Buy-side vs Sell-side Philanthropy
There are many consultants out there who advise non-profits on things like strategy, marketing, grant-writing, etc. The market for the philanthropic dollar follows the usual 80/20 rule: 80% of the funding comes from 20% of the donors (it’s probably far more skewed than that – more like 95/5). A particular area of focus for consultants is therefore how to capture the high-end of the market – HNW family giving. We can think of this as the ‘sell-side’ of philanthropy.
On the ‘buy-side’, there are the families. Because of supply-demand economics, it is a buyer’s market: causes are most always chasing families rather than the other way around.
Families choose causes for a variety of reasons, but too often those reasons are unorganised and reactive. They may be a response to a personal connection, or a direct solicitation. That may leave family members looking back at a schedule of the gifts for the year and wondering why, and what their impact has been.
It behoves families on the ‘buy-side’ to take a more strategic and proactive approach to their philanthropy. That starts with having a strategy and goals, and then choosing to allocate in a more sophisticated way. This can be balanced by an ‘allocation’ or ‘bucket’ for opportunistic or reactive giving.
Consider This: What proportion of your family’s giving is reactive vs proactive? Does your family have articulated goals for its philanthropy? How does it measure against those goals?
- Top Tips For Effective Charitable Giving
- Philanthropy: Four Steps To Giving Strategically
- It’s a great time to help clients think about their philanthropy
Here is more on reading on family business governance.