It also is changing as both advisor anddonor begin to understand better how complexeffective philanthropic advising can be.

On the other side, there is legitimate self-interestfor advisors, who are professionals rightlywanting to be paid for their services, but also apotential for exploitation. Several intervieweessaid donors should always ask: “whose agenda isit?” when talking with an advisor.


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Core Element 2 - Psychologically-basedunderstandingThe foundation of the donor-advisor relationship,and one of the wellsprings of trust within it, is thedevelopment of a psychologically-basedunderstanding by the advisor of the donor’sneeds, aspirations and complex relationship tophilanthropy. Interviewees indicated that creatingsuch an understanding requires a number ofactions:

1 - The advisor must enter the relationship as a“deep listener,” as one interviewee put it. Theyneed to go deeply into helping clients understandtheir values and passions. Listening sets up all theother aspects of good understanding. Theisolation sometimes experienced by the wealthymakes this even more important. For someclients, as one interviewee said, “They don’t talkto each other even if they are socializing orplaying golf, though they may exchange stories.”In addition to listening well, the advisor needs tolearn not to be afraid of silences, which can befollowed by particularly valuable input when thedonor does finally speak up.

2 - There is a need to meet clients “where theyare,” at whatever level of investment in andunderstanding of philanthropy they currentlyhave. Pushing clients beyond these limits is notlikely to turn out well, some intervieweesemphasized, even if the client initially may acceptthe pushing!

3 - The process of working with donors thus needsto be custom-tailored to each donor and theirparticular circumstances, at a particular point intime – especially where psychological matters areconcerned. As more than one interviewee said,this mitigates against pre-packaged approaches todonor advising, though some basic processes maybe routinized across clients.

4 - Change happens within the context ofrelationships, so advisors need to build thatrelationship prior to suggesting significantchanges.

5 - As with counseling or psychotherapy (or legaland financial advising not focused onphilanthropy), there is an obligation not to createdependent relationships. Good advisors, manyinterviewees insisted, set limits, sometimesincluding limits on how long they will work witha donor before insisting that the donor functionwith some independence. However, someadvisors reported working successfully withdonors for years, even decades, in the context of ahighly trustful, evolving relationship.

Trust is needed because money is involved – mostwealthy individuals have had some negativeexperiences in how their money has been handledby various professionals, up to and includingoutright fraud or thievery. As importantly, moneyis a sensitive topic for many individuals of wealth,and often they are quite shy about discussing it. Atrustful environment makes it easier to have anhonest, open discussion about philanthropicmatters that also involve money.

Moreover, many wealthy people are apprehensiveabout asking questions concerning philanthropy.They are accomplished individuals who don’twant to look stupid or uninformed. An advisoralso can create an atmosphere in which the donorcan feel more comfortable in being vulnerable inthis way. To use the words of one interviewee:“There is a general emotionally placed sense thatdonors have. Doing good is who they are as aperson so it should be easy. There then is a senseof guilt or shame if they can’t figure out how to dothis on their own. They can feel like they’re not agood person or not competent. This then becomesa failure of character not just a failure ofcompetence.”

Psychologically-based understanding by theadvisor requires understanding the family as wellas the individual donor. This means getting toknow the family history and dynamics. It alsomeans measuring the desired level of involvementof family by the donor. There are some specificissues related to how to get children or otherrelatives involved in the philanthropy.


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There often is a simultaneous wish to dophilanthropy well and to have an impact, and atthe same time make philanthropy a core part ofthe family identity, their time together and theirrelationship. These motivations are not mutuallyexclusive, but they need to be managed carefully.

One of the ways to have impact is to focus thephilanthropic activity on certain problems orpopulations. As several interviewees pointed out,if the donor is honestly trying to be inclusive offamily members, this may be difficult.

A family systems background, as defined earlier,can contribute importantly to doing this part ofthe work Interviewees said that it is important forall types of advising, such as estate planning, notjust for philanthropy. Several interviewees hadformal training in that area, but until recent yearsthere was no place to get such training, and thereis not now in many geographical areas.

In particular, family systems training can helpadvisors better understand and deal with thecomplex family process around working togetherand making joint decisions. A lot of philanthropygets sidetracked because family members can’twork together. The effort to give stalls, doesn’twork well or a strategic plan is difficult to setbecause of these interpersonal and family dynamicproblems. The clinical resources to help familieswith this too often are not brought in to theadvising process if the advisor does not alreadyhave this skill.

Money is still a taboo topic of conversation inmany families. There is a need to create a safeenvironment in which people can talk aboutvalues, money and financial decision-making.This will enable them to better get to thecontradictions and the emotional complications.There also needs to be recognition of diversity ofvalues in the family, and acknowledgment ofpainful experiences the family may have had inthe past (as well as times they have supported andsustained each other, creating interaction patternsthat can be drawn on in a healthy way).

Sometimes the advisor will have to handleconflict. One advisor was involved in a familywhere war broke out late in the life of the donor.He created a second foundation, but there was alawsuit and a court split up the assets. Then anew infrastructure was set up, one with publictrustees not family members for the foundation,and a much simpler infrastructure to guide thephilanthropic activity.

Also, at times personal issues interfere withphilanthropic strategy or even create it. Theexample was given by one interviewee of awoman donor who created a foundation becauseshe didn’t want to leave money to her estrangeddaughter!

And sometimes advisors have to “clean up a lot ofmesses” in an existing philanthropy (to use thewords of one interviewee). Mistakes may havebeen made by the donor or by a previous advisor,and remedial actions are needed to get thephilanthropic activity on a firmer footing. Thisalso has to be done sensitively, so as not to “trash”the previous advisor (in many cases these areattorneys, accountants or others who continue towork with the donor, even if not in aphilanthropic capacity), or the donor themselves.

In at least some cases, donors (and some advisorsalso) come to philanthropic work with a certainlevel of mis-trust and disdain for the nonprofitsector. They see nonprofit organizations asinefficient and their impact as much less thanwhat they desire. As a result they tend to focuson due diligence instead of strategy, because theyare convinced that nonprofits are “inefficient,incompetent and unethical,” to use the words ofone interviewee.

There are also differences in these psychologicalelements between generations (the so-called “G1,G2 and G3,” with G1 being the wealth creatorsand then the successive generations thereafter,who are the wealth builders and maintainers).Some advisors developed their practice workingwith Depression era clients or Greatest Generation


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clients. Their perspective on giving money awayis very different than that of younger clients (e.g.,a focused desire to “give back” to the country thatprovided them with opportunities), and advisorsneed to make that adjustment if their workincludes a broad range of age groups.

Today, many interviewees emphasized, gettingpeople to give money while they are living is nolonger as much of an issue. As one intervieweesaid: “We don’t need to talk them into anything,but we do need to help them figure out how to doit.” In many cases clients have become quitesophisticated; they know what the issues are andwhat kinds of investments they’re interested inmaking. The nature of the consultation they seekfrom advisors changes as a result of this increasedsophistication.

Part of psychological understanding is recognizingthat donors’ motives may shift, sometimesrepeatedly. A good advisor has to understandthat donor motivations are not stable, andsometimes are deeply conflicted. One intervieweereported working with a donor for eight years.Because the donor’s motivations and actionsshifted so often, at the end of that time the advisorfelt less sure of the donor’s underlying motivesthan did other advisors who came in and had oneconversation with the donor.

On the more positive side, many donors have areal learning curve over their philanthropiclifetimes. This has been discussed in biographiesof wealthy people, and also in philanthropicwritings. For example, Andrew Carnegie changedhis views about philanthropy over a 20 yearperiod, as have many others. The good advisorhas to establish where the donor is on thattrajectory of learning and try to guide progress tothe next steps. This may lead from an initialdefinition in the donor’s mind, to something thatcan be expressed and even put into writing.

There is a psychological side for the advisor too.For example, donor advisors must be able to workwith powerful people who don’t necessarily know

much about the subject on which they’re seekingadvice, and they must be comfortable with therealities of great wealth and power. Someinterviewees said that this is not work that suitseveryone, and that psychological comfort with theworld of the wealthy and the lifestyle that goeswith it is essential to success.

Finally, donor recognition is a psychological issueadvisors sometimes may need to confront. Somedonors desperately want to be recognized in apublic, and symbolic way, for the gift they havegiven. Others are just as strongly motivated toremain anonymous, or at least to be recognizedvery simply. Advisors need to address this issuevery sensitively, and respect the donor’s desires.

Core Element 3 - Knowledge and experience Advisors of course need expertise in their primarydomain of advising. The concentration in thisstudy is on philanthropic knowledge andexperience. The main areas of expertise neededare in (a) forms of philanthropic vehicles, (b) thenonprofit community, including appropriatecharities for investments and how philanthropicchoices relate to legal and financial choices (and todonation decisions in the case of fundraising-based advisors), (c) the process of planning, and(d) the social and family contexts of wealthydonors.

Many interviewees were concerned that advisorsoften lack one or more of these areas of knowledgeand experience. One observed: “I don’t see peoplegetting the whole continuum of information theyneed to make decisions, especially aboutphilanthropic vehicles.”

This may mean that a donor will get differentopinions from different advisors. A communityfoundation will give one message regarding donoradvised funds; attorneys another aboutfoundations; wealth managers about investmentproducts that they have a stake in selling them;and so forth. What people need, said anotherinterviewee, is “a full range of value-neutraloptions.”


