Road to Charitable Giving
This feature was written by Studio MSP writers. While some of our advertisers were sourced, no advertiser paid to be included.
Two years after 13-year-old Katie Hageboeck lost her battle with leukemia, her parents sponsored a fundraiser for the Children’s Cancer Research Fund, a charitable fund at the University of Minnesota.
Today, CCRF is a national foundation that has raised and contributed $150 million to childhood cancer research and other programs since the Hageboecks’ 1981 fundraiser. It also supports education and quality-of-life programs for families facing a child’s cancer diagnosis. Those efforts also have been buoyed by $22 million raised over the years from Dawn of a Dream gala, since the Hageboecks created the first one in 1981.
For most people, as with Norm and Diana Hageboeck, the journey of charitable giving begins with a personal passion or life-changing event, says HaiVy Thompson, CCRF’s director of marketing and community engagement.
“The Hageboecks started CCRF because they lost their daughter to cancer. That was intensely personal and profound to them,” she says. “We see that a lot. Something resonates with a person, and they start to get involved in philanthropy.”
The desire to make a difference, solve a problem, or leave a legacy is at the heart of giving. But not everyone has a galvanizing moment. They want to give, but in a world of many needs, huge problems, and competing desires, how do you decide where to give? And how do you make that giving strategic—and truly effective?
Just Get Started
Experts from across the nonprofit and charitable giving sector say there are as many strategies for giving as there are donors—it’s a personal decision with limitless possibilities. At the same time, there are some fundamental choices and steps in almost every donor’s journey.
“Whatever age you are, and whatever amount you have to give—just get started,” says Debra Behrens, chief advancement officer of Aeon, a Twin Cities nonprofit dedicated to creating quality affordable housing. “It doesn’t matter how much money you have.”
“It can feel a little intimidating if you have never given before, but that journey of becoming a donor begins within,” she says. “People give because they want to solve a problem in the world. It’s you asking yourself, ‘What are the issues that I care about?’”
“What have you received in your life that you want to provide to someone else?”—Debra Behrens, Aeon
What Behrens describes is known in the charitable giving community as a “values assessment.” It’s an exercise to reflect on your goals and values to help you identify where to focus your giving.
She says it boils down to one essential question: “What have you received in your life that you want to provide to someone else?”
“It’s a very introspective experience for many as they get started in the journey. For others, it could be a gut reaction,” Behrens says. “It is listening within yourself and responding with a gift of any amount. It does not matter what you give. You will be naturally drawn down the path.
“Giving is not a rational act—it’s not something we do because it makes sense for our bottom line. It’s something that we do because it’s an expression of who we are, what we care about, and the mark we want to leave on the world.”
From Gut-Check to Action
With your charitable vision taking shape, it might be time to write a check. But charitable giving professionals say this is also a great time to do some homework.
For Alison Roberts, director of development for the Pinky Swear Foundation, charitable giving is an investment in the community, and she says donors should be as thoughtful in making charitable gifts as they are with other financial choices.
Roberts and other experts point to the Minnesota-based Charities Review Council, which shares reports on how hundreds of nonprofits meet its accountability standards. On the national level, Charity Navigator offers insight into how well nonprofits carry out their missions, along with metrics on how effectively they use resources.
“These online tools can help you find nonprofits in your community that focus on your interest area,” Roberts says. “With research, you can feel confident in giving your dollars to those organizations.”
Volunteering is another way to test-drive a nonprofit, she says. “That is especially important to smaller nonprofits, like Pinky Swear Foundation, that have a really lean staff.” Pinky Swear provides financial and emotional support to children with cancer and their families.
“Regular volunteers really make a difference and elevate our mission and help us reach more people,” Roberts says. “Even though that is not money— the time [they give] being advocates in the community for us is really valuable.”
Time, Talent, and Treasure
As a lifelong fundraiser, Jeremy Wells says many donors model their giving on the example of their parents, grandparents, or someone else in their life. He describes giving as a commitment of using your “time, talent, or treasure” to help a cause.
