Atrocities, biological warfare, carnage. Aid, best practices, country building. Such are the ABCs of philanthropy in war-torn countries like Syria and the Sudan. While one person’s terrorist may be another’s freedom fighter, the same tragedies are suffered by all sides. And philanthropists who try to alleviate that suffering must negotiate their own minefields, strewn with a morass of government regulation and the threat of fines and criminal prosecution.

Syria is a prime example. It is common knowledge that while the world watches the unimaginable atrocities visited upon its civilian population, donations are frequently intercepted by members of ISIS (otherwise known as the Islamic State of Iraq and Syria). In some instances brave individuals are driving cash and supplies over the borders, attempting to ensure that philanthropic aid is not diverted before it reaches its intended beneficiaries. The Charity Commission of England and Wales has recently published guidance that acknowledges the importance of providing humanitarian aid to those in Syria while warning of various obstacles, which in addition to the obvious physical dangers, include inadvertently engaging in terrorist financing. Syria is subject to a broad sanctions program administered by the U.S. Treasury’s Office of Financial Assets Control (OFAC) in conjunction with the U.S. Department of Commerce’s Bureau of Industry and Security, which apply to all U.S. citizens as well as U.S. entities such as private foundations and other 501(c)(3) organizations. U.S. charities that wish to make donations to Syrian charities must apply for a license from OFAC. Otherwise donations may be made to a U.S. charity that is registered under the OFAC Syria sanctions program or to a charity in a third country.

The most prudent and, in many cases, the most effective strategy is to work through NGOs with significant experience in the region. A Gulf-based donor with close ties to Syria has suggested that Médicins Sans Frontières, as well as the Maram Foundation and Karam, both of which are U.S. charities, continue to be successful in delivering aid to those affected by the Syrian crisis. The Maram Foundation runs the Atmeh Refugee Camp in Idleb, Syria’s largest refugee camp for internally displaced people, providing all food, medical and hygiene supplies. Karam operates a range of projects on the ground within Syria, including vital food distribution, and social and educational projects.

Of course Syria is not the only country in need of humanitarian assistance. It is however, along with Burma (Myanmar), Cuba, Iran and the Sudan, the subject of comprehensive OFAC sanctions programs. Sanctions and other anti-terrorist legislation have long been a part of governments’ foreign policy arsenal.

Various governments and international organizations (including the Financial Action Task Force, the European Union, and the United Nations) have issued guidance and sanctions in an effort to combat terrorism. Various countries, including the United States and the European Union, have also enacted anti-bribery legislation that impacts charities. The regulations and guidance issued by OFAC and the U.S. Department of Commerce include detailed guidance for U.S. donors and their foundations. They are also relevant for non-U.S. donors who may wish to fund projects by making grants to or partnering with U.S.-based NGOs. OFAC has also issued “Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.- Based Charities” which are, as the name suggests, voluntary but may be useful to many donors. (These guidelines in particular have also been the subject of significant criticism.)

As a general matter, donors may begin their due diligence by reviewing the “Specially Designated Nationals and Blocked Persons List,” or SDN list, published by the United States and the United Kingdom’s consolidated list, which includes those persons and entities on the European Union’s and United Nations’ lists. The U.S. list includes individuals and entities throughout the world (including the United States) that are designated due to their activities in targeted countries as well as others such as terrorists and narcotics traffickers. Regardless of whether an entity or individual is on an SDN list, donors are required to undertake their own due diligence to determine if they are providing assets or services to entities that are owned, controlled by or acting on behalf of a person or entity on the SDN list.

The SDN lists can be problematic. Once an individual or organization appears on the list, it can be difficult to get off, regardless of circumstances. On July 18, 2013, the European Court of Justice issued an opinion confirming that the procedures used to list the plaintiff, whose removal from the list had been recommended over 10 years ago by the United Nations, were flawed. One U.S. court has found that the U.S. government froze charitable assets without probable cause, in violation of the Fourth Amendment to the U.S. Constitution. A second district court determined that illegal wiretaps were used to gather evidence supporting inclusion on the SDN list; however on appeal it was determined that the government had not waived sovereign immunity and the district court decision was vacated. OFAC issued guidance in 2010 relating the release of limited amounts of blocked funds to cover legal fees and costs incurred by U.S. persons who seek to challenge their designation as blocked persons.