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This has practical consequences that can affectphilanthropic performance. Said one interviewee:“A lot of people say they are in a giving vehiclethat doesn’t suit them,” an intervieweecommented, but “they don’t know how to makethe switch, say from a donor advised fund thatdoesn’t give them much chance for input toanother vehicle that does.” On the other hand,donors need to know the complications of eachavailable vehicle. For instance, they probablyshould not start up a foundation unless they havea long-term view and want to be quite involved.

In short, because of the limits of input they receivefrom their advisors or other sources, “donors oftenhave to make the most important decisions withthe least amount of information,” in the words ofone interviewee. The effective advisor has “a lotof tools in the toolkit and can fit the tools to thedonor’s needs to help them make the rightdecisions philanthropically.” Also, effectiveadvisors know when to bring in other advisorswhose expertise is needed.

Core Element 4 - Skillful researchInformation both about structuring theirphilanthropy and about the nonprofits or issues inwhich they make investments is fundamental to adonor’s success. Good advisors are good thinkerswho can synthesize information about theinterests of their donor advisees – about thecharities they want to invest in, about issues theycare about, about the philanthropic vehicles thatare open to them, about how these relate to thelarger environment of their community or theworld.

Sometimes this information comes from some typeof systematic information-gathering the advisorundertakes on behalf of the donor. Oneinterviewee reported undertaking a months-longstudy of the particular institution in which thedonor was considering an investment, looking atits larger community context, what other funderswere supporting it, and how to leverage aninvestment the donor might make to enhancelong-term sustainability. Another talked about

hiring experts to conduct an environmental scanin the donor’s chosen topic area of interest, todetermine where the most strategic investmentcould be made.

Whether this research requires an informal inquiryor a formal study commissioned out to a third-party expert, skillful research is fundamental tothe effectiveness of most donor advisors.Advisors also need to be able to communicatewhat they learn so that their research can be usedby donors for good decision-making. Success mayinclude understanding the way in which thedonor absorbs information most effectively(written report, Power Point, verbal presentation,etc.).

Research skills advisors originally developed intheir previous lives in an academic institution canbe very helpful here. Several intervieweesoriginally were trained as historians, and havemade good use of that training in their donoradvising work. For them, research means morethan just the search for information throughreading, interviewing or site visiting. It meanshaving a permanent curiosity about the way theworld works, and the willingness to investigatehow the donor’s philanthropic objectives fit into alarger environment. The donor will make theultimate decisions, but having adequateinformation available can help to shape gooddecision-making.

The range of donor advising activitiesInterviewees tend to connect and work with theirclients in many different venues and styles.Referrals from other professionals are common, aswell as connections through business or socialrelationships. As one interviewee said,“serendipity has as much to do with it asanything.”

Frequently, donors will have done somephilanthropic work on their own before coming toan advisor. Sometimes their self-initiated effortsare successful and they approach an advisorbecause they want to build on that success. More


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often, interviewees said, donors come to anadvisor because their efforts (or those of aprevious advisor) didn’t work out so well, andthey are frustrated.

Often the advisory relationship begins without aspecific focus on philanthropy, and that developslater (though in a number of interviews hereadvisors were clear that they often don’t deal withtheir clients philanthropy at all). Thephilanthropic focus when it happens can rangefrom recommending a specific charity the clientmight find of interest, to suggesting an issue orcommunity that could be the aim of the client’sphilanthropy, to developing some sort of ongoingprogram. Strategy can be involved in even thesimplest activities, e.g., keeping a roster of all thechecks a donor has written.

Donor advising thus covers a great deal ofterritory, and “there is no generic version of aphilanthropic consultant,” as one intervieweeobserved. While some advisors look on“philanthropy as either a tax exercise or a threat tomaintaining the asset base” others see it as animportant aspect of the client’s life and goals, withaccording attention to it by the advisor. Therelationship is with the individual donor orfamily, even though a foundation or otherorganizational structure may be involved.

Some of the donor advisors interviewed had verylittle to do with philanthropy, and said so. Legaland financial advisors may simply not deal withclients’ philanthropic activities, and sometimesthis is because clients are not much interested inthem. In other cases, there is philanthropicactivity such as setting up a foundation for the taxbenefit it will provide, but little in the way ofstrategy other than being sure the foundationmeets its payout requirement and otherwise iscompliant with the law.

At the other end of the spectrum are not onlyadvisors specializing in philanthropic strategy, butalso some who work in full-service philanthropicfirms that also provide tax and legal advice,

investment management as well as guidance onphilanthropic strategy. Many donors have morethan one advisor. They might have an accountant,a trust and estate attorney, a wealth manager, abanker, and a philanthropic advisor.

Also, within a single organization there may bemore than one person serving a high-net-worthclient. One of the financial advisors interviewedasserted that in any community the banks andwealth management firms are all chasing the samehigh net worth and ultra high net worth clients.And these clients may diversify their financialportfolio, putting parts of their resources underdifferent firms so that the firms “share clients’wallets,” as one interviewee put it.

Examples of practiceTo provide a larger frame for the discussion ofspecific donor advisor activities that follows, hereare several examples of practice from the 75interviews conducted:

* One donor advisor reports she helps clients “dowhat they want to do” philanthropically across abroad range of intent and activities. This maymean helping her client develop grant guidelinesand structures for a new activity. Or it may meanrefining the directions and specifics of a long-standing charity.

She works to ensure the programs they want toestablish are actualized and accomplish what thedonors want. She does due diligence work,determining through a research process whetherthe charities her client is considering are goodones to invest in. She helped one client establisha foundation through which charitable workfocused on the international arena can be done.The advisor also smooths the way with relevantU.S. regulatory bodies to be sure that the money istransferred appropriately to charities in othercountries.

* Another advisor reports having developed a“philosophy of philanthropy” for clients thatresonates with a investment banking philosophy:


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- funding longterm- building relationships in a community- educating donors about the field in which they’regiving - helping donors become visible, “publicambassadors” to that field- creating a narrow focus for the work, e.g., “earlyintervention for mothers at-risk”- setting mission, vision, guidelines for that focus- bringing on smart legal and investment adviceto build a team for the donor

* An advisor sees philanthropic input coming inthe same form as help clients receive with theirinvestment portfolio, tax matters, and generalestate planning. It is driven by a customizedapproach to what the client needs. To learn aboutthose needs, the advisor has detailedconversations with the client, to determine bothexplicit and implicit goals. Says the advisor, “wehave thoughts but want to hear what the clientwants; we don’t do a pre-packaged approach, likedonor advised funds, for every client.”

* Another advisor sees her work as beginning withdialogues that identify the donor’s particularpassions and specific areas of interest. Then shehires a researcher to benchmark each field ofinterest – topics like mentoring of disadvantagedyouth, preventing diabetes, etc. Next, she bringstogether experts to meet with the donors,including both content experts and other funders.Finally, at the end of this process she helps thedonor identify where are the gaps and where thedonor might make the greatest difference. Thisleads to the development of a strategy that can beimplemented with specific philanthropic activities,and to the creation of one or more philanthropicvehicles (foundation, donor advised fund, trust,etc.).

* “All families are unique,” an advisor says inspeaking of his work with clients. A portion of hisclient base does nothing in philanthropy, so hesimply mentions philanthropy as an option forestate and tax planning. Some clients say “I’vejust made $5 million and I’m still churning very

hard so philanthropy isn’t a goal right now.”Then there are clients in the middle, who “want adonor advised fund but pretty plain vanilla,”which they appreciate largely for the tax impact.And then are the other end of the spectrum areclients who spend the majority of their time doingphilanthropic work.

* Another advisor’s new client focused a high levelof importance on having a family meeting, todetermine how the donor and his spouse couldbest engage their children in philanthropicactivities. After the meeting, the advisor workedwith the donor to put together a mission statementfor this purpose. Added to that was aphilanthropic strategy the advisor created, onethat respects the individual goals and preferencesof each family member.

Examples of how strategy is addressedInterviewees frequently mentioned that they try toeducate their clients about the advantages ofhaving a strategy to focus their philanthropy. Saidone: “Our donors are on the cusp - we turn themfrom accidental donors to intentionalphilanthropists.”

Out of the basic strategy may come not onlyspecific charities, issues or communities to focuson, but also the desire to do research (or have theadvisor do it), make site visits, and otherwisebuild the knowledge base on which goodphilanthropic decisions can be made. Everybodycomes in at a different point of maturation andexperience, but in most cases some sort of valuesclarification across generations can help identifycore giving areas of interest.

These are then put into the larger context ofcharitable giving (both in life and in death) andgiving to heirs. As one interviewee put it: “We tryto focus and bring out people’s philanthropicintent, which they usually have but don’t knowthey have.”

Several interviewees emphasized that the amountof giving has to be of a certain size for it to make


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sense to create a detailed strategy. But given somesignificant level of resources, a written strategycan dovetail neatly with financial and estateplanning, e.g., about leaving a legacy. Some self-examination is usually part of this, so that thestrategy is informed by the person’s values.

Said one interviewee: “there is a general lack ofrecognition – not just among donors but amongmany types of advisors – about the value ofstrategy. There is a general sense thatphilanthropy consists of choosing a list ofgrantees.” Some advisors specifically ask theirclients if they are interested in knowing what theirimpact is, because if they say yes then strategy canbe discussed.

Often even very sophisticated donors don’t knowabout strategy and would “faint if they heardabout a theory of change and logic model,” as oneinterviewee expressed it. Advisors have to meetpeople where they are and define strategy interms the donor and family members canunderstand. Sometimes the advisor also needs towork with the donor to temper unrealisticexpectations about what they can accomplish orhow they can measure success. The strategy canthen be adjusted to align with these more realisticexpectations.

