Two Culture of Philanthropy:
- "Money that goes into a foundation or donor advised fund is philanthropic." (Tax benefits.)
- "Money that leaves a foundation or donor advised fund is philanthropic." (Social benefits.)
Around #1. has grown a business or many businesses: tax planning, legal work, accounting, values-based planning, investment management, insurance as part of estate planning.
Around #2. has grown up a shaky bunch of loss leaders, low profit boutiques offering grantmaking advice, heirs giving advice to heirs on a pay it forward model, and associations of professionals who staff community foundations and larger private foundations.
#1 and #2 are in some sense complementary. (Money out follows upon money in). But the cultures are not united and pull often in different directions. (Money in that stays in generates ongoing revenue for the advisor managing the money. Money that goes in and then leaves quickly or that goes directly to frontline charities, diminishes or eliminates the advisor's ongoing asset management fees. Starve if you wish, mutters the idealistic advisor's supervisor, but not at this bank, or brokerage house. Remember who you work for. This is not an eleemosynary institution. Be charitable with your own money. You don't work for the public good. You work for me. Do not go depleting the charitable accounts that keep the lights on here.)
Donors need both #1. and #2. But the advisor in charge of #1. has no incentive to introduce the client to those skilled in #2 (skilled as the advisor sees it in divesting the advisor of assets under management).
The puristic solution is to unbundle grantmaking advice from assets under management. (Lowest load investments on money in charitable accounts coupled with a separate fee for grantmaking advice provided by experts contracted at arms length.) Not much of that going on. Instead, donors assume that the financial intermediaries have it all under control. And, who knows, maybe they/we do.
I am asked almost daily: "How do I make money giving philanthropic advice?" The answer is #1. Wiser are the children of darkness...., as the Good Book says. In this real fallen world more and more of #1 will eventually lead to some trickle of dollars into #2. And that would be good, maybe the best for which we can reasonably hope.
