From spending and saving to borrowing and investing, we are constantly urged to “take control” of our money. But what about our giving? “Take control of your generosity” isn’t a well-known tagline, but it could be with a little time and consideration.
Taking control of our generosity is something people should be thinking about because doing so is very powerful, rewarding, and fun. In the not-too-distant future, new tech-enabled platforms will make this happen by empowering Canadian donors and charitable champions in much the same way as financial advisors and online platforms empower investors.
The stage has been set for this shift by an exponential surge in the number and value of donor advised funds (DAFs). These philanthropic tools, which enable people to donate first, receive a tax receipt, and then choose how they want to allocate their donations at a later time, are now estimated to be worth a combined $6 billion in Canada, and are projected to total $10 billion by 2026. This approach is particularly relevant during the annual end-of-year “giving season,” when many Canadians want to donate ahead of the Dec. 31 tax deduction deadline but may not have clear ideas of the causes they wish to support.
Power to the people
DAFs are growing in popularity because they enable donors to take control of their generosity. Like bank accounts dedicated to charitable giving, they provide donors with the time and space to be proactive and strategic about their approach to giving, and to focus on creating change when and how they see fit. By contrast, most Canadians only give when asked. They react to fundraising, which is a targeted sales mechanism that can leave donors feeling unfulfilled or fatigued. If people are only ever prompted to give situationally – at the cash register, on the street, via emailed crowdfunding campaigns and so on – they miss out on the joy, purpose and impact that comes from giving intentionally.
DAFs are also becoming much more widely accessible. Once the domain of wealthy donors seeking less expensive and more streamlined versions of private foundations, free-to-join online DAFs like Charitable Impact’s allow anyone to participate, regardless of how much money they choose to give away or which charities they choose to support. Using a tool built for their needs, donors can more naturally discover and learn about charities that match their interests, and connect with like-minded philanthropists to support their decision-making and become more effective and impactful donors over time. Giving is a skill that can be learned, and that improves with experience.
Taking the next step
Regardless of how experienced you are with giving, it can be hard work to feel really confident about the charities you choose. The time has come for this new generation of digitally democratized DAFs to leverage the expertise and passion of those Canadians who are most intimately engaged with the causes supported by charities. The social worker who has helped turn countless lives around in Vancouver’s Downtown Eastside, for instance, or the researcher who for decades has been sounding alarm bells over the effects of climate change in the Canadian Arctic.
If today’s most progressive DAFs are like online bank accounts for charitable giving, the next generation will be like online brokerages led by what I call impact advisors. Just as investment managers help clients choose which stocks to buy or mutual funds to favour, impact advisors will help Canadians maximize the impact of their generosity. And just as top financial advisors highlight their stellar stock market returns, impact advisors will have proven track records of maximizing support for charitable causes.
How will the latter share their expertise and passion while allowing others to rally around it? Simple: By starting an online DAF, for free, that’s accessible to everyone. They will then use that DAF to share their charities of choice for the cause they know so much about.
Think about how exciting and rewarding it would feel to be part of a movement led by a dynamic individual who has devoted much of their life to the cause you both support. Consider how this approach to charitable decision-making contrasts with the experience of fundraising as we know it today.
Offloading charitable decisions to an impact advisor is 100-percent analogous to how we treat our finances. When our bank accounts grow, investments often follow. When we lack the expertise to confidently make those investments, we enlist advisors. Then when our investments grow, we feel rewarded by our approach and confident in it. Why should charitable giving be any different?
The future is fulfilling
As it stands, Canada’s most knowledgeable cause experts and change agents can’t easily share their wisdom with the hoards of donors who would benefit from it. Having more confidence that “good” high-impact charities are ending up with the hard-earned money generous Canadians choose to give away is key to increasing participation in and joy from giving. Action and advocacy are powerful forces, to be sure, but delivering crowdsourced financial support to portfolios of registered charities has tended to be so complicated and costly that it has remained in the hands of fundraisers working for individual charities. But in much the same way that Instagram has fuelled a surge in social influencers who are market-moving experts in fashion, interior design, the culinary arts and so on, digital DAFs will fuel a surge in charitable influencers and, in turn, a corresponding jump in overall giving bolstered by the flywheel effect of soaring donor confidence, heartfelt interactive engagement, and universal accessibility.
And that’s a prediction you can take to the (online) bank.