Typical Activity 1 - Financial assessmentTiming often weighs heavily in the developmentof philanthropy. Frequently, people come toadvisors because of a liquidity event in business,a serious health diagnosis of the donor, or thedeath of a family member and inheritance issues.Tax matters often underlie the urgency of seekingprofessional advice, with estate planning not farbehind.

Whatever brings the client in the door, one of thefirst steps is to determine “how much is enough”in protecting their assets and assuring that theclient’s current lifestyle can be maintained (or if areduction in lifestyle is needed in order to makeavailable the resources for meeting philanthropicgoals, determining that such a step is acceptable).

The whole financial picture is needed to make thisjudgment.

Often the risk is much less than the donor thinks,and they can give more than they thought theycould. Development of a financial modelrepresenting the client’s present and anticipatedfuture situation often is helpful in making thesedecisions. This exploration culminates in whatone interviewee calls “financial discernment” – aself-reflective clarification to determine howfinancially secure the clients is.

Advisors take the client through the numbers, andmeasure what’s needed to maintain a certaindesired lifestyle. Conservative projection ofexpenses then allows a determination of whatincome is available for philanthropy, and whatimpact that will have on taxes.

As another interviewee said, “I have never met adonor who didn’t have a good idea what theywant to do. The real opportunities come when thefinancial threshold goes beyond what they can dowith the money they have to spend for legalreasons, so they need help in giving more away.This is when they get strategic.”

Typical Activity 2 - Values clarificationThe next step is to identify the values about givingthat are important to the client. This can involvedelineating specific philanthropic goals: forinstance, to differentiate between ameliorativesolutions and root solutions (which gets intopolicy and advocacy).

Values clarification sometimes involvesconstructing a kind of “moral biography” so thedonor can see the “big picture” of their personalvalues, partly by looking at how they’veimplemented them already in their lives (e.g., indifferent types of charitable activity - givingmoney, volunteering, etc.). This can be donethrough a biographical interview the advisorconducts, teasing out enduring principles fromamongst a lot of activities the donor has engagedin.


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There are other ways to clarify values, accordingto those interviewed. For instance, an advisor canask clients “who they admire and why.” Or theycan ask clients to tell them a story from theclient’s childhood that relates to some type ofcharitable activity in the family of origin. Or theycan ask the client: “If you think about what youheard on the news the last week what got yougoing?”

Some advisors create exercises for their clientsabout values, such as writing out a list of personalvalues that can then be compared betweenhusband, wife and children (see next section).Sometimes a visual exercise like “draw a familycrest” can be part of the process. And the advisormay ask the client to look at the milestones in theirlives. What do they remember as very deepexperiences for themselves?

A critical part of the donor advisor’s work is toreflect back to the client what they are saying.This serves both to refine donor intent and toidentify new areas for possible philanthropicactivity. The resulting “moral compass” identifiedrelates not just to philanthropic activity but tofamily values, business values and larger societalattitudes. Sometimes this is done by theindividual or couple separately, and sometimes itinvolves the entire family (See next section).

Said one interviewee: “we go through a scoping oran initial conversation over one to two days, to getpeople to sort out their priorities.” This involvestaking clients through an exercise of “thinking intothe future” – what would they like to see andwork backwards from that point. Twenty yearsfrom now, what would be the most importantchanges to see (improvements in education,poverty alleviation, and so forth)? From that theycan focus on one or more strategies they canexplore in more depth.

Advisors reported they encourage people to bedeliberate – to explore a field and find out whatthey respond to most (hands-on work in thecommunity with individual people, advocacy

work at a larger policy level, etc.) without makingtoo many commitments up front. This will help todevelop the ability to engage. Said oneinterviewee: “Donors often have a pretty clearidea of what they’re interested in but may haveonly superficial knowledge of the topic.” Theadvisor can find community settings in which thedonor can learn both about their interests andabout themselves.”

Ultimately, the biggest impact on donors inclarifying their underlying philanthropic valueshappens when they get out into the field and seethe reality of the people and environments theywant to affect. Thus many advisors try to arrangesite visits, sometimes with the donors remaininganonymous, and perhaps just participating asobservers at the beginning.

Typical Activity 3 - Family involvementThe next step is to determine whether and howthe family will be involved with the donor’sphilanthropic activity. One interviewee suggeststhat the process always “start with thefundamental values of the family. These can bemore successfully stimulated by an outsider; theyare more apparent from the outside looking in.”

Another interviewee emphasizes that “whenyou’re dealing with several family members thereis usually a dominant speaker, so I have toencourage the others to speak. Sometimes I willmeet with people individually because, forexample, the grandkids might have too muchrespect for the grandparents to speak up.”

In addition to looking for specific areas ofphilanthropic activity, this family discussion canfocus on the overall family legacy. Is this relatedto the source of the wealth to be distributed? Is itrelated to family background, culture, religiousvalues, etc.?

Sometimes, interviewees reported, getting familiesor individuals to make decisions can be a problem.There are so many choices about how and whereto give, and how to structure philanthropy, and so


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few constraints. And especially since firstgeneration wealthy individuals are often highlydriven perfectionist types, they may delay makinga decision for an unreasonable time because theywant to be sure to get it right. Then the advisormay need to provide some gentle pressure tomove ahead, even without complete information.

Typical Activity 4 - StructureNext, the advisor needs to sort through with thedonor (and the family) what the many options arefor structuring the philanthropic activity. Asmentioned previously, that means that advisorsneed to be well-informed themselves about theseoptions – foundations of different sorts,supporting organizations, donor advised funds,trusts of various types, funder collaboratives(giving circles, formal collaboratives, etc.),checkbook philanthropy, and so forth.

Interviewees had concerns in this arena. Somesaid that too many advisors are still trying to useold templates because this is what they know. Thedonor may not be satisfied with the results, andgoes to another advisor, but doesn’t givefeedback. This leaves the original donor advisorin a state of “happy incompetence” – noopportunity for learning how to do better.

For instance, one advisor reported that his clients“become more philanthropic after they have beenshown how to give as much as they have beengiving over time but with different assets in waysthat save them lots in taxes.” Charitable givingusing appreciated stocks or real estate, setting uplead trusts or other instruments that affect taxconsequences, and numerous other options can bepresented by a knowledgeable advisor for theclient’s consideration, also taking into account theclient’s personal and family values.

The unstructured state of the field of donoradvising of course has an impact on this. Sincethere are so few external standards and not muchformal communication about state-of-the-artpractice, there aren’t many ways for advisors tolearn how to do better in this technical realm.

Typical Activity 5 - ActionsOnce the underlying philanthropic structure hasbeen set up, more specific actions can be taken.The advisor’s role here is to provide counselaround technical issues – first, setting up all theprocedures by which potential grant recipientswill be evaluated (called “due diligence”), andsecond, setting up the structures by which actionwill be taken – how grants will be made, forinstance. This may include a number of actionalternatives, such as multi-year grants, capacitybuilding grants, operating support grants, grantinitiatives, Requests for Proposals, etc.

As one advisor said, this is a developmentalprocess: “We try to measure what is reasonable interms of scope, and not bite off more than thedonor can chew especially at the beginning. Wedon’t want people to be overwhelmed with toomuch information or too many grant proposals.”This advisor introduces clients to a small cadre oforganizations that might match their interests, andinforms them about the due diligence concept andhow it can be applied to each of these potentialrecipients. Later the base can be expanded as thedonor’s experience and sophistication increases.

One interviewee said of her firm: “Our hallmark isan understanding that this business is 10%inspiration and 90% process – having a wonderfulidea and terrific intentions but not implementingthem very well can be as forbidding to real changeas not having a wonderful idea.” This is wherestrategy comes in, to focus the actions and howthey are carried out.

Some philanthropic advisors will structure andalso may operate a system for philanthropic actionon behalf of their clients. This may includeserving as initial or even permanent executivedirector of a family foundation, or other activeroles. Sometimes it also includes proprietarysoftware for managing the “back office” of theclient’s philanthropy.

Finally, the advisor sometimes may serve as a“voice” for the client, representing them in their


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communities of interest, and with otherphilanthropic entities. This can be particularlyimportant for clients desiring to maintain a highdegree of privacy in their philanthropy.

Typical Activity 6 - Learning & peernetworkingAs the philanthropic strategy is set in place, manydonors are interested in learning more aboutphilanthropy, and about the environment inwhich it operates. Interviewees suggested thatthis learning process often has already begun inthe family and social context of the donor. Donorsoften report to advisors that they learned aboutphilanthropy by watching a parent, a friend,someone in their church or synagogue, or abusiness associate.

Learning experiences may range from providingspecific information on prospective grantees orcommunities, to more conceptual matters, e.g.,helping the client understand the different typesof outcome evaluation they may want to consider,depending on how much need they have foroutcome data and how they intend to use them.Often this education is experiential in nature,provided by bringing clients together with otherphilanthropists or philanthropic institutions toobserve best practices, by going out into the fieldon site visits, or connecting clients with peernetworking experiences as described below.

Collectively, these learning and peer networkingexperiences provided by an advisor constitute animportant source of capacity building for thedonor’s philanthropy, regardless of thephilanthropic instrument(s) in place. However,not all interviewees get involved in providing thisservice to their clients, even if they are offeringinput to them directly about how to structure theirphilanthropy. Some don’t have the contacts orbackground to do so, while others don’t see it aspart of their responsibility. Several intervieweesreported they see such activities as potentiallyintrusive, and that their clients prefer to search outtheir own learning experiences.

