Philanthropy in Times of Crisis: Should I Stay or Should I Go?What are the trends saying?
Looking at philanthropic trends in a time of crisis when so many are in need may seem a tad robotic, but when it comes to important decisions such as how much, where, and when to give in a post-COVID world, the data may be helpful in guiding a family’s decision making.
It’s no secret that in this current climate many non-profit organizations and charities are in greater need of funding. And while the crisis has had a negative impact on charities, with cancelled fundraising events and loss of donations, it also brings about valid questions for the donors. Should they scale back? Will they favour a time-limited approach to giving? Will this need change the causes they choose to support?
The current financial climate in global markets may draw comparisons to the 2008 economic crisis which “reduced total philanthropic giving by 7% that first year and by another 6.2% in 2009” in the United States, according to Forbes. While current times and market uncertainty might give philanthropists a cause for pause, it’s still too early to tell how this pandemic and the impending economic repercussions will impact charitable giving on a large scale.
At the same time, non-profits and charities are doubling down and getting creative on various strategies to increase the visibility of their causes and share the importance of donations. It’s clear that the need is greater now than it was just mere months ago. In this context, high-net worth families might be rethinking their approach to philanthropy for the short term. But rather than stop completely, it’s important to think about it strategically.
In a report published in January 2020, Campden Wealth revealed the results of a survey done with high-net worth families all over the globe. According to this report, 32% of interviewed families prefer a time-limited approach to philanthropy. Seeing a growth in recent years, this trend can have certain benefits for high-net worth families according to Campden Wealth, for instance: seeing the impact of giving during their lifetime, narrowing philanthropic focus, and transferring more of a founding donor’s wealth to good causes sooner rather than later.
This is just one consideration families should ponder when giving, or when creating a family foundation. While a family foundation is a reflection of family values and a great way to pass on the family legacy to the next generation, it also allows for a strategic approach to philanthropy. At its conception, the family should create a mission statement and vision for the foundation which should guide future decisions and donations. Having this vision statement and a solid grasp on your financial picture may make the answer of ‘to donate or not to donate’ clearer.
For many there is no doubt that giving back is seen as a great responsibility; an altruistic endeavour. But if visibility or reputation is also a goal of giving, then giving in times of crisis is one way to gain visibility. Business Insider is tracking the donations made by billionaires to aid in the fight against COVID-19.
Above all, there are many reasons to donate to the causes at hand, there are many reasons (and probably a greater need now) to continue supporting the organizations you may have worked with pre-COVID, just as well as there are many reasons to take a moment to evaluate your strategy or the current limitations of your giving at this point in time. All considerations and concerns are valid. It all comes down to what makes most sense for the family at the end of the day.
At Richter Family Office, we understand that philanthropy is about more than just giving money to important causes, it’s often an expression of your family’s core values, and legacy. This is why we work closely with our families to determine the best way to facilitate and manage their philanthropy in a manner that offers the maximal economic and social impact.
 Campden Wealth. “Global Trends and Strategic Time Horizons in Family Philanthropy 2020.” http://www.campdenwealth.com/article/global-trends-and-strategic-time-horizons-family-philanthropy-2020