The next step for charities interested in countries subject to sanctions programs is to review the relevant sanctions. Broadly speaking, the comprehensive sanctions programs allow for philanthropic activity through either general licenses (which may require reporting but do not require a license before the activity takes place) or specific licenses, which apply specifically to the applicant. Sanctions programs are subject to change at any time—changing even as this article was written. Donors are encouraged to continuously monitor OFAC licensing procedures and related guidance and regulations.

The United States first imposed sanctions on Burma in 1988 when it suspended aid to the country after the shooting of protesters by the military junta. Humanitarian assistance was permitted to continue. In light of the momentous changes that have taken place in the country over the past few years, the United States has eased its policy, paving the way for full economic engagement with Burma, while at the same time providing safeguards in the event that the Burmese government changes its policies. Sanctions relating to philanthropy have been eased accordingly. In April 2012, OFAC expanded the types of support for humanitarian, religious and other non- profit activities that could be provided in Burma, provided that they do not benefit any “blocked persons.” These developments should also pave the way for the creation of micro-finance projects in Burma.

Up until the recent announcement of reinstated relations between the two countries, OFAC maintained a comprehensive sanctions program against Cuba, and a new FAQ published by the Treasury Department updates the information as of January; licenses are available for a wide variety of philanthropic undertakings. The thawing of U.S. relations with Iran, historically referenced as part of the “axis of evil,” is also evident in the easing of OFAC’s sanctions programs. On September 10, 2013, OFAC issued two new general licenses as part of the Iran Transactions and Sanctions Regulations. One authorizes NGOs to export services to Iran in support of non-profit activities, subject to certain reporting requirements and a cap of $500,000 on the transfer of funds over a 12-month period. The other authorizes the importation and exportation of certain professional and amateur sports services and exchanges, including activities related to exhibition matches, sponsorship or players coaching, refereeing and training.

OFAC sanctions apply differently to different regions of the Sudan and to a large extent no longer apply to the Republic of South Sudan, which gained its independence in 2011. Generally, humanitarian relief is permitted in Darfur and “specified regions” of Sudan and favorable licensing policies are applicable in other regions. It appears that relations with the Sudan may be easing as well in light of a deal struck between the U.S. company, General Electric, in the Sudan and a reported statement by Sudanese Foreign Minister Ali Kharti that several U.S. companies which applied for licenses to operate in Sudan were granted, which he believes “is an indicator that investments and commercial relations could overcome political difficulties.” In the meantime, it is permissible to donate articles that relieve human suffering such as food, clothing and medicine.

The United States has targeted programs which prevent individuals from doing business with blocked persons in Somalia, Western Balkans, Belarus, Cote d’Ivoire, Democratic Republic of the Congo, Iraq, Liberia (Former Regime of Charles Taylor), Persons Undermining the Sovereignty of Lebanon or Its Democratic Processes and Institutions, Libya, North Korea, Somalia and Zimbabwe, as well as other programs targeting individuals and entities around the world. In certain cases OFAC has been more flexible. For example, the U.S. Treasury website’s Frequently Asked Questions regarding private relief efforts in Somalia recognize that, due to the highly unstable environment and urgent humanitarian needs in the country, some food, medicine or payments may unintentionally be provided to al-Shabaab, a terrorist group. The FAQs state that, so long as the donor did not have reason to know it was dealing with al-Shabaab, “such incidental benefits . . . would not be a focus for OFAC sanctions enforcement.”

Legitimate concerns have been raised about the breadth of the power that governments may marshal to investigate and audit philanthropic endeavors and freeze assets. Depending on where one’s sympathies lie, these sanctions may be seen as necessary or the misguided edicts of Western governments. Some jurisdictions such as the European Union have promulgated regulations prohibiting compliance with U.S. sanctions where they conflict with the EU’s. Furthermore, the applications of sanctions may differ, based on whether the individual or entity is a charity, a corporation, or a branch of the U.S. government.

