Good with Money
You’ve spent years managing money with discipline and precision. But does that same rigor apply to how your family gives it away? Here’s a post to help refine your thinking about giving, whether you’re a family business, family office, or foundation.
Good with Giving?
Having learned the value of a dollar, you’d like to support cause leaders and nonprofit organizations who understand the focus, discipline, and sacrifice required to earn the money you are donating. You’d like them to be careful stewards of donated funds, putting every dollar to work for mission fulfillment and maximum impact. But giving wisely and well is challenging for many family businesses. There are at least two reasons for that:
First, it can be hard to find efficiency-minded, outcomes-focused cause leaders and nonprofits who embrace accountability. We’ll return to that.
Second, business acumen can be both a help and a hindrance to family philanthropy. Phil Buchanan founded the Center for Effective Philanthropy. In his book Giving Done Right: Effective Philanthropy and Making Every Dollar Count (Public Affairs, 2019) he writes, “Most effective givers … know that, while their business acumen (or that of their forebears) may have created their wealth, giving effectively requires a different set of skills. It necessitates a different level of collaboration and relationship building, deep humility, and a recognition of how difficult it is to chart cause and effect.” (p. 4)
Four Types of Givers
Buchanan describes four types of givers. Which type best describes your family’s philanthropy up to this point?
- Charitable Bankers. Give occasionally when asked. Decidedly nonstrategic.
- Perpetual Adjusters. Always shifting support as the breezes blow this way, then that. Unsure how or even whether it all coheres.
- Partial Strategists. Can name a category of support and allude in general terms to a strategy for impact but cannot articulate a logic connecting the use of resources to goal achievement.
- Total Strategists. Focus consistently on what will enable goal achievement – and ensure that all decisions are guided by that focus.
Would it surprise you to learn that only 20% of affluent donors track their giving’s effectiveness? I’ll admit, I was surprised – and disappointed – when I saw that stat in the 2025 Bank of America Study of Philanthropy My disappointment lightened a bit when I realized that there may be good reasons why some affluent donors aren’t concerned about effectiveness. A lot depends on a giver’s motives.
Three Categories of Motives
Researchers Neus Feliu and Isabel C. Botero combed through 25 years of publications about family business philanthropy globally and identified three general categories of motivations. Not all giving is the same, and understanding why your family gives is the first step toward giving better.
Family-Oriented Motives
Family Identity – giving promotes family unity, cohesion, and connections between generations.
Legacy – giving in appreciation for the opportunities the community provided to the family business’s founder(s), aimed at extending those opportunities to others.
Wealth Advantage – giving primarily to accrue wealth benefits to the family through tax advantages.
Business-Oriented Motives
Strategic – donations to increase sales, enhance operations, or improve financial returns.
Political – supporting causes favored by political leaders or parties, or other influential personal contacts of the family business’s leaders such as the philanthropic elite.
Expectations – giving in response to social expectations held by stakeholders within the firm, peer organizations, or the community as a whole.
Dual (Family and Business) Motives
Reputational – giving creates the perception that the business is a positive influence in the community which can translate into opportunities. Particularly appealing to families whose name is associated with the business.
Moral – giving back to the community to affect social change or solve social problems.
Educational – philanthropy provides a context in which family members learn to manage their wealth and develop and practice leadership skills, and/or where junior generations are educated about issues important to the family and the business.
These are not mutually exclusive, and they may change over time. But do you see how the type of giver you are depends a lot on your motives? And if you’re not in a position right now to give money, these motives still apply to giving your time, your expertise, and your voice in advocacy.
A Great Need for Strategic Givers
The challenges of our times, and the huge potential positive impact of thoughtful family business philanthropy make a strong case for strategic giving. Because of the “Great Wealth Transfer” underway globally, the most influential philanthropists in history are walking among us now, and the need for targeted effective philanthropy is great. But where to start?
From Categories to Goals
Buchanan is helpful here. “Too many givers aren’t clear on their goals. They can tell you the category of their giving: ‘We fund education,’ or ‘We support the environment.’ But they can’t tell you what they hope to achieve. Without goal clarity – ‘I am seeking to improve the quality of high schools in Omaha, as judged by the number of students who go on to two and four year colleges’ – it’s tough to make decisions about what to support, much less to gauge progress.” (p. 78)
Some of our most rewarding work is helping business-owning families become more thoughtful, strategic, and impactful in their giving. A few simple concepts can help, such as the four traditions of American philanthropy and the powerful pilgrimage from categories to goals.
A Theory of Change
Philanthropic strategists have found great value in developing a theory of change. Thankfully, the Annie E. Casey Foundation has devoted significant resources to equipping other donors with this invaluable tool. They explain: “A theory of change is both a conceptual model and a concrete product that reflects the model. A fundamental component of any large-scale social change effort, theory of change can help teams strengthen strategies and maximize results by charting out the work ahead, what success looks like and how to get there.” We have deep personal experience with this tool. We have seen how a theory of change, paired with robust outcomes assessment, creates learning that informs an iterative approach to grantmaking producing better and better results.
One Example of the Power of a Theory of Change
A family foundation we were privileged to work with gave generously to support the development of an entrepreneurial mindset in several American undergraduate engineering programs. They learned that the programs’ most entrepreneurially-minded students were at greatest risk of dropping out in the first year. To combat this attrition, each university developed curricular and extracurricular resources to affirm the entrepreneurial orientation of these students and help them persevere through the first-year challenges that had tripped up so many of their peers. The schools’ faculty then shared these resources with one another, identified best practices, and continued learning together in virtual and in-person meetings about cultivating an entrepreneurial mindset in undergraduate engineering education. This story illustrates theory of change impact at several levels including Individual Impact (improved student retention), Organizational Capacity (improved university graduation rates), and Alliances (collaborative relationships among the schools’ engineering faculty). All of this was in service of the initiative’s overarching goal: equipping the next generation of American engineers with an entrepreneurial mindset as a vital aspect of preserving our global economic competitiveness.
Finding Good Partners – 3 Questions You Can Start Using Today
We mentioned in our second paragraph that it can be hard to find efficiency-oriented, outcomes-focused cause leaders and nonprofit organizations. But it is possible! Your theory of change will enable you to vet prospective grant recipients very effectively. You’ll learn to ask them three questions:
What are you trying to achieve? Listen for clarity on goals, not just a category. You’re interested in outcomes (Omaha grads enrolling in college) not just inputs (teaching Omaha’s high schoolers).
How are you seeking to achieve it? Listen for the strategies and tactics they are using to achieve their mission, and the rationale for this approach.
What information do you use to assess progress? This is called “outcomes assessment.” Strong grantees measure outcomes to track whether their efforts are actually changing things for the target population. They use that data to get better.
In time, as you discover high-impact partner people and organizations, you may begin to explore supporting organizations, not just programs. Buchanan lists several traits of organizations worthy of support (p. 111).
Seven Pillars of Excellence for Nonprofits
- Courageous, adaptive executive and board leadership.
- Disciplined, people-focused management.
- Well-designed and well-implemented programs and strategies.
- Financial health and sustainability.
- A culture that values learning.
- Internal monitoring for continuous improvement.
- External evaluation for mission effectiveness.
If we can help you achieve clarity about motives for family philanthropy, progress from category to goals, or explore developing a theory of change as a basis for objective outcomes assessment and continuous learning for iterative grantmaking, contact us today. The Good Book says that God loves a cheerful giver (2 Cor. 9:7). Total Strategists with goal focus and a theory of change are not only cheerful, but joyful, impactful, and appreciated. Happy giving!