But a number of the advisors interviewed look onthe client learning component as a critical elementof the service they provide. Advisors developthese learning experiences through theirconnections with the community, and sometimesthrough the work they’ve done with other donors.

Frequently the most powerful learningexperiences are those that arise out of peernetworking. More than a few of the advisorsinterviewed see making “learning connections”between their donor clients and his or her peers asfundamental to the service they provide. Becausethese activities are the focus of one of the fivemain study themes, they will be summarized inmore detail below.

Typical Activity 7 - CollaborationTo extend the impact of their philanthropicdollars, many advisors will help their clients findopportunities for collaboration of some types.This may be with another individual donor, witha group of donors (e.g., through a giving circle orother instrument for joint giving), or with afoundation, government agency or corporation inthe community. The point is to leverage thedonor’s dollars. This is often done not justthrough conjoint giving but through using thedonor’s resources strategically to get others to givemore (challenge or matching grants, etc.). Again,because these activities are the focus of one of thefive main study themes, they will be summarizedin more detail below.

Typical Activity 8 - Evaluation Some donor advisors help their clients determinehow effective their charitable activities have been,and how they might be improved in the future.This may include an annual review by the advisorof all philanthropic dollars spent, or it mayinvolve an annual report on impact achieved fromgrantees.

In some cases the advisor may help the client setup an entire system for evaluation. As oneinterviewee described it: “We write software foreach client tailored to their philanthropic strategy


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so they can get statistics on how well they’redoing,” such as how many children were taught toread through a program the philanthropist funds.

The interviewees included a few who werecontrarians on the subject of evaluation. Oneadvisor does not encourage the push towardaccountability characteristic of many otheradvisors. Rather, she encourages a long-term viewof giving and returns, in which even an annualreview may not show the desired impact.

For example, one of this advisor’s clientsoriginally asked for quarterly reports from agrantee. They did not receive good reports. Thenthey tried to fund an organization, hoping otherdonors or foundations would join them, and leadto measurable results. This did not happen. Theyare now in the seventh year of their philanthropy,and now realize that measurable results are noteasy to ascertain. It may take years more to fulfilltheir goal.

This advisor tries to help clients be clear as to theirexpectations: what is achievable, and have realistictime horizons. The philosophy is that the donorcan be an equity investor and over time can havean impact. Frequently, it isn’t realistic to ask forresults on a yearly basis.

Particularly for complex problems, the advisorhelps donors put their giving into a larger contextin order to understand the impact of theirphilanthropy. The donor must understand thetime horizon, where the intervention is occurring,and aware what can be measured, and how theycan be held accountable. “Great dreams have nofear of time” was how one interviewee expressedit.

Personal background of donor advisorsAs already stated, advisors come from a variety ofbackgrounds. Not one went to school to study tobecome a donor advisor, and not one planned onworking with donors as a major professionalactivity (though some may have long-planned towork in the legal or financial field - it is the

philanthropy part of their career which appears tohave been unanticipated in every case).

Some donor advisors got involved inphilanthropic advising because their clients(initially focused on other subjects like estateplanning) asked them for assistance. Amongst thesample of advisors focused on philanthropic work,most had some prior contact with philanthropythrough foundations they worked for, or theirown personal philanthropy.

The latter constitutes a particularly importantelement that has emerged in this research. Thestudy included interviews with a number of dualpassport donor advisors. These are persons ofwealth who also provide professional service asphilanthropic advisors. They have made adecision about focusing their professional energieson helping other wealthy individuals, their peers,develop and implement philanthropic strategies.

These dual passport advisors are in a uniqueposition to generate trust, and to use their ownpersonal experience to guide the work they dowith donors. They can speak with an unforced,natural authority out of that personal experience,and it also provides them with a fund of contacts,examples and information.

However, as several interviewees stressed, a “dualpassport” does not guarantee that the person willdo good donor advising work. For example, aperson of wealth who’s had no personal or familyexperience with philanthropy, or any professionaltraining in advisory work, may be quite limited intheir philanthropic expertise (though they maystill have a perspective on other issues of wealththat give them something in common withclients). Nor does it mean those who do not comefrom such backgrounds can’t be effective. But thisis a special category and needs more study, as willbe recommended later.

There may also be strong connections between theadvisor’s personal and family philanthropichistory and their donor advising work – this too


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needs more study. For example, several of theadvisors interviewed indicated that their pro-active work with donors was the result, at least tosome extent, of early observations of philanthropyin the family household. Moreover, thatbackground had influenced them initially indeciding to go into donor advisor work as a majorprofessional activity.

Some donor advisors are not even clearlyidentified as such, but work informally behind thescenes, on a compensated or uncompensatedbasis, with wealthy individuals, sometimes formany years. One interviewee gave the example ofa foundation executive who also has served fordecades as advisor to one of America’s greatfamilies of wealth in designing and carrying outits philanthropic plans. Such informal butsignificant advising can have great impact, andalso needs further study.

Theme 2 - Donor advising in the U.S. is afast-growing cottage industry which has notyet fully developed a business model

Increased donor advising focused onphilanthropyDonor advising focused on philanthropy is acottage industry because the infrastructureinternally and externally is still limited. Somepractices or firms are set up formally and are well-linked to the larger philanthropic world. Othersare not.

Practice in this area is certainly fast-growing (thisis true of donor advising on legal, financial anduniversity/nonprofit giving matters as well, butthese were not the main subject of attention in thisstudy), because of several developments thatalready were mentioned in brief:

(1) the recent sea changes in the public visibility ofphilanthropy, particularly through the activities ofBill and Melinda Gates and Warren Buffett;

(2) the increase in the number of wealthy peopleable to give philanthropically (including the baby

boomers who will be initiating trillions of dollarsin wealth transfer in the coming years); and

(3) the increased demand for services as thesepeople realize their philanthropy can be moreeffective if it is professionally supported, just asinvestment management is.

Nonetheless, the overall state of development isstill fairly modest at present, despite this forces forrapid growth. As one interviewee put it: “As asector it is where doctors and lawyers were 150years ago.” The majority of people doing thiswork are financial and legal advisors who have notraining in philanthropy. If they have access tosomeone with a philanthropic background, saidan interviewee, some may ask “Teach me thebasics so I won’t look stupid.” In other cases,advisors are reluctant either to admit what theydon’t know or to reach out for expert consultation,so if a client asks them for philanthropic input,they’ll do their best on their own to provide it.

Several interviewees asserted that most people inthe financial industry are investment/asset typesand at present have no great interest in givingadvice on philanthropy. However, now that theirclients are beginning to demand such advice, thesetopics become more central to the successful clientrelationship. However, advisors are working hardto keep up with the non-philanthropic aspects oftheir work, so their responses to inquiries aboutphilanthropy may be tailored to the importance ofthe client to their practice or firm.

As assistance with building philanthropic strategyis increasingly seen as adding value, donoradvising is further being increased throughmarketing efforts. For example, in the programsof the Los Angeles Music Center throughout 2007,Wells Fargo Private Bank took a full-page adwhich invites clients to the private bank so theycan help “realize your philanthropic ambitions.”In other regions, Citibank, Chase and BankersTrust have taken similar ads. This increases thevisibility of donor advising, and it also increasesthe amount of actual activity.


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As already stated, this is mostly a business basedon referrals. Sometimes another advisor is thereferral source, sometimes it is a communityfoundation or other philanthropic institution.And in fact, referral is an element of professionalpractice for all advisors, one on which skilldevelopment and resulting expertise also isimportant. Growing practices and firms dependon healthy referral bases.

Also affecting the growth of the field are turfissues within larger institutions – who within thefirm does philanthropic advising, and how thiswork contributes to increasing revenues (assetsunder management, fees). Other turf issues arisewhen a donor has more than one advisor, as isquite common today among high-net-worthindividuals. Financial, legal and philanthropicadvisors may have somewhat different, perhapseven conflicting interests regarding the work theydo with clients, and these also have to be resolvedor at least aligned if effective service is to beprovided.

There is room for much more growth. Accordingto one interviewee, perhaps 85% of affluentindividuals have no vehicle in place forphilanthropy. Several interviewees commentedthat even for those who have a vehicle, it is oftenthe wrong one (for example, charitable remaindertrusts produce taxable income but many donorsdon’t need that; 80% of family foundations are lessthan $3 million in assets, which in mostcircumstances is simply too small to absorb theadministrative costs and still leave a good amountof funds for disbursement as grants – though thisis changing with the advent of administrativeservices like FoundationSource which provide theback office services cost-effectively).

The number of philanthropic advisory services isgrowing, but probably less than 5% of thepotential market is being served at present Amain barrier to getting engaged is lack offamiliarity with philanthropic advisory services –it just isn’t as familiar a process as other types ofadvisory services for wealthy individuals.

Other sources of philanthropic advicePhilanthropy has always been a do-it-yourselfbusiness, with many donors shaping their ownphilanthropic strategy without outside assistance.As the findings of this study make clear, thatprofile is shifting with professional advisingbecoming much more common. However, not allof the outside advice comes from professionaladvisors. Peer networking and peer-to-peerconsultation through giving circles, donorlearning groups and other donor-driven entitiesare becoming more and more common. In somecases, these activities may lead later to a donorseeking a professional advisor.

