Four Key Steps to a Meaningful Philanthropic Strategy

Philanthropy is incredibly personal. Individuals and families engage in it for various reasons, and many find that it can bring great purpose and joy to their wealth. 

If you're new to philanthropy, it can be difficult to know where to begin. In today’s complex and interconnected world, there are many worthy causes and ways to get involved. How can you make a difference?

Here are four practical steps that can help you craft and execute a personal, coordinated, and strategic plan to create lasting impact with your philanthropy.

1. Reflect on your key motivations and craft a philanthropic mission statement

Understanding the potential factors that drive you to philanthropy can help shape your focus, determine the scale of your giving, and sustain your impact over time. You may engage in philanthropy to:   

• Make a difference in a community or on a specific issue  
• Respond to a cultural or religious calling to give back  
• Start or continue a family tradition or legacy
• Capitalize on tax or wealth planning opportunities   

Many of our clients distill their motivations into a philanthropic mission statement that defines what causes they want to fund and clarifies the long-term impact they hope to achieve.

These two examples of mission statements can serve as a guide for drafting your own: 

2. Build your philanthropic strategy

Once you have your mission in place, you can begin building a full philanthropic strategy. Whether you give through a foundation, donor-advised fund, or trust structures, having a strategy to guide your resources is important. These three pillars can help you start the process:

• Develop a theory of change: A theory of change is often used to identify and guide decisions around effective approaches for the causes you hope to support. Understanding an issue’s scale, speaking to key players, and gathering research and evidence for what has and hasn’t worked in the field can help hone your strategy, bring your philanthropy to life, and ensure your endeavors are effective. 
• Create clear goals and success metrics: Specific goals can help focus efforts on your desired impact. Incorporate both the outcomes you’d like to see as well as your time horizon (i.e., when you’d like to get started and how soon you’d like to see results). Your goals can help articulate what success looks like and how you’d measure it, year after year. 
• Consider all your resources: An organization’s needs and how you’d like to respond may extend beyond financial support. Consider how you could leverage your time, talents, and networks to make a difference. 

You can also think about how you want to be involved in your philanthropic efforts. Consider these four philanthropic plays: 

• Funding nonprofit programs that provide services directly to those in need 
• Increasing the capacity of systems so that multiple programs and organizations are more effective and efficient 
• Supporting policy and advocacy initiatives that change the environment in which nonprofits work 
• Funding research and innovation with the potential for game-changing progress

3. Evaluate nonprofit organizations and partners

When you have solidified your focus and approach, the next step may be to search for new organizations to partner with. A landscape scan can help you sift through gaps or opportunities in funding or impact, and through the vast number of potential organizations to identify those best aligned with your values and goals. Once you’ve identified organizations, you’ll want to:      

• Assess the organization’s effectiveness, including the strength of its leadership and strategy, as well as its financial sustainability using available reports, such as the organization’s form 990.   
• Assess program effectiveness, which can include the strength of its operations and program-level impact data. 
• Assess societal impact, including the organization’s and program’s metrics over time. 

You also may evaluate long-standing organizations that have received your philanthropic support to determine if a more intentional approach could be useful—whether that’s funding a new project or evaluating the organization’s need for additional resources. 

4. Monitor, evaluate, and learn to adjust your approach

Once you and an organization decide to work together, it can be helpful to align on key goals and success metrics. Doing so at the beginning of the relationship can promote a greater level of mutual transparency and understanding.   

As you create a dialogue with the organization, reflect on these key questions:  

• How do you and the organization define success? What shared metrics will you use to measure it?  
• How will you or they benchmark progress?  
• How do other similar and even unrelated organizations measure success? Is there anything you can learn from them? 
• How do people in your network measure success in their philanthropy? 

Metrics are a critical part of philanthropy. In addition to quantifying lives touched or changes made, a primary purpose of measurement is to learn what’s working and what could be improved. Importantly, co-designing metrics together with an organization (instead of solely utilizing yours as a funder) enables an aligned outcome and better community collaboration for longer-term sustainability.

As you embark on your philanthropic journey, staying current on the latest philanthropic trends and enduring approaches can help further your impact—there are often new mechanisms and vehicles for philanthropy which could sharpen your efforts. 

If you’re interested in beginning or refining your philanthropic strategy, reach out to your Goldman Sachs advisor.