Most people make charitable donations at least sporadically, if not frequently. You might donate regularly to your local food bank or animal shelter, but that doesn’t necessarily mean you consider yourself a philanthropist.
That leaves the question: what’s the difference? At what point does charity become philanthropy?
What is the Definition of Charity?
According to The American Heritage College Dictionary, charity is defined as the “provision of help or relief given to the poor” or “benevolence or generosity toward others or toward humanity.” Charity is generally made in the short term, has short-term goals (feeding the hungry, for instance), and is often more reactionary.
For example, if you recently donated to help those affected by the horrific wildfires in California, that’s charity. (And it’s great, so thank you.) You reacted to an external situation and made one donation (or a few donations) to solve an immediate and short-term problem.
How is Philanthropy Different?
Philanthropy is more all-encompassing than charity. In fact, the word “philanthropy” means “the effort or inclination to increase human well-being” or “goodwill to fellow members of the human race.”
Philanthropy: goodwill to fellow members of the human race.
~Merriam-Webster
When looked at this way, that covers a pretty broad spectrum.
Technically, philanthropy includes charity. But it also includes other activities for the greater good, such as volunteering and political activism.
Short-Term Help vs Long-Term Change
When we think about charity vs philanthropy today, the main difference is short-term assistance vs long-term impact.
In general, charitable donations are one-time gifts, although you might contribute to the same charities multiple times or establish recurring gifts. Even so, these are more reactionary contributions and usually require little thought before deciding to give.
Philanthropy takes a deeper and longer-term approach to a problem or opportunity, so you can make lasting change in issues that matter most to you.
To do that effectively, you need to clearly define what those issues are and what kind of an impact you can make with the resources (money, time, and influence) you have available.
For example, while there are plenty of charitable giving options for helping those displaced by the California wildfires, there are also options for addressing climate change that are both charitable and philanthropic, such as
- Donating to or volunteering with organizations that work to fight climate change
- Lobbying for public policy that protects the environment.
- Mobilizing others to get involved as donors, volunteers, and activists.
- Establishing a foundation or a fund with your local community foundation that invests in programs to protect the environment.
How to Become a Philanthropist
In addition to considering the financial commitment you’re able and willing to make, you should also consider how personally involved you want to be in effecting this change.
Do you want to sit on the board of a charitable organization so you can be involved in making decisions about the organization’s next moves?
Do you want to establish your own foundation and be directly involved in giving decisions, bringing others along with you?
Or do you want to allocate assets to organizations addressing the issues you care about and let them decide the best way to use those dollars? Which of these options will be most effective and give you the greatest satisfaction?
Making those decisions can be easier said than done, and that’s where a philanthropic advisor can help. I work with my clients to help them articulate their values, determine the impact they wish to have, and decide how to use philanthropy for the greatest success, aligned with their goals and integrated into their financial plans.
I also work alongside my clients’ financial advisors to determine the best way to structure their philanthropic investments, so they can leverage sound tax planning and have the biggest positive impact on the world while meeting other objectives for themselves and their families.
If you’re curious about how we can change the world together, let’s talk. I would love to hear about your interests and goals. You can go here to get the conversation started.