Chiquita Brands International Logo

Take, for example, the case of Chiquita Brands International (“Chiquita”), which through its Banadex Unit owned banana operations in Colombia. From 1997 to 2004 Banadex made payments to United Self Defense Forces of Colombia (also known as AUC), a violent paramilitary and drug trafficking organization, for protection from guerrillas that had previously murdered Chiquita employees. As of September 10, 2001, it was a crime to finance AUC. In 2004 Chiquita sold Banadex to Banacol, which then provided bananas to Chiquita. Chiquita was subsequently indicted by the U.S. Department of Justice in connection with its payments to AUC, and in 2007, pled guilty to doing business with a terrorist organization and paid a $25 million fine. However “Chiquita turned a $49.4 million profit from its Colombia operations during the period while it was making the illegal payments to the AUC. . . . Defendant Chiquita’s payments may have protected its workers while they were working on the company’s profitable farms, but Defendant Chiquita’s payments field the AUC’s terrorist violence everywhere else.” During the sentencing hearing Chiquita’s lawyer noted that Chiquita had voluntarily approached the Department of Justice when it asked whether it should stop making payments, the government’s response was equivocal. The “government did not want to say ‘stop’ explicitly because it did not want to have blood on its hands if someone was, in fact, killed. It couldn’t say ‘continue’ because it did not want to hurt its case and so it looked for...a middle ground.”

If a charity made payments to a “specially designated global terrorist” its assets would be frozen and likely its directors would be subject to prosecution. Apparently when a corporation makes such payments, it is one of the costs of doing business in Colombia.

Could Chiquita’s predicament have been resolved if NGOs had trained managers to use nonviolent methods of conflict resolution? In Holder v. Humanitarian Law Project, the U.S. Supreme Court determined that it was a crime for a U.S. NGO to train Kurdish and Tamil groups on the SDN list to use peaceful methods of reaching their objectives, such as petitioning the United Nations and other entities and to engage in political advocacy for groups. Ironically while everyone’s stated wish is “world peace,” it is a crime to assist terrorists to find peaceable methods of making themselves heard on the world stage. While it is understandable that tax relief is denied those who assist parties who are not in alignment with U.S. foreign policy, providing groups designated as terrorists with alternatives to terrorism is also a laudable result.

While donors are required to follow these rules under threat of civil penalties and criminal prosecution, the U.S. government struggles to end its own terrorist financing. In his July 2013 Quarterly Report to the U.S. Congress, John F. Sopko, the Special Inspector General for Afghanistan Reconstruction (SIGAR) expressed concern about 43 cases in which material “supporters of the insurgency” in Afghanistan, including supporters of the Taliban, the Haqqani Network and al-Qaeda, had received government contracts. SIGAR reported that the Army Suspension and Debarment Office declined to act on these cases as it would violate the contractors’ due process rights if they were suspended or disbarred based upon classified information or findings of the Department of Commerce. Sopko concluded: “I am deeply troubled that the U.S. military can pursue, attack and even kill terrorists and their supporters, but that some in the U.S. government believe we cannot prevent these same people from receiving a government contract. I feel such a position is not only legally wrong, it is contrary to good public policy.... I continue to urge you to change this faulty policy and enforce the rule of common sense in the Amy’s suspension and debarment program.”

Peter Norton, founder of the company whose ubiquitous computer software bears his name, sold his firm in 1990 to devote himself to philanthropy. With his wife, Eileen Harris Norton, he ran the Peter Norton Family Foundation, which has given heavily to arts organizations and some social-service groups. In 2000, Peter Norton filed for divorce. As often happens when a large fortune is at stake—Norton’s assets exceeded $100 million—the case was heavily litigated over a period of years. Eileen won the first round when a judge ruled that roughly 87 percent of the proceeds from the sale of the software company were to be considered community property, subject to equal division. One issue not on the table, however, was what would happen to the foundation.