Intermediaries (nonprofit organizations that bringtogether nonprofits and funders in a particularcause area) often provide a platform of access togiving grants to nonprofits, especially in hard-to-reach countries and communities. Acumen,Synergos and Global Green Grants are examples.Finally, there are internet-based services both forgrantmaking and learning about philanthropy.For instance, SmartLink offers a variety of onlineinformation resources and learning tools to helpphilanthropists make good decisions. Developedthrough a partnership between the NeighborhoodFunders Group and the Aspen Institute, thisinternet resource is a kind of “virtual donoradvisor.”

Emerging business modelsBusiness models for donor advising and how totake these activities to scale are not yet well-worked out, especially for individuals andinstitutions not focused only on philanthropy.What does philanthropic advice contribute toretaining clients, getting assets under management- and what are appropriate fees if any to charge forit? In essence, what does philanthropic advisingbring to the bottom line? These are particularlyimportant questions for the law firms, accountingfirms, banks and wealth management firms thathouse a certain amount of philanthropic activity.

Also, with financial entities in particular rushingto offer philanthropic advising as a free service to


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high-net-worth clients, there is a danger ofadvising becoming commoditized. It may be lessappealing in the future because it doesn’t offer amarketing advantage, but also doesn’t contributeto the bottom line. And if it is offered as acommodity but at a relatively low level, it mayrisk acquiring the same reputation donoreducation services did a few years go, according toseveral interviewees. Donor education, theseinterviewees said, was regarded as relativelysuperficial, and not adding much value as eitherdonors or advisors saw it.

On the other hand, increasingly there are smallconsulting firm operations that often involve justone practitioner, perhaps with support staff.These small operations have to charge high feesbecause they have only a few clients. Getting toany economy of scale is difficult.

In several cases, interviewees said they have dealtwith the economy of scale issue by using asuccessful model they developed for one clientwith a number of other clients having similarneeds. This has been true both for philanthropicadvisory firms and for family offices. In fact, themultiple family office is a business model that hasenjoyed a fair amount of success. It provides aplatform for philanthropic advising, in partbecause the economy of scale allows for offeringsome services that can be amortized across a set ofclients.

And some specialized philanthropic consultingfirms have been created in the last 20 years.Examples are The Philanthropic Initiative andRockefeller Philanthropy Advisors. These offer apackage of services focused on philanthropy, andboth examples given happen to be nonprofits aswell. Thus they have an inherently differentbusiness model.

As one interviewee put it: “No one has yet figuredout how to create a philanthropic service forclients that makes money except JP Morgan.Otherwise it is relationship building and goodwillonly – and the first thing to go when there is a

financial hiccup.” A few firms take a longer view,believing it is possible to add value and grow thebusiness at the same time.

Selection of one or more philanthropicinstruments is an important part of wealthmanagement. The family foundation is the mostlucrative option for advisors in wealthmanagement firms. Several intervieweescommented these advisors might sometimes bemotivated to encourage such a structure even if itis not the best choice for the client. These advisorsmay also make arrangements with communityfoundations, to place a client there in a donoradvised fund, with the fund coming back to thatfirm for asset management.

One business model interviewees put forth isbased on the concept of the “boutique” servicefirm. This involves having a structured group ofservices but a limited number of clients. One suchfirm started as a single family office. They tooktime to “build out the platform” for their servicesbefore taking on additional clients. Then theyinvited a small number of additional families tojoin.

Some philanthropic advisors also haveconnections with financial institutions. They notonly take referrals, but also may do trainingprograms for staff of these institutions that in turnmay refer them more business, as well asproviding service internally. Also, one large bankis putting together a list of donor advisors theycan then recommend to clients.

Gatekeeper rolesFinancial advisors, according to those interviewed,are particularly likely to serve in a “gatekeeper”role. Thus, if a client asks about philanthropy,they may refer the client to a philanthropicadvisor.

This is true in part because accountants, bankersand wealth managers see their clients moreregularly than do trust and estate attorneys,whose work is much more episodic (often


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involving the initial set-up of trust and estateplans, then revisiting them only occasionally ...often only when there is a death or significantliquidity event). This gatekeeper role is animportant one in the realm of donor advising andneeds further study.

Mix of servicesIn a large firm if there is a “philanthropyrepresentative” that person can do something andit won’t cost much, which keeps the charges inline with what many clients are willing to pay.One large financial institution has staff to provideservices related to philanthropic issues for higher-end accounts, and sometimes this involves puttingon group education events also fordonors/customers.

Some large wealth managers and banks are hiringpeople with philanthropic and nonprofit expertisein order to offer philanthropic service to theirclients who ask for it. This includes people fromuniversity development, foundations and otherbackgrounds.

Another innovative example involves a privatebank that has hired two part-time psychologists towork with their high net worth clients (the serviceis complimentary to the clients). Thepsychologists help clients deal with the complexfamily issues of wealth management, estateplanning and philanthropy. These in-housepsychologists may meet several times with thefamily, offering advice, some intervention, andreferring them out to ongoing psychologicalservices if these are needed.

The futureOne interviewee has a theory that over the next 20years the influence of individual donors will grow,while that of larger philanthropic organizationswill weaken. She bases this on her observation ofgrowing dissatisfaction with large, cumbersomeadministrative operations. Donors increasinglyfeel that such administration and the staff requiredare not justifiable, so she predicts greater use oftechnology and more direct involvement of

donors in administering their philanthropy.Clients are looking for the most cost-effectivemethods and will affiliate with the advisors whoprovide them.

Another interviewee says that the donor advisorbusiness model may be affected significantly bychanges in technology. One example isSmartLink, already discussed. Another isKiva.org. This service allows private individualsto donate to an entrepreneur in a developingcountry and get the loan repaid.

Such internet-based services will connect donorsand their causes across distances and cultures inways we can’t imagine today. As these modelsemerge, advisors may need to change theirpractices and underlying business modelssignificantly, to remain competitive in a worldwhere “do it yourself” has become feasible in newways, thanks to technology and increasing donorsophistication.


Most interviewees report they learned how to dodonor advising simply by doing it, and byobserving or receiving input from colleagues.Coaching and mentoring from more seniorcolleagues is fairly common, especially in thephilanthropic advisory firms whose principals weinterviewed.

So is “follow-along” training in which a neweradvisor joins one or more senior, experiencedpeople on a consultation assignment with a donor.Sometimes in large financial firms the coaching isdone by a person with philanthropic experiencewho has been hired partly for that purpose.

One interviewee also reported learning aboutphilanthropic issues by “tagging along with clientswho are members of Social Venture Partners,” amajor giving circle operation in the U.S. andinternationally. The advisor reports valuablelearning as a result. A number of interviewees


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reported that they’d learned about donor advisingstrategies partly from their own philanthropicactivities, and from participating in learningevents in the community whenever thesepresented themselves, such as a public lecture bya major philanthropist.

Several interviewees said they had neverdiscussed philanthropic practices with their officepartners before the interview for this study. Oneinterviewee reported she asks about philanthropywith clients during the initial evaluation for estateplanning purposes, and was surprised to find thatothers in her office do not. She believes that herinquiries result in a greater degree ofphilanthropic involvement by her clients.

Donor advising on philanthropic strategy appearsin few job descriptions, and is not typically thesubject of direct supervision, according to ourinterviewees. As described below, intervieweessuggested readings and coursework on specificsubjects, such as family systems training.

Training for philanthropic advisingDeveloping resources for training as aphilanthropic advisor begins by recognizing thatthis is a professional practice field and there is abody of knowledge and skill that goes with it ...even though it is not documented and not well-organized. This is true whether the training ismotivated by the individual advisor seeking toimprove his or her practice, or by an institutionlooking to develop a training program. The resultsof this study provide one rough sketch of thedimensions of that body of knowledge andpractice.

No formal training programs for donor advisorsexist in academic institutions. However, severalacademic programs touch on issues of concern toadvisors, for example the fundraising andphilanthropic training programs at the Center onPhilanthropy at Indiana University, and theAmerican Institute for Philanthropic Studies atCalifornia State University Long Beach, whichtrains planned giving professionals.

Several professional organizations have startedcertificate programs which offer some relevanttraining and development opportunities. Theseinclude The American College “CharteredAdvisor in Philanthropy” (which concentratesmostly on tax, legal and financial aspects ofphilanthropy) and Family Firm Institute “WealthAdvisory” programs.

The Family Firm Institute is primarily concernedwith professional development for family businessand family wealth advisors. FFI is now aninternational professional association with morethan 1400 individuals and organizations; sixpercent of members are family wealth advisors. Inaddition to holding conferences and trainingevents, FFI publishes both print and onlinejournals.

Advisors in Philanthropy is for financial advisorswho focus within their practice on philanthropy.AiP’s membership includes accountants, insuranceagents, lawyers, investment advisors,representatives of charities, and philanthropicadvisors.

The Family Office Exchange and the NationalCommittee on Planned Giving are other examplesof groups offering training and information thatmay have value for advisors. A relatively neworganization, the National Network ofConsultants to Grantmakers, is developingstandards of practice and professionaldevelopment activities for consultants who workwith foundations, most of which could be appliedto work with individual philanthropists as well.

These professional development, continuingeducation and certificate programs are just nowbeginning to have some visibility in the world ofdonor advising. For example, one large financialinstitution requires all its employees in thecharitable services division to have the CAPdesignation.

