What is best practice in philanthropy?

The more active donors become in seeking to drive positive change, the more important it is to think about doing philanthropy well. There are responsibilities that go along with seeking to change lives, change places or change perspectives on social or environmental issues.

Charitable activity is governed by the principle of acting for public benefit, which has a formal legal definition in the UK. The trustees of charities have the legal responsibility to make sure charities are acting for public benefit. As a donor, your gifts enable them to do this.

Equally, if you are a major donor making gifts large enough to shape organisations or programmes, it is worth reflecting on your responsibility to serve public benefit.

There is a great deal that has been written on best practice in philanthropy. The key issues are:

1. Who gives you the mandate to drive change?
   Philanthropists are not elected, so the question of where you get your mandate is an important one. It is not enough to have a good idea for how to change things and try and implement them. Your ideas need to be rooted in the communities, issues and existing systems you are trying to change. Consultation is key.
   
2. How do you decide what to fund (and therefore what not to fund)?
   Philanthropists have limited resources, and sometimes lack knowledge, especially in the context of social or environmental change. You have to make choices about what to fund and what not to fund, but in making those choices you could create bias. Bringing a diversity of voices and opinions to your decisions is essential to ensure issues and communities don’t get overlooked. Click here to read about how you can bridge diversity in your giving 
   
3. How can you be sure you are driving change?
   It is very hard to measure change, especially if you are trying to create changes that will improve lives through a lifetime or that tackle systemic issues. In most cases you are only ever contributing to change. There is an added challenge that most charities are not resourced well enough to gather or provide data – and even if they can do this, would it ever be comparable? Getting to know the charities you support well and building trusting relationships so you can discuss success and failure is very important. 
   
4. How can you be sure you are getting straight answers?
   Linked to the previous point, it is almost a given that if you have money and charities need it, they may be tempted to tell you the things you want to hear. Building trust is important, and so is sharing the power that comes from having money. If they were on your side of the table, what would they do?

There is a growing philanthropy sector of experts who can help deepen your understanding of these issues. The key to good philanthropy is to be open to listening to others, especially those with first-hand experience or years of experience in the field.

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Barclays Bank has produced a number of reports that delve into these issues:

• Guide to Giving – overall guidance
• The path to effective philanthropy
• Motivations for giving
• Focusing your philanthropy
  

Charities Aid Foundation (CAF) authored a Guide to Giving  report, with the ambition to help donors identify where and how to give more effectively. The advice they provide helps you understand how to structure your giving, and what questions you could ask yourself to identify which cause or charity you feel committed to.

Coutts was one of the first banks to offer philanthropic guidance to their clients. Their Philanthropy Handbook provides a useful overview of questions to ask yourself.

Cazenove Capital have a wide-range of resources available to guide philanthropists but their podcasts about Practical Philanthropy offers examples of how giving has been brought into practice.

UBS provides guidance to help donors understand whether it might be better for you to add resources to an organisation, or to build their capacity, or perhaps join them and campaign for change. You can download the compass here.

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