This is an especially tricky subject. A foundation, strictly speaking, is not a marital asset—once money is donated, it is no longer under the personal control of the benefactors. Yet this is a grey area because influence over the foundation is, in a way, a fringe benefit of a marriage. That’s why many divorce attorneys will put the family foundation on the table during negotiations even though it is not a financial asset. “Say there’s a $100 million foundation,” explains William D. Zabel of Schulte Roth & Zabel in New York, a leading divorce lawyer to the rich and famous. “The husband says to the wife, ‘That’s it, you’re out, you have nothing more to say about it.’ I’d take that case in a minute.”

Virginia Esposito

The confluence of two factors—the astonishing growth in the number of family foundations and a national divorce rate that continues to hover near 50 percent—suggests that family foundations will increasingly become an issue in divorce. “People are establishing foundations at a younger age,” says Virginia Esposito, president of the National Center for Family Philanthropy. “Everything in this founder generation is new. And changes in the family, happy or otherwise, are inevitable.”

Established in 1989, Norton's foundation had a market value of some $26 million by the end of 2002, a year in which it distributed more than 100 grants totaling $3 million. The biggest gifts went to the California Institute for the Arts, the Los Angeles County Museum of Art, the Studio Museum of Harlem, and New York’s Symphony Space, which named its concert hall for Norton following a $5 million pledge. A one-time Buddhist monk, Norton has also made some offbeat philanthropic gestures, such as buying the notoriously personal letters written by the reclusive author J.D. Salinger to Joyce Maynard at auction from Sotheby’s for $156,000 and then returning them to their author.

After the divorce, a court order split the foundation 60/40 between the two, with, according to its 2011 IRS filing, a “substantial contraction.” A final return representing 2012 would be prepared, indicating that the foundation, which reported assets of only $50,000 in 2011, would shortly be out of business. Both Peter and Eileen continue to serve as trustees, along with Anne Etheridge, who is executive director.

Of the possible paths for family foundations caught in the middle of a divorce, some are exceedingly civilized. Virginia Esposito remembers an instance where both parties stayed on the board after the split. “They talked about it and decided that what they were doing transcended their personal problems, and now they seem to be doing just fine.” In another case, not only did both exes remain on the board, they were joined by their adult children and a new wife. “They realized the foundation was a part of their selves and have stayed focused on the work,” Esposito says. “It may not be personal property, but it’s part of their personal responsibility.”

Sometimes it’s important to give the participants “some breathing room,” she adds. “It may just be a matter of getting past the immediate difficulties. And you have to factor in the possibility that feelings might change. You could have the husband say, ‘I’m not that involved; you go on ahead with our adult children.’ Then, a few years later, he realizes there’s a space in his life and he wants to be more involved in his community.”

Of course, not everyone can be so calm and rational in the midst of divorce, and one option at the other extreme is to split the foundation in two. This isn’t terribly difficult as a technical matter, although there is some lawyering involved. “The basics aren’t that hard, but for people in that situation everything’s a big deal,” says Jerry J. McCoy, a Washington-based attorney specializing in charitable issues. “She says, ‘Most of the money was from my family,’ and he says, ‘But I tripled it in the boom,’ and she says, ‘But you tripled my money.’ It often degenerates into bitterness and that inability to get along.”

Karen Greene, who heads family foundation services at the Council on Foundations, recalls a number of occasions when a giving vehicle was rolled into two separate ones. For example, Norman Waitt Jr., who founded Gateway Computers with his brother Ted, later established the Andrea and Norman Waitt Jr. Foundation. After the Waitts’ divorce, the fund split into Norman’s Kind World Foundation and Andrea’s Messengers of Healing Winds Foundation.

Raoul Felder

But the same effect can be achieved more informally. “We frequently make claims that the wife has the right to direct a certain amount of foundation spending after the divorce,” says Raoul Felder, the dean of New York divorce lawyers. “As part of the settlement, the husband gives from his foundation to, say, the New York Community Trust, where she can set up something and control the spending. This is happening as people are getting more sophisticated.”

“Money is a socially prestigious weapon,” says Bill Zabel. “[Women] serve on boards where they have to make a $50,000 or $100,000 annual contribution. Take away that money and you’re causing tremendous harm to her social life. That’s why, in a majority of substantial divorce cases with a foundation, the departing spouse usually has an issue about how to share in the distribution. You can have a foundation giving away a million a year, and she might say, ‘I need $200,000 of that to keep up my contributions.’ So as part of the deal, you might give her the right to designate that amount. It’s usually done as a side letter, not as part of the public document, and the wife isn’t usually on the board after that – they want her out of there.”

