Why You Should Develop a Giving Strategy

In 2019, a year or two after becoming a billionaire, Shopify CEO Tobias Lütke got a bit philosophical about philanthropy during an interview with Report on Business magazine:

“There’s a couple of causes I’m really interested in, like mental health and computer literacy,” Lütke told interviewer Trevor Cole. “But there is a general pattern that I find is unfortunate. There’s sort of the Rockefeller progression: Build an evil empire, a monopoly, take no prisoners along the way, and then rewrite your own story by being exceptionally beneficial to the world. Carnegie did the same. I hope it’s possible to not need to do the two-phase approach.” He then stated his intent to “absolutely” give away most of his money, an effort he and his family have since pursued with a series of significant donations, including his father-in-law’s long-anonymous $200-million contribution to Centre for Addiction and Mental Health.

There’s an argument to be made that very wealthy people, like Lütke and his kin, have a responsibility to apply focused thought behind what, when and how they give back. But you don’t have to be worth billions to do that. In fact, all working professionals — even those at the beginning of their careers or those without much cash to contribute — stand to benefit from developing a personal giving strategy.

Why bother defining your approach to charity? Smith Business Insight contributor Deborah Aarts spoke with a panel of experts in the business of giving to understand the value of forming your own altruistic mission statement.

It helps simplify things

Count Ylber Kusari as someone who gets the value of giving strategies. “I can’t stress enough how important it is that we are intentional and strategic in how we want to make the world a better place,” he says. As executive director of development and alumni relations at Smith School of Business, he deals with donors every day, drawing on a long and varied career in philanthropy and social impact. In his view, a personalized set of guidelines for philanthropic giving simplifies what can be a complicated act. 

Giving in Canada can be surprisingly confusing. There are more social, environmental, community and health-related causes in need of support than there are Timbits at a hockey rink. With more than 170,000 charitable and nonprofit organizations in Canada — about half of which are registered charities — there’s no shortage of ways to give. And since the quality and motives of these organizations can vary dramatically, there are plenty of potential pitfalls, so it’s on would-be donors to do their due diligence. “Donors are overwhelmed and overstimulated with all these requests coming at them,” Kusari explains. “All of them are worthy. How do you cut through the noise?”

One tactic Kusari recommends is for prospective donors to think of themselves as “venture philanthropists.” Just as investors filter opportunities by their relevance to a set mandate and criteria (like, say, industry sector, growth trajectory and leadership), so too should donors consider their contributions against set parameters, such as a central issue (e.g. cancer research), or type of organization (e.g. registered charities), or impact (e.g. organizations that serve immediate needs). Being able to say “I centre my giving on X organizations that support Y cause in Z way” adds focus and simplicity to an endeavour that can feel sprawling and impenetrable — and can also result in more bang for your buck, Kusari says: “When you move away from the ‘spray and pray’ approach and instead focus on two or three things, you can generate more of the change you want to see happen.”

It allows your money to work harder

Everybody wants their charitable dollars to go as far as possible. Most also want to contribute in ways that are productive to their own pocketbooks. And while few people get into charitable giving solely for the tax breaks, there’s no denying that it’s a significant consideration in any conversation about giving.  

“There are different strategies when it comes to charitable giving, and some are more tax-efficient than others,” explains Betty-Anne Howard, Artsci ’79, a philanthropic financial planner, planned giving consultant and charitable giving expert who works with clients to redirect as much money as possible to the causes they care about most. “The majority of people are not aware of that.”

Many people engage in what Howard calls “chequebook giving” by contributing money straight from the balance in their bank accounts, which they’ve already been taxed on. That can be great, she says, especially when addressing immediate charitable demands — but more powerful alternatives are also available. For example, making an in-kind donation of appreciated investment securities to a charity allows the donor to both eliminate capital gains and receive a tax credit for the contribution. And investing in a charitable giving life insurance policy can transform a monthly allocation of funds into a much more significant long-term contribution. “These things can not only double up on peoples’ tax savings,” Howard says, “They also magnify the gifts to charities.”

These kinds of decisions take some education. They also tend to take patience. Ad-hoc or reactive giving doesn’t allow much room for either, but a well-considered giving strategy does. “Information is power,” Howard says. “I find once you get people on the path of thinking about this, and thinking about how they want to make a difference, the impact just expands from there.”

It equips charities to do more

A giving strategy can also be a big help to the organizations that receive the support. Running a charity can be tough business, according to Danzel Pinto, BCom ’07, a principal specializing in assurance services at Grant Thornton LLP (Canada), where his practice focuses on auditing and advising charities and not-for-profits. Donor contributions are often unpredictable, which is tricky to manage around at the best of times, and brutal during periods of recession or inflation. (Witness the current gradual, and persistent, downward trend in Canadian charitable giving.)

Because most giving strategies clearly define how much you’ll contribute, and for how long, Pinto says they can help charities and not-for-profits to plan in a more sustainable fashion: “That predictability when it comes to cash flows allows for the organization to really think about what they want to do,” he says. “It allows them to better consider how they can improve the organization and increase their impact in the future, as opposed to just surviving in the status quo.”

Moreover, because giving strategies tend to encourage ongoing contributions, it creates opportunities for donors to better connect with the organizations they back — which can create more positive outcomes for all. “When you are able to have regular conversations, it allows the charity to learn what donors truly want from the organization,” explains Pinto, who moonlights as treasurer of the Canadian Association of Gift Planners, a national association that educates and advocates for professionals in the charitable giving space. “The organization can then either adjust what they’re doing to match what the donors want or educate the donors about work that has the most impact.”

Such dialogues reduce confusion among both parties, Pinto says, and result in fewer assumptions being made. They also establish a collaborative M.O., he adds: “The best of the best relationships are ones that are more of a partnership, where you’re working with the charity in order to achieve what they set out in their mission.”

It makes you feel terrific

As anyone who’s spoken with a typical 20-something can tell you, we live in increasingly purpose-driven times. As such, more and more donors — especially Millennial and Gen Z ones — are adopting a different approach to philanthropy. “They’re more interested in really getting involved and seeing an impact,” says Karen Humphreys Blake, who teaches Business for Good at Smith School of Business, and who has held executive-level fundraising and public relations roles in health care and government. “There’s a wish to get more hands-on than in the past.”

Many of today’s donors are therefore more drawn to immersive activities like volunteering, board service and advocacy — often, in addition to financial contributions. Humphreys Blake says that such fulsome engagement can help professionals foster social connections, broaden work experiences and apply their skills outside of their day jobs, among other benefits. A defined giving strategy allows them to coalesce all this goodness towards a thought-through and intentional purpose, she says — and that can feel pretty terrific.

“When you identify a specific cause — because it has meaning in your life and because you want to do something about it — it allows you to focus your efforts and direct your involvement, rather than applying it helter-skelter across many different charities,” Humphreys Blake says. “That gives you more personal satisfaction. It feels more rewarding. And I think it’s important that when you give, you feel good about it.”