[We are pleased to introduce this series of six articles as a companion to the book by Steven L Meyers, Personalized Philanthropy: Crash the Fundraising Matrix and Make the Real Shift to Donor-Focused Giving. While that book was written primarily for gift officers and professional advisors, these articles are written to share with donors – hopefully to begin a new conversation about philanthropy with clients/donors who ardently wish to support their most treasured charities. The articles aim to introduce some of the basic concepts of Personalized Philanthropy, a powerful new and tested model for charitable planning which challenges conventional fundraising practices in bridging current and future giving so that donor impact and recognition may begin immediately and scale up over time.]

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Personalized Philanthropy and the Grail of Fundraising
for the Four Donors Within You

• What would be the best gift you could make, even if your cause doesn’t ask for it?
• How might getting in touch with the 4 donors within you lead you to a better gift?
• Can you become comfortable with your complex motivations?
• What if you are wise, wicked, simple, and still don’t know how to ask?

What is the best gift for you? A gift design that is personalized just for you can both shape and empower major gifts that could otherwise never have happened. They could have been deferred. Or denied.

Consider the ideal gift. Could there even be such a thing? The Grail of Fundraising is exactly this chaining tog ether of your current and future gifts and capacities for giving in such a way that your overall philanthropic program supports both the current needs and at the same time secures the future needs of the organizations you care most about.

Sounds simple. But how do you execute it?

Below you will find just a few examples, in this case of scholarships, that have come about, or have been upgraded, by “meeting the donor where they are” with personalized philanthropy.

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Turning Endowment on its Head: Scholarship with Virtual Endowment

Wise: astute, aware, careful clever, discerning, thoughtful

A Wise donor, indeed. Arthur is an astute and loyal annual donor. He generally makes a gift every year from his personal foundation, almost without being asked, and he designates his gifts for general funds. Starting there, with the annual gifts, Arthur eagerly responded to ideas about opportunities for increased impact. Wouldn’t you?

From his pattern of regular annual giving, it seemed apparent that Arthur was not ready to make a large contribution at this time. He had been making gifts for so many years and was very comfortable with his habit of annual giving.

However, in an extended conversation, it turned out that once being presented with the concept and opportunity to have a greater impact, with little or no change in his annual giving patterns, Arthur would happily make two new choices.

He decided for the first time that he wanted to restrict his gifts, and he determined he would designate them for a scholarship. He did this after realizing that his regular annual gifts would go much farther as a continuing series than as individual gifts. In fact, with no change, his annual gift would perfectly support an annual scholarship.

For the years in which Arthur would continue to make annual gifts, he would have what I call a virtual endowment. His annual gift of $7,500, when viewed as part of a scholarship series, would have the power of a gift 20 times larger, since $7,500 equals a 5% spending rate from a $150,000 endowment.

Funding a long-running program with these multi-year annual gifts essentially turns endowment on its head. The focus and driver has become the repeated annual gifts, rather than the single gift of principal.

Along with his enthusiasm for continuing the tried and true pattern of continuing annual gifts, Arthur was also perfectly willing to designate that at a future point, on his death or possibly sooner, he would contribute through his foundation an outright gift or balloon payment that would fully fund his scholarship, so that it might continue in future years. At that point, a virtual endowment becomes a true endowment. In the meantime, Arthur’s scholarship would start up immediately and would be recognized now, and his scholarship student would be named right away. An exciting ‘win-win’ for everyone. Arthur’s total gift plan included a multi-year commitment for annual gifts, along with a separate commitment for the balloon payment (bequest). The two aspects were each secured by a legally binding pledge, and so the entire combined gift was counted on the charity’s books in the year the pledge was signed. And, later, if he decides his foundation can make a larger gift than originally contemplated, his master’s scholarship could be upgraded to a doctoral scholarship or postdoctoral fellowship, or even a professorial chair.

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From Postdoc to Philanthropist: A Classic Endowed Scholarship (Stepped Up)

Wicked: Reserved, mischievous, competent, expert, able, questioning

Wicked or not? Better to think of this donor as reserved and questioning. The most effective donors are the ones who give with their head and not just with their heart. Donors who need to have a give and take certainly aren’t wicked. They may just need to establish a sense of security and smart financial planning that allows them to explore options for increasing their gifts to reach ambitious goals.

Thirty years before he became a philanthropist, Richard was a postdoc. (“Postdoc” is slang for an individual holding a doctoral degree who is engaged in a temporary period of mentored research and/or scholarly training for the purpose of acquiring the professional skills needed to pursue a chosen career path.) While a student, he developed a new process for freezing protein crystals, reducing protein analysis from six to twelve months to just a couple of hours. This process became standard practice in laboratories all over the world. But Richard left academia to pursue a career in business, and as a result did not become aware of his impact on basic science until many years later. Richard and his wife wanted someone else to have the same opportunities they had. He says, “When success came, we made a list of all the things we wanted to do for the rest of our lives, and giving back was right near the top.” They decided to create a scholarship. This scholarship started out as an outright contribution to establish an endowment fund, based on their success in business. That fund would spin out an annual “spending rate” or distribution that creates many scholars in their name over the years to come (e.g., if the endowment for the scholarship costs an outright contribution of $150,000 and the spending rate is 5%, the scholarship would be expected to spin off or distribute $7,500 per year, over the years funding many students.)

Several years after creating that classic scholarship at the Masters level, with an outright contribution, they decided they wanted to augment it. However, they were not able to make another large outright contribution to move from one academic level to another. As an alternative, they obtained a charitable gift annuity. The gift annuity immediately gave them the assurance that their fund would grow in future years, increasing the impact of their scholarship. At the same time, their gift annuity provided them an income tax charitable deduction in the year of the gift as well as a stream of lifetime payments for the rest of their lives. This gave them the security and assurance to step up their gift without having to wait until a later date or defer their gift until after their lifetime. They get to see and enjoy their gifts in action.

After their deaths, the remaining proceeds will be added to their scholarship fund, helping it step up to the higher level, to a postdoctoral. It seems likely they will find other ways to add to the impact of their scholarship fund over a productive and philanthropic lifetime as conversations and ideas continue. It is possible their Masters could move to a doctoral scholarship or a postdoctoral fellowship, or even a professorial chair. In our organization, donors frequently use charitable gift annuities, combining them with bequests and outright gifts to establish major philanthropic funds.

When you use the basic building blocks of philanthropy toward a purpose, over time you can achieve a larger goal than you might imagine with any single gift.

A fair number of donors have described themselves, in terms of the 4 donors, as both wise and wicked. Wanting to help other people and humanity generally, but also motivated by an internal metric that demands accountability and responsibility for themselves first. Ultimately, the wise donor is a donor who knows who they are and where they are. Arthur understood and embraced his true longing to help real people, not just an undefined cause; he found a way to link his current and his future giving. Richard and his wife understood that they wanted to help others as they had been helped and yet, at that point in their financial life cycle they saw how a life income arrangement providing for their own needs, could enable them to make an additional gift. This was the best gift for them at that point in their philanthropic journey.

Next week, article 4: The Power of Spending Rate to Transform Philanthropy

Steven L. Meyers, Ph.D., is Vice President of the Center for Personalized Philanthropy at the American Committee for the Weizmann Institute of Science.