Zabel has even seen foundations used for underhanded maneuvers in this realm: “Say a guy has $60 million, has been married 30 years and wants a divorce. So, he transfers $10 million to his foundation and says, ‘We have $50 million to split.’ Does he negotiate and give her certain rights to distribute that $10 million? Or does she say, ‘I should get $30 million, since he gave that money away knowing he would divorce me.’ It’s all arguable and negotiable and litigable. I don’t believe anyone’s ever litigated it—I’ve threatened to and settled—but it probably will be someday.”

The best way to avoid these sticky scenarios, experts say, is to think things through in advance. “When setting up a family foundation, you need to define what you mean by ‘family,’” advises Mary Philips of Grants Management Associates, Boston-based philanthropic consultants. “Set the criteria upfront so it doesn’t become personal. Make it clearly written: in the event of divorce, the divorcing spouse goes off the board—or not. Do we want only lineal descendents? Think of board eligibility in terms of your goals and the experience you want rather than who you want.”

“Ideally, families should treat eligibility in a fairly rigorous way,” says Karen Greene. “This applies not only to the founders, but to later generations. It seems inconceivable when it’s just you, the wife and the kids, but go down a couple generations and you’ve got 20 or 30 people. Someone’s divorced, another one never shows up at meetings. Do you just want lineal descendants? What about adopted children, stepchildren, offspring of gay and lesbian partners? Should your foundation exist in perpetuity, given how much families can change? It can be a ticklish situation, very uncomfortable if you’re the in-law who becomes the ‘out-law.’ It’s always better to make policy in the abstract, but you can’t foresee every circumstance. I remember one gentleman who came up and asked me, ‘How do I keep my daughter-in-law and get my son off the board?”

The Nortons are only one of many examples where philanthropists must think through all the implications of their divorce.

“Charitable giving has a new look,” Time magazine recently reported, “one that is broadening the giving pool and helping keep the dollars rolling into nonprofits even during tough economic times.”

That new look is a method for giving called “donor-advised funds,” or DAFs. This is how it works: A donor opens an account at a “sponsoring organization,” such as a community trust or the charitable arm of a financial services company. While any contributions to the account are immediately tax-deductible, the donor generally has no deadline for disbursing the funds. It’s today’s go-to for philanthropists who aren’t ready to commit their wealth to specific organizations or don’t want the burden or expense of establishing their own foundation. DAFs, reports Giving USA, which tracks the annual growth of philanthropy, “are the fastest growing charitable vehicle in the country.” They have become so popular that they now represent more than $37 billion under management in the United States alone.

Technically, the DAF dates back to 1931, when The New York Community Trust invented the arrangement. However, not much happened for the next 60 years. “People didn’t realize the donor-advised fund model would work,” says Eileen Heisman, president and chief executive officer of National Philanthropic Trust (NPT). But in the early 1990s the Fidelity Charitable Gift Fund received a favorable ruling from a federal appeals court that said DAFs have charitable status, even when they’re under the aegis of an investment firm. Other groups quickly joined in.

Located in the Philadelphia suburb of Jenkintown, NPT, founded by the Pitcairn family in 1996, is today a DAF heavyweight. With more than $1.7 billion in charitable assets under management, NPT ranks among the 25 largest grant-making bodies in the U.S.

Heisman says that DAFs give donors the benefit of professional guidance. “Whether a donor wants to turn an illiquid asset into a gift or create a global grant or a multi-year grant, we hold a mirror up to what the donor wants and reflect best practices in the philanthropic world,” she says. That can include advice on how to structure the gift and outline its goals, as well as ongoing stewardship as donors regularly make their charitable decisions into the future.

But when it comes to how they want their money spent, donors “know what they want to do,” says Heisman. “Donors to DAFs are pretty well informed. They come in with a lot of energy about giving to their causes. They’re engaged philanthropically, many serve on charitable boards, and they’re using us as a way to fulfill their monetary philanthropic goals.”

