By Eleanor Roberts, Private Client Manager
You will not be surprised to hear that, as a private client manager at the Charities Aid Foundation (CAF), I find philanthropy an exciting and innovative sector. Every day, I get to see the impact of thoughtful giving. However, some myths and misconceptions still persist that prevent both new and more-experienced philanthropists from making the most of their giving.
Myth one
Today's problems are too big for anyone to solve
With so much going on in the world right now, it can feel incredibly overwhelming. And many donors question if their contribution can make a genuine difference with an ever-growing funding gap. But do not let this discourage you.
By developing a clear plan and strategic approach to your philanthropy, you can make sure that you are always giving with purpose and impact.
Ask yourself – what do I care about? What does change mean to me? And where can my contribution make the most difference? By taking a step back to think about the impact you want to make first, the perspective you gain will reduce the risk of feeling overwhelmed as well as help make your giving more fulfilling.
Myth two
Efficient charities have low overheads
Like all organisations, charities need good governance and administrative support to run well. Strategic development, impact measurement, robust financial management and good governance are vital to a charity’s resilience and impact, but they also contribute to their overheads. In fact, based on CAF’s work with charities across the sector, we know that higher running costs can lead to better performance.
So, if you are making project-specific donations, consider taking a full-cost recovery approach. This includes a percentage contribution to a charity’s overheads to make sure the lights stay on and the project runs effectively.
Myth three
You need to restrict donations to generate impact
One of the best ways to make an impactful difference is to give unrestricted donations to charities you trust. Find out more about the charity you are considering supporting. You do not need to be an expert. You can start by looking at the charity’s vision, talking to their decision makers and understanding the difference they are trying to make.
Then if you decide you would like to make a gift, listen to what they need most and be flexible. By taking a more trust-based approach, you can help the charity to be more agile and respond to the needs of the communities they support. A responsible charity will always be able to share the impact of your donation with you, whether it is restricted to a specific project or not.
For example, a family foundation, working with CAF, supported the UK charity, MSI Reproductive Choices, which provides reproductive healthcare across 36 countries, with flexible funding. The foundation committed $15 million in total, over three years, enabling MSI to invest in outreach teams globally and pivot services to areas of greatest need.
Myth four
Philanthropy should only fund tried and tested solutions
Philanthropic funding can help support positive innovations within the charity sector in ways that statutory and traditional grant funding cannot.
Taking an entrepreneurial approach to your giving can be incredibly rewarding. If you have built a strong trust-based relationship with your charity partner, you can help them test new approaches and build a culture of innovation – this can be a game changer.
So, talk to your charity partner about their approach to innovation. For example, how do they embed evaluation and learning into their strategy? Are they able to take time to reflect on failures and learn as they go? Do they have the capacity and unrestricted funding they need to target their energies on supporting projects, rather than on sourcing the next round of project funding.
When you work with CAF, we will help you manage due diligence like this. Allowing you to focus on making an impact, while we make sure the charities you support comply with all necessary regulations.
Myth five
The only benefit of giving is tax relief
What we know from working with donors around the world is that giving is personal, and about more than financial benefit. It offers you and your family the chance to help achieve positive change for the causes and communities that you care about the most.
Through your philanthropy, you can meet people from diverse backgrounds, learn from innovative leaders, gain a deeper understanding of the solutions to some of the biggest challenges our society is facing, and develop insights into governance and impact. These are all real examples of the added value getting involved with giving has had for individuals we work with.
There are also different ways to give your support, for example, offering your skills and expertise to the charities you support. More purposeful and impactful giving can open up a whole new chapter in your life.
Giving more impactfully
Challenging these misconceptions and taking a more strategic approach to your giving can be a learning curve. But remember, you do not need to navigate this alone. Our Private Client team is here to provide expertise, resources and tools to help you find your way and help generate greater impact.