In some cases, financial or legal advisors may notmeet their professionals ethical practice standards


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if they don’t talk with clients about philanthropy,because of the tax advantages offered. This mayincrease the motivation to obtain what training isavailable for people doing advisory work.Professional societies in the legal and financialfields are increasingly starting to offer some typeof continuing education focused on philanthropicadvising, though these efforts are so far limited.

Also, some professional practice bodies arespringing up that are relevant to donor advising.For instance, the American Bar Association’sSection of Real Property, Probate and Trust Lawoperates an “Emotional and Psychological Issuesin Estate Planning Committee,” which holdsmonthly telephone conferences for its more than100 members. Its mission is to help membersunderstand and respond to the interpersonal andemotional issues often encountered in the estateplanning process.

The committee’s areas of focus include dealingwith the stressful aspects of estate planning;helping clients include family values as well as taxmatters in their thinking; understanding howclients feel about money; and addressimgproblems in estate planning such as suddenwealth, issues with children, or dealing withterminally ill clients. All of these may includesome focus on the client’s philanthropic matters aswell.

Both AiP and FFI provide information relevant toadvisors on their websites, as do the NationalCenter for Family Philanthropy and ThePhilanthropic Initiative, among otherorganizations. Such information resources may behelpful to those considering or beginning toundertake philanthropic advisory work.

Some financial institutions and somephilanthropic advisory firms now are developingtraining programs for their staff on philanthropicadvising. To date, these programs typicallyinvolve a single lecture, often by a senior advisor(including a number of people interviewed for thisstudy, and both of its co-authors). For example,

one interviewee mentioned that his financialinstitution invited in a senior staffer from aphilanthropic advisory firm to talk aboutphilanthropy, including practice and ethicalissues.

One of the philanthropic advisory firms reportshaving done a benchmark project on professionaldevelopment within the last year, to guide betterits own training efforts. Four other similar groupswere studied to see what they did to train newhires, and the study came to the conclusion thatthe best options are to expand the currentcombination of external and internal training.This means attending high-quality professionalconferences (to learn and network), belonging toan affinity group around an issue area, being anactive member in a community (being a nonprofitboard member), and internal stretch assignmentsor shadowing assignments.

Several donor advisors interviewed for this studyhave worked with private banks that asked themto develop elementary programs aroundsupporting clients with their philanthropicactivities. This has never involved more than aday-long curriculum, and in one case it wasoffered by affiliation with an academic institution.Such training programs may become moreextensive and more common in the future.

A few interviewees emphasized that the besttraining available actually can come from a self-designed learning program for a person desiringto do philanthropic advisory. Such a programmay include activities like the following:

* serving on the board of nonprofit organizations;

* acquiring experience as a volunteer with anonprofit organization about which the advisorfeels passionate;

* learning everything one can about nonprofitcapacity building and other subjects which may bepart of a philanthropic endeavor;


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* attending meetings and conferences in thenonprofit field, and in philanthropy (manyfoundation and nonprofit groups have workshopsand conferences, such as those of the Council onFoundations or the various Regional Associationsof Grantmakers);

* interviewing people who work in thephilanthropic sector, asking: What are theirperceptions regarding the challenges in their job?What they would like to learn more about? Whatdo they perceive as gaps in the field?; and

* cultivating relationships with financial advisorsand estate planning attorneys – and stayingcurrent on changing laws, regulations andinvestment strategies in these realms.

Practice guidelines for philanthropic advisingIn addition to the core elements defined earlier inthis report, our interviewees identified othercomponents of a skill set needed for doingphilanthropic advising effectively. For instance,some organization development background isuseful, because of the complex interactions withinstitutions that are part of so much advising work(with a donor’s foundation and its staff, with otheradvisors often in large institutional settings, withnonprofits and community organizations, etc.).

Having training as a facilitator also is useful, as arerelationship management skills. Facilitation skillsinclude acquiring an understanding of how tomanage interactions with families or groups ofdonors, and to develop consensus and a decisionmaking process.

And as already mentioned knowledge and experiencebackground in philanthropy is quite helpful fordoing this work. So too are skills as a researcher.Many clients want well-organized informationabout their areas of philanthropic interest they canuse to make better decisions. Research skills canbe acquired by experience, and also by takingcourses in research methods at a university inalmost any subject of interest to the learner (theseskills are highly transferrable).

Skills as a teacher are important, since so much ofthe work advisors do with donors really is at itscore an educational process. Understanding aboutdifferent adult learning styles can be an importantcomponent of success for this type of work.

Skills in field-building may be useful for donoradvisors who have a larger systems frame for thework they do. For example, one interviewee saidof his work: “I have three goals – creatingeducated donors, skillful advisors and gettingcharities educated about both.” This may involvework at the level of community systems change, aswell as building a field of research or practice inthe areas of the donor’s interest.

Skill and knowledge about the art of grantmaking isessential for most donor advising work inphilanthropy: the advisor must have the ability totranslate a set of goals and money into an actualgrantmaking program. So is some basicfamiliarity with the process of being a consultant- to help someone develop their own vision andnot impose your own.

Other recommendations for skill developmentmade by interviewees include:

* learn how to develop a strategic planning process;and acquire an understanding of what type ofstrategies work best in philanthropy;

* learn how to be self-reflective; one is oftenchallenged in the philanthropy world, as there areso few rules. Ethics and integrity come into playoften;

* learn the basics of how to promote transparencyand accountability in all philanthropic activities;

* study public policy and how it fits into work withdonors;

* learn about fundraising, nonprofitadministration, and other specific issues withinthe nonprofit world on which these organizationsconcentrate, to promote more effectiveness; and


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* understand the way in which nonprofits areassessed for their overall organizational health, asa part of the due diligence process.

ChallengesIn this fast-growing field there are a number ofchallenges for practitioners:

* confidentiality - some advisors tend to talk toofreely amongst themselves about their clients, andoften name them, said several of our interviewees;while this exploratory study can’t speculate abouthow widespread the problem is, it certainly bearssome focus of attention in future research.

* unqualified practitioners - anyone can callthemselves a philanthropic advisor, and if they arein the community doing shoddy work that affectsthe reputation of all. As one interviewee put it, itis perfectly possible to hear: “Last week I was anentertainment attorney, today I’m a philanthropicconsultant.” While there are legal requirementsfor some non-philanthropic aspects of donoradvising (legal, financial), there are no regulationswhatsoever for philanthropic advising.

* setting boundaries with clients - even though it maybe very tempting to go on the client’s yacht for theweekend, such boundaries are crossed atconsiderable risk, as they are in other kinds ofprofessional relationships. Common sense canhelp to minimize boundary problems, as oneinterviewee said: “Accept the glass of fine wine,turn down the weekend stay at the countryhome.”

However, some interviewees noted that suchboundaries may be defined very differentlydepending on the advisor and the firm orprofessional environment in which they operate.

* maintaining ability to disagree with clients - part ofwhy setting boundaries is so important is thatsuch boundaries help to keep a level ofindependence so it is possible to examine issuesboth technical and ethnical with some objectivity,and offer an alternative point of view to the client.

* conflicts of interest - interviewees pointed out thatsome advisors giving philanthropic input alsohave potential conflicts, e.g., they are hoping tokeep the donor in a particular investment vehicleor with a particular firm. They also may have avested interest in keeping a donor involved witha particular cause or charity.

* recommending other advisors - good advisors willunhesitatingly recommend another advisor ifthere is some reason to do so. But others fear ofloss of control if they do so. And, as oneinterviewee pointed out, this is not invented.There are some “inherently unstablecharacteristics of donors” that may cause them tobehave erratically, especially given some newinput.

* donors are getting more sophisticated -philanthropic advisors now are in competitionwith peers, the press, the internet, and educationalevents from various sources in providing reliableknowledge about various aspects of philanthropy.

Advisors who haven’t kept up with theadvancements in their field of practice are fairlyeasy to pick out. As one interviewee put it:”It isn’tthat difficult for a client to sniff out that theadvisor in front of them has a limitedperspective.” This increased sophistication notonly makes donors more shrewd in selectingadvisors but also more likely to work actively withthem.

Theme 4 - Providing opportunities for donorlearning is an important part of donoradvising

Already identified as a key activity, encouragingdonor learning was characterized as of specialimportance to the success of philanthropicadvising because, several interviewees said,donors tend to grow in their philanthropiceffectiveness most quickly by direct learningexperiences. The platform for these experiencesmay range from peer interactions (e.g., throughgiving circles or donor learning groups), to site


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visits, to pilot tests of philanthropic strategies, toexamining evaluative data.

In the world of philanthropy, donor education hasbecome a topic of considerable interest. Studiessuch as Siegel & Yancy’s research on donoreducation strategies (2004) have outlined a rangeof donor education activities, such as lectures,conferences and online education programs.Some philanthropic advisory firms have added tothe literature on this subject with publications likeWhat’s a Donor to Do? (Remmer, 2000).

The consensus of opinion is that institutionalizeddonor education efforts on the whole have notbeen particularly successful. Peer networking anda few high-end donor education programs havehad the best track record so far. A secondgeneration of donor education activities, such asthe peer learning and high-net-worth donorworkshops summarized below, is now beinginvestigated by the Aspen Institute’s DonorEducation Planning Group, an informalnetworking group of people with an interest indonor learning.

In addition, some donor advisors are reluctant touse term “donor education” as a way of describingthe experiences they feel are valuable for theirclients. They say most clients report they alreadyfeel they are well educated, but they are interestedin positive learning opportunities outside of someexpert-provided education. This, our intervieweessaid on several occasions, is part of the dis-connect between organized philanthropy anddonors – they think donors need “education.”