Still, groups such as NPT do more than distribute alms. “Some people think a DAF is merely a wink for total [donor] control, but it’s really not,” Heisman notes. “Every document clearly states that NPT has the final say over how the money is to be spent. And we reinforce that verbally. We will honor requests that are legitimate, but if you want to go outside things that are legal then we won’t do it.” For example, a gift to an individual from a DAF is forbidden.

Although NPT’s donors are savvy, they still need to be reminded that their wishes might not stand the test of time. Heisman recommends that they include an escape clause in their gift agreements, permitting NPT, usually after a donor’s death, to spend the money on a similar cause if the original intent is no longer possible. “We have the obligation—and undertake the risk—to distribute the money properly,” Heisman says, “and we’ve seen so much that we almost always know more than donors when it comes to structuring the gift agreement. We also tell them that something might be legal now but the laws could change five years from now. Some donors embrace an escape clause in an instant. Others go kicking and screaming. If they never want to change any of their donative intent and if the purpose becomes obsolete, it’s going to be our job to figure something out.”

Congress and the IRS have long struggled with the concept of the donor-advised fund, and in the Pension Protection Act of 2006 Congress did clarify for the first time many definitions and regulations relating to DAFs. Still, the absence of a spending rule worries some legislators. Although foundations are required to spend at least five percent of their assets on their programmatic activities, public charities are not. So, the concern goes, DAFs are nothing more than parking lots where donors can stash money indefinitely and take healthy charitable deductions without actually helping society. The reason the charitable income tax deduction exists is to encourage people to give; the idea is that the foregone tax revenue will help society in ways that government cannot. So legislators might very well think there should be some minimum requirement to ensure that at least some of the deducted donations are actually injected into society’s bloodstream.

But that concern is misplaced, according to Heisman. “Donor-advised funds are actually paying out between 17 and 24 percent, and that doesn’t include overhead, as is the case with foundations,” she says. The National Philanthropic Trust conducts a lot of research on the model throughout the country, perhaps the most of any organization. “The issue about us being these warehouses is not warranted,” she adds. “Money is pouring out the door. We encourage philanthropy.” She sees no need for a required minimum annual payout. In fact, it could be counter-productive. “If you impose a five percent minimum, it may very well become a maximum in people’s minds. It actually could hamper giving. Why would you take a group of entities that are paying 20 percent and say you have to give out five percent per account when the aggregate is humongous?”

Heisman sees her biggest challenge, and perhaps NPT’s biggest opportunity, as one of shaping the future. While there’s no way private philanthropy can ever replace the government’s role in helping society, it can seed some interesting projects. She mentions NIH, the National Institutes for Health, which is a government agency. “NIH won’t fund anything without preliminary findings from smaller experiments, and private philanthropy often funds those smaller experiments. And not just in medicine. Private philanthropy can provide seed money for new ideas to emerge in many areas. “

A favorite teacher of Heisman’s once talked to her about “ideas coming from the fringe of society, and that when they mature they become mainstream.” Philanthropic money can be used to attack the root cause of a problem, not just the symptom. “You want to be funding the stuff on the fringe,” she says. “Some of it will become mainstream.” The women’s rights movement is another example. “There was a time,” Heisman says, “when women’s shelters were considered fringe organizations. Rape assistance? That was really radical. Now, nobody thinks they’re radical, but at the time it was difficult. Things shift and then people don’t even remember.”

When she talks with donors, she says she always tells them “not to be afraid of taking a risk. Some of the most creative thinking in the social sector is by people who are in emerging organizations. If the idea doesn’t mature, it doesn’t mean you were a failure. Maybe that idea could be the next big change in the social sector.”

At NPT, the next big change is expansion overseas and the organization is soon going to be offering the same services to donors outside the U.S. that it does domestically. To be sure, Great Britain’s philanthropic landscape is different from America’s. The federal government in the US as well as many state governments has passed legislation to actively promote charitable donations to a degree that few other nations have. It’s still unknown whether the British will take to the American approach, but it’s worth finding out. As Heisman counsels her donors, “Always take risks.”