“Early on, the greatest resource people have is their time,” says Wells, the vice president of Philanthropic Services for the Saint Paul & Minnesota Foundations. “They don’t necessarily have the treasure yet, and they haven’t yet developed the talent, but they have time to get involved as a volunteer.”
“Early on, the greatest resource people have is their time.”—Jeremy Wells, Saint Paul & Minnesota Foundations
As people advance in life and professional experience, they begin to share their expertise and talents as advocates, or they serve on nonprofit committees or boards, he says. Finally, as donors gain greater financial capacity, they often increase their charitable giving.
“By and large, that’s usually the pattern that emerges,” Wells says. “We have such a rich culture and history of philanthropy. . . . It’s been built into the culture of this place by wonderful individuals, families, corporations, and others who have led the way. But I do think we need to pay attention to who are the next generation of donors.”
Gen X and Beyond
The next generation of philanthropists is out there, but it differs from past generations in one important way. These donors are children of a digital revolution that has changed almost every facet of everyday life, including charitable giving.
Experts in the field say that Gen Xers and millennials are engaged with giving, but how they connect and work with nonprofits has created new intersections for charities and their donors. Peer-to-peer fundraising, online gifts, and giving communities are the new normal.
“Social media has changed giving,” says Erica Hollom, events and volunteer manager with the Angel Foundation. “Every day on Facebook, you get shared posts that people are fundraising for their birthday or sending invites to charitable events.”
Hollom and other experts say that Minnesota’s Give to the Max Day has played a big part in moving fundraising online, where communities, groups of friends, and advocates participate in a day of giving and other online crowd-funding efforts.
“Peer-to-peer giving is happening,” Hollom says. “It’s mostly smaller gifts, so I think that people are more apt to give, and they are more philanthropic, so you are going to see in the long run that overall giving will increase as they get further in their careers.”
Like others in her field, Hollom says that younger professionals (Gen Xers and millennials) are also engaging with nonprofits and charities in a much more hands-on way.
“They want to know how much of their gift is going to directly affect the people we are serving in a program,” she says. “They want to see videos about it and pictures, and not just a listing in the annual report. They want metrics and concrete background about where their gift is going.
“That goes back to feeling good about giving,” she adds. “They’re not so much about the recognition; it’s more about the feeling that ‘I gave to this cause, and I feel good about it.’”
Tradition and Innovation
Greater Twin Cities United Way has an ambitious agenda. “We would like to have everyone see themselves as a philanthropist,” says Kim Stone, the organization’s senior vice president of advancement.
“People think of us as a fundraising organization, but we really are a community impact organization,” she says. “We are focused on the root causes of poverty and making change at the system level to remove barriers to education, the workforce, and basic needs such as food and shelter.
“The average gift size is around $530, and it’s the collective impact of many, many concerned individuals . . . that allows us to [help] tens of thousands of community members in need.”—Kim Stone, Twin Cities United Way
“We have 65,000 donors that give to us on an annual basis, and that allows us to advance at least $80 million in the Twin Cities,” Stone says. “The average gift size is around $530, and it’s the collective impact of many, many concerned individuals . . . that allows us to [help] tens of thousands of community members in need.”
Stone concurs with other experts that there are similar steps in many donors’ giving journeys—learning about challenges in the community, researching charities, and volunteering. But the United Way also encourages donors to involve family and friends in their philanthropy, and to seek out like-minded givers as part of a coordinated giving strategy.
To start the conversation, the United Way has organized giving groups around: LGBTQ issues, educating emerging community leaders, supporting professional women, and convening longtime community leaders to study the region’s most complex issues. Stone says that inviting like-minded individuals to focus their talents and resources on a specific issue is a win-win for the community. It creates connections and solves problems.
Legacy and Change
Nathan Laible describes charitable giving and volunteering in Minnesota as “a point of civic pride.” As the United Way’s director of planned giving, he has worked with philanthropists across the spectrum and he’s proud of the state’s history of charitable giving.
“We don’t want to take for granted that this will continue,” he says. “Our perspective is that making sure the next generation keeps that legacy going . . . is part of our responsibility.”
To that end, the United Way has developed a giving vehicle that is the first of its kind in the nation.