The educational activities of groups like theNational Center for Family Philanthropy, and fordonors with foundations, the Association forSmall Foundations, were reported by intervieweesas having been effective in providing donors withuseful learning experiences. These organizationshave both on-line and in-person componentsthrough which learning takes place.

Peer networkingPeer networking and interaction are regarded asimportant aspects of donor learning by some, butnot all advisors and their clients. As oneinterviewee put it: “My clients gravitate to peerlearning more than anything. I encourage themto affiliate with something that feels comfortable.”Another interviewee said: “Informal mentoringcan help. I try to introduce donors to others whocan help them because they have something incommon.” But not all clients want or feel theyneed such peer networking, and advisors must besensitive to these differences.

There are a number of peer-to-peer networks thatprovide learning opportunities, sometimescombined with giving circles (Rutnik & Bearman,2005) or other types of collaborative philanthropy.Some of these include the Threshold Foundation(which is now in its second generation of activity,with the children of the group’s founders nowleading the work), Democracy Alliance, ThirdWave, Money Making Change and Play Big.

These groups provide a platform within whichdonors can discuss philanthropic strategy, workwith advisors and other topics in a privateenvironment with other people who “look likethem”– wealthy donors wanting to do goodphilanthropic work. Advisors need to know aboutthese groups and be ready to refer their clients tothem whenever that is indicated.

Many donor learning groups are springing up,some of them affiliated with either individualfoundations or with philanthropic networkingorganizations. For example, the FamilyFoundations Information Exchange, which hasseveral chapters in Los Angeles, is affiliated withthe local foundations networking organization,Southern California Grantmakers. This group wasstudied by Backer (2006), as was a similar group inthe San Francisco Bay Area, which has beenaffiliated with the East Bay CommunityFoundation.


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Social Venture Partners and other giving circleshave proliferated greatly in the last few years, andhundreds of these groups have been studied inrecent research (cite). They provide goodeducation for donors as well as opportunities forleveraged giving on certain topics.

Some donor learning groups also are affiliatedwith donor advisors themselves. Some of ourinterviewees have started groups intended tobring together their donor-clients for learningexperiences. In several cases, these groups alsoprovide platforms for actual philanthropicactivities. Peer networking also may take placebetween friends and neighbors through churches,social clubs and sometimes within the family oforigin for a donor.

High net worth donor training programs Generally well-regarded by our interviewees, asmall number of programs provide more intensivelearning experiences for high net worth donors ina peer-to-peer environment, supplemented withexperts who speak and consult with theparticipants. The original program of this sort isthe Rockefeller Philanthropy Workshop, whichhas been offered for years at the Rockefeller familyretreat, Pocantico, in New York State. This hasbeen replicated more recently by the ThePhilanthropy Workshop West, which is offered tohigh-end donors (primarily those located on thewest coast) by the William & Flora HewlettFoundation, in partnership with the TOSAFoundation.

The Aspen Philanthropy Seminar also bringstogether wealthy donors who are significantgivers. It is aimed to help them think more deeplyabout philanthropy (the first one was held insummer 2007). As with the other programs justmentioned, the focus is on values, why peoplegive, the value of philanthropy in a good life, andspecific strategies for philanthropic activity (“Howdo I work my values through my giving?” And“What are the tradeoffs from any givingdecision?”).

Technology-based resources for donorsResources for philanthropists are increasinglyavailable on the web, many of them aimed atproviding information about specific charities, andsome of those also make it possible to make adonation online. Other resources are aimed moreat general education and development. Two ofthese, SmartLink and Kiva.org, have already beendiscussed.

Theme 5 - Donor advisors can help inpromoting donor collaborations

The range of activity regarding donorcollaborations – partnerships with other donors orfoundations – was quite broad even in ourrelatively small interview sample. Some advisorsdo nothing in this arena, others are pro-active.Part of the “market niche” of some advisors isoffering of a pre-existing stable of collaborativeprospects, as discussed below.

Donors often feel limited about what they canafford to give, so a pro-active advisor may try tolocate partners to leverage the donor’s resources.In addition to promoting participation in SocialVenture Partners or other giving circle operations,donor advisors regularly reported having donematch making to bring together two donors, or adonor with a philanthropic institution like afoundation.

Sometimes the donor advisor has a learning groupor collaborative giving program themselves, andas already mentioned, donors come to them forconsultation partly because they perceive a matchbetween the goals and process of the group towhich they will then belong. One advisorinterviewed operates five funding collaborativesand also has relationship with others. One ofthese collaboratives has 30 funders in it, andrecently has taken on a life of its own by becomingincorporated and getting its own executivedirector.

Donors and foundations make good partners, saidseveral interviewees. Each has something to bring


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to the table, mirroring public-private partnerships.In partnership with an individual donor, afoundation becomes more like the public funder(with the advantages of accountability, and thebureaucratic restrictions on operations). Thedonor is more like the private money - flexible andeasy to adapt, all other things being equal.Another interviewee said: “Without donoradvisors, donors and foundations might nevermeet; we operate in separate worlds.” Mostdonors aren’t connected to the institutionalphilanthropy world – and they think verydifferently about philanthropy. Advisors can helpto make the translation.

One interviewee reported an example offoundation-donor collaboration, in this caseinitiated by an intermediary organization ratherthan an advisor, but with implications for donorpartnerships in general. The donor was interestedin infrastructure development in developingcountries, specifically in creating clean watersources. A large foundation had a similar interest,and so the third party brought the two together.They agreed to jointly fund drilling a well forclean water for a particular community in thecountry of their common interest. It was such asuccess they did it a second time for anothercommunity.

Having the trusted intermediary bring themtogether, first for an informal discussion in whichno commitments were needed, helped to start thehealthy conversation process. Intermediaryorganizations are particularly powerful in thisrole.

Groups such as Synergos, started by theRockefeller family to bring together wealthyindividuals for collaborative giving, have hadgreat impact in collaborations of all sorts, betweendonors or between donors and foundations. Sohave community foundations, and philanthropicadvisory groups like Rockefeller PhilanthropyAdvisors, which recruit clients partly because theyare interested in the funding collaboratives forinternational philanthropy RPA has created.

But some interviewees reported that they do notencourage donor collaborations. As one advisorsaid: “Collaboration is important but very delicate- even the word can be off-putting.” Anothertalked about the down-side of working together:“Collaboration often implies a level of walking inlockstep that independent donors rail against.”

Advisors cite as one reason for their reluctance tocollaborate is that their donors may have had badexperiences with collaborations in the past. Oneinterviewee described a donor’s experience witha national collaborative in the medical field, whichwas not good. There were troublemakers on thecollaborative’s board so the philanthropic businesscould not get done effectively, and the donordropped out after seeing that this was the case.

In the parlance of fundraising, “G1” (donors whocreated the wealth themselves, and who in today’senvironment are typically people of middle age ormore, though not exclusively) are less likely to beinterested in collaborations than their children orgrandchildren (the so-called “G2" and “G3"donors). These generational differences need tobe taken into account by donor advisors in tryingto set up such relationships. Younger donors, saidseveral interviewees, are more open about who'sin charge (same as with young family members onboards), and say that the critical element is to beopen about the power and control dynamics.

Dissemination and Further Study

This was an exploratory study, and like mostresearch of this nature, has raised more questionsthan it has settled. But especially given the recentgrowth in activity and interest surrounding donoradvising and philanthropic strategy, there aresome next steps that can be taken to build on thework done here.

Plans for disseminationThe first steps involve disseminating the results ofthis study to key target audiences that may be ableto use what has been learned in practical ways, aswell as increasing dialogue about the issues and


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questions raised here. Dissemination of thisreport in Spring 2008 will include circulation tostudy participants, who are in prominent placesin the donor advisor and philanthropic worlds. Itwill also include placement on the HumanInteraction Research Institute’s website, with linksto websites of other organizations concerned withthis issue (e.g., Advisors in Philanthropy, NationalCenter for Family Philanthropy, Council onFoundations, etc). A dissemination plan willguide these actions, and others.

For example, several speaking engagements willhelp to share findings from this research withappropriate professional audiences. These includea session on donor advisors at the 2008 Council onFoundations summit session, and a session onapplying venture principles to philanthropy atGrantmakers for Effective Organizations 2008conference.

Other possible presentations include speeches tothe 2008 Family Firm Institute meetings and the2009 Advisors in Philanthropy conference.Universities with philanthropy programs (such asDuke and Georgetown Universities) have invitedguest lectures on the research.

To promote wider implementation of the study’sfindings, a book based on this study report isplanned. It will be designed to influence goodpractice and healthy growth of the field. The bookwill be oriented both to how donor advisors canimprove their learning and practice, and to howdonors can best select and work with advisors toachieve their philanthropic goals. The book willplace what’s presented in this report into a moreaccessible format, and will add specific, identifiedexamples. It may also include results from someof the follow-on studies suggested below.

Finally, one or more concise “learning briefs” willbe developed to share results with both donorsand advisors. These briefs may be disseminatedthrough networking and support organizationsthat target these audiences, such as the severalmentioned above.

Topics for further studyAmong the numerous topics identified in thisstudy as worthy of future research are thefollowing, in no particular order of priority:

* young donor advisors - the current studyinterviewed only experienced advisors who havebeen working with wealthy people onphilanthropy or other issues for a long time.However, given the growth of the field, many newadvisors are moving into it, and interviews withthem can help to understand developmental andtraining needs in a much different, more focusedway. The sample could include young staff ofsome of the organizations whose senior peoplewere interviewed for this study.