“We call it the Donor Infusion Fund (DIF). It’s similar to a donor advised fund, but it was developed for large, major donors to make a significant gift to the United Way,” Laible says. “We were pressed into doing this by a donor who challenged us to create a flexible fund.”
“[Milennials and Gen Xers] want to know how much of their gift is going to directly affect the people we are serving in a program. They want metrics and concrete background about where their gift is going.”—Erica Hollom, The Angel Foundation
Unlike a donor advised fund, which is invested for growth to support long-term giving, the DIF is designed to put the gift to use in the community over a relatively short time, and the minimum gift is $200,000.
“It is not set up to be perpetually sitting around. We require that it be spent down within five years,” Laible says. “We want those dollars out in the community.”
He added that all giving from Donor Infusion Funds will be restricted to only the nine-county metro region and in the umbrella of programs already funded by the Twin Cities United Way.
Will it work? Laible and Stone say there has been great interest in the DIF from United Ways across the country, and from donors pondering what to do with an IRA rollover.
“People are not permitted to make those rollover gifts to private foundations or donor advised funds, but they can make those charitable rollovers to our DIF,” Laible says. “It’s a really perfect match with the tax code. We are hearing a lot of positive things so far.”
Off to a Very Good Start
If charitable giving is a journey, then probably nobody better exemplifies the passion and reward of the journey than Ariana, a Twin Cities 14-year-old who is already an accomplished philanthropist.
In 2008, after one of her grandparents died from cancer, then-8-year-old Ariana and her family began fundraising for the Pinky Swear Foundation, the nonprofit dedicated to helping families with children facing cancer.
Roberts, Pinky Swear’s development director, says Ariana’s family started with fundraising but soon began attending the organization’s events and connecting with several of its “All-Stars,” the kids with cancer that it supports.
“Ariana has held events for some of the kids battling cancer. She has had a carnival, she has had movie nights. She saw the faces of the kids we are helping,” Roberts says.
To date, Ariana has raised more than $200,000 for the foundation and continues to be a strong advocate of its mission.
Next Stop: Gift Planning
For Wells of the Saint Paul & Minnesota Foundations, the most critical step in giving back is learning how to be an effective donor.
“Financial managers help grow your wealth, so you have money for charitable giving,” he says, “but they aren’t experts in how to be an effective donor.”
That’s where gift planners at community foundations (and other nonprofits) come in. They are skilled at helping donors accomplish what they want to do philanthropically by knowing the tax code, effective giving vehicles, causes, nonprofits, and issues in the community.
Community foundations and other charitable organizations often work with financial planners to help their charitably minded clients make good choices and create a strategy for giving, Wells says. “We complement what they do on the investment management side with expertise on the giving side.”
Create a Financial Plan for Giving
For most donors, the basic ingredients of making a charitable gift are a combination of their interests, values, life experiences, volunteering, and desires to change the world. But to hold those ingredients together, you must add a little—or a lot—of money to the mix.
That’s where financial planners come in: to help you make choices that allow you to add more cash to your charitable giving.
“We recommend establishing a budget to save funds for giving,” says Elise Huston, an advisor associate at JNBA Financial Advisors in Minneapolis. “This, of course, means making sacrifices in other areas if charitable giving is established as a higher priority.”
For many, charitable giving can be a bit scattered, a little here and a little there, without much thought about an overall goal. Huston says there are two concrete steps to launch a giving strategy once you find a cause you want to support:
- Determine how much you can give as part of your overall annual budget.
- Identify the best way to give (e.g., cash, appreciated stock, donor advised fund, qualified charitable distribution, planned giving campaign, or time).
“To step up your giving over time, consider how you want to prioritize charitable giving and the reallocation of budget dollars to increase annual giving each year,” Huston says. For example, you might want to allocate a part of each pay raise for charity.
Finally, Huston advises donors to exercise due diligence on the causes, groups, and nonprofits they want to support.
“We recommend learning more about the operating expenses within the organization,” she says, pointing to Guidestar.org and other online resources that offer detailed metrics on charitable organizations. “By giving to an organization with low operating costs, it will allow more of your donation to go directly to the cause you hope to support.”