One pilot interview was conducted to determinewhether such an approach would be fruitful.Results indicated there is much to be learned frominteractions with young advisors.

* experienced donors - an exploration of howexperienced philanthropists work with advisors(or reasons they don’t do so) will help to fill outthe other side of this complex relationship. Manyof the tentative themes and conclusions reached inthis research need to be validated from the donorside, e.g., identifying the practices advisors usethat experienced donors see as most valuable.

Again, one pilot interview with a sophisticateddonor was done to test this notion. Results makeit clear that such interviews would be provideuseful insights..

* advisors as a bridge between individual andinstitutional philanthropy - while this role wasdiscussed by several interviewees, more study isneeded to determine how foundations and donorscontact each other and build collaborations, andhow donor advisors could help.

* dual passport advisors - interviews with advisorswho come from wealth, and who are deeplyinvolved in their own individual or familyphilanthropy in addition to their advising work,


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could focus on how this dual passport status isused, what its advantages and disadvantages are,and how the work of these individuals can shedlight on donor advising more generally.

* personal characteristics of donors and advisors -informally, several interviewees in this studymade a point of how age (and related generationaldifferences), immigrant status, religiousbackground and gender (theirs and their donorclients’) could influence the process ofphilanthropic advising. Some interviews focusedon this subject could increase our understandingof these possible influences.

* role of technology in donor advisor work - theemergence of donor software systems, blogs aboutphilanthropy, internet services for identifying andconnecting with charities, and support serviceslike FoundationSource that offer cost-effectiveadministration of philanthropic instruments allneed further study to determine how thesetechnological developments will affect advisingpractice.

* media and donor advisors - in the last several years,both the New York Times and Wall StreetJournal have assigned reporters to a “philanthropybeat.” This increases the likelihood of majormedia providing a way to educate donors,advisors and the general public aboutphilanthropic advising and its role in effectivephilanthropy. Both looking at how this ishappening and making inquiries about futurepossible media coverage would be helpful as away of extending the results of the present study.

* relationship to other research - both theEntertainment Industries Foundation and NewVentures in Philanthropy are embarking onstudies of donor advisors; these studies can becoordinated with the present research, andespecially with the follow-up inquiries proposedhere.

* donor collaborations - the characteristics of donorswho are willing to collaborate, and how advisors

can support them, can also be the subject offurther study.

* pro-active advisors - the characteristics of donoradvisors who take a pro-active stance with theirclients, and how effective such a stance is inproducing good philanthropic strategy, is also auseful topic for further study.

* donor advisors as agents of change - the ability ofadvisors to play a larger role in the developmentof philanthropy as an instrument for communitychange also can be studied. Some of theinterviewees in the present research are activelyinvolved in organizing donor collaboratives andotherwise going beyond an advising role toleading change.

* evaluation strategies - more study is needed ofhow advisors can help clients develop evaluationstrategies, and how they can best be implemented.

In this vital environment, there are manysimultaneous developments that will betransforming the arena of donor advising andphilanthropic strategy over the next few years.Building on what was learned from this smallstudy can help to create opportunities foradvisors, donors and others on the philanthropicscene to increase the quality of donor advising andits impact on reaching philanthropic goals.


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References Cited

Backer, T.E. (2004). The psychology of philanthropyand community change. Presentation to theUCLA School of Public Affairs, May.

Backer, T.E. (2006). Nurturing high impactphilanthropists: Learning groups for donorsand foundations. Encino, CA: HumanInteraction Research Institute.

Backer, T.E., Miller, A.N. & Bleeg, J.E. (2006).Capacity by any other name. StanfordSocial Innovation Review, Spring, 15.

Baick. J.S. (2004). Cracks in the foundation:Frederick T. Gates, the RockefellerFoundation, and the China MedicalBoard. Journal of the Gilded Age andProgressive Era, 3(1), 77.

Bolduc, K. Et al (2007). Beyond the rhetoric:Foundation strategy. Boston: Center forEffective Philanthropy.

Brest, P. & Harvey, H. (2008). Money well spent: Astrategic guide to smart philanthropy. NewYork: Bloomberg (Forthcoming).

Carnegie, A. (1998). The gospel of wealth. Bedford,MA: Applewood Books.

Center on Philanthropy at Indiana University(2006). Bank of America Study of High Net-Worth Philanthropy: Initial report.Indianapolis, IN: Author.

Ellsworth, A.Z. & Remmer, E. (2005). Givingtogether: A primer for family philanthropy.Boston: The Philanthropic Initiative.

Frumkin, P. (2006). Strategic giving: The art andscience of philanthropy. Chicago:University of Chicago Press.

Gary, T. (2007). Inspired philanthropy. SanFrancisco: Jossey-Bass.

Hughes. J. (2004) Family wealth - Keeping it in thefamily. New York: Bloomberg Press.

Madden, K. & Newton, C. (2006). Is the tideturning? Professional advisers’ willingnessto advise about philanthropy. Brisbane,Australia: Queensland University ofTechnology.

Ottinger, R. (2007). Beyond success: Building apersonal, financial and philanthropic legacy.New York: McGraw-Hill.

Remmer, E. (2000). What’s a donor to do? Boston:The Philanthropic Initiative.

Rutnik, T. & Bearman, J. (2005). Giving together: Anational scan of giving circles and sharedgiving. Washington, DC: New Venturesin Philanthropy.

Siegel, D. & Yancey, J. (2004). Philanthropy'sforgotten resource? Engaging the individualdonor. Mill Valley, CA: New VisionsPhilanthropic Research and Development.

Social Welfare Research Institute (1999).Millionaires and the millennium.Washington, DC: Author.

Stone, D. & McElwee, J. (2004). What Californiadonors want in their own voices.Washington, DC: National Center forFamily Philanthropy.

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List of Interviewees

Darya Allen-Attar, Morgan StanleyJohn Ambrecht, Ambrecht, Arnold, Tokuyama & BrittainSusan Amster, Wealth Tax AdvisoryMichael Anders, Fidelity Charitable ServicesBill Barrett, Fiduciary Trust International of CaliforniaJudy Belk, Rockefeller Philanthropy AdvisorsMelissa Berman, Rockefeller Philanthropy AdvisorsLeah M. Bishop, Loeb and Loeb LLPCynthia Brittain, Ambrecht, Arnold, Tokuyama & BrittainCharles Collier, Harvard UniversityTom David, Tides CenterBarbara Dingfield, The Giving PracticeDebra Doran, Harris myCFODuane Duim, Laird Norton TyeeSusan Dunn, Dunn CommunicationsJoel Epstein, Roll CorporationJohn Ford, formerly of Stanford UniversityShirley Welk Fredricks, Lawrence Welk FoundationJoel Fleishman, Duke UniversityDoug Freeman, IFF AdvisorsEllen Friedman, Tides CenterTracy Gary, Inspired LegaciesDennis Gilkerson, Comerica BankPeter Haight, retired wealth managerDonna Hall, Women’s Donor NetworkLee Hausner, IFF AdvisorsSteve Hilton, Conrad Hilton FoundationJames Hodge, Mayo ClinicLeon Janks, Green, Hasson & JanksPeter Johnson, Rockefeller Family & AssociatesSteve Johnson, The Philanthropic InitiativePeter Karoff, The Philanthropic InitiativeLeslie Kautz, Angeles Advisors and Kautz Family FoundationTom Kenney, Fiduciary Trust International of CaliforniaJan Kern, Southern California GrantmakersEric Kessler, Arabella AdvisorsKaycee Krysty, Laird Norton TyeeBaruch Littman, Jewish Community Foundation

Joe Lumarda, Capital GroupPhil Magram, Valensi RoseJan McElwee, McElwee GroupTerry Meersman, Talaris Research InstituteMaryann Meggelin, Mellon BankDouglas Mellinger, FoundationSourceJanis Minton, Janis Minton ConsultingRichard Mittenthal, TCC GroupElizabeth Myrick, Aspen InstituteRandy Ottinger, LMR AdvisorsJudith Stern Peck, Money and Family Life Project, Ackerman Institute Drummond Pike, Tides CenterJohn Piva, formerly of Duke UniversityEllen Remmer, The Philanthropic InitiativeCasey Rogers, Janis Minton ConsultingClaudia Sangster, Harris MyCFOJohn Sare, Patterson Belknap Webb & Tyler LLPCarol Schauer, Gordon & ReeseJilliene Schenkel, Taper Family OfficePaul Schevish, Boston CollegeChristine Sherry, William & Flora Hewlett FoundationPaul Shoemaker, Social Venture PartnersHildy Simmons, Consultant (formerly JP Morgan Private Bank)Victoria Simms, donorChristine Sisley, Solid FoundationsJames Allen Smith, Georgetown UniversityBente Strong, Capital GroupKerry Sullivan, Bank of America Matt Talbot, Bristlecone AdvisorsJean Tardy-Vaillernaud, Gainsborough Capital (formerly in private banking)Gene Tempel, The Center on Philanthropy at Indiana UniversityVicki Unger, Smith BarneyAnn Van Dormalen, Philanthropic AdministrationEric Wasserman, Wasserman & WalkupEileen Wilhem, Bank of AmericaAmelia Xann, Jewish Community FoundationDrake Zimmerman, Advisors in Philanthropy

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Transcript of DONOR ADVISORS AND PHILANTHROPIC STRATEGY · legal, tax and accounting issues). Donor Advisors and...