By the time I co-founded Good Done Great, I had already seen my share of poverty.  I’d spent my formative years in Thailand with a father who was an Air Force pilot-turned missionary and a mother who was an early social good entrepreneur.  As my father tended to the spiritual needs of the congregation, my mother spent her time providing job skills and entrepreneurial mentoring to a thriving cottage industry. I witnessed first hand how this type of support complemented and often exceeded the impact that the church could achieve through utilizing contributions from their members. What started out as her little business soon prospered, and the money often-times became the main source of income for our family.   It was then that I realized how critical business engagement was to solving many of the world’s greatest social and environmental challenges.

I returned to the United States after high school, attended college, and then later completed a masters degree in international business studies. I held the expected jobs in the corporate world with expanding responsibility and challenges and yet found myself increasingly anxious to do something with greater social impact.  

In 2009, I contacted a former colleague, David Barach, and together we imagined a technology firm which might increase efficiencies for foundations and other philanthropists to identify needs, select charities, and provide grants directly to the most deserving programs.  The solution quickly gathered momentum with foundations.  As the solution spread, we discovered there were many multinational corporations with a growing desire to be involved in the communities where they participated. We were anxious to partner with firms that were willing to lend their resources for good.

Earl Bridges

Corporations command a unique position within the world of giving because they have both the financial means to donate to nonprofits, AND employees with both time and money to volunteer.  The workplace is where human and corporate capital intersect.

We continue to believe the corporate social responsibility market is ripe for disruption. With a U.S. donation market of $280 billion from individuals alone, we see an opportunity for our company to do well by doing good. During the last several years, we have dedicated our efforts to proving solutions for workplace giving. Corporations with a purpose that create a culture of people who really care, and are encouraged by their employer to seek out charitable causes that have the greatest capacity to change the world.

The Good Done Great solutions provide employees with a web portal to find volunteer opportunities, make donations and receive their company’s match, and engage with others.  They can follow their progress towards personal giving goals, team goals, or company goals.  Gamification strategies encourage additional good works in order to reach higher levels.

We’re also able to integrate our corporate grant solutions with workplace giving which enables corporations to aggregate information from all of their CSR programs in a way that has never been possible on one platform. This is significant because often with corporations, volunteerism lives in human resources as an employee engagement strategy, corporate giving lives in the CEO budget, corporate sponsorships live in marketing, and matching gifts are often a hybrid that lives in community or investor relations. We believe that too few companies are combining all of the results of these initiatives into a story that tells the “purpose” of their company. Good Done Great’s unifying technology creates a crucial platform where data from volunteerism, grant making, sponsorships, matching grants, and employee donations all lives in the same place and is easily accessible, enabling integrated data-driven storytelling. It’s rewarding to know that our products and services are ultimately building the reputations of corporations that we’re very proud to partner with.

One final note, It was important to David and me to remain true to our original social intentions despite the growth of our company.  So in 2012 we became a B-Corp, or benefit corporation.  We believed that as a for-profit business we have the same responsibility to bettering our society that our philanthropic clients have. The B Corporation movement reflects our values, which is why we joined this community of companies that is creating a society where businesses are beacons of what good citizenship can be.

The journey to building a socially-responsible, yet profitable company has been extremely rewarding.  We have found many partners along the way who have shared in our vision of a better world through active leadership by brands, companies, and philanthropists.  We are constantly inspired by our clients and their employees, and the innovative ways they come up with to impact the needs in their immediate surroundings.  And we have made a difference in the world.

Data has been the buzzword in philanthropy for the last 18 months. Just as it has proved to be a major driver for the commercial economy, so it has become the lifeblood of the social economy. Not only are the provision and use of data now key to persuading donors where to place their money, but they are also vital in helping improve the efficiency and effectiveness of the charities and social enterprises funded by such gifts.

Guidestar.org is the shining beacon, or perhaps more accurately the behemoth at the vanguard of this spread sheet revolution. It is a portal, gathering information on nonprofits, packaging it and disseminating it to a hungry public. These numbers and facts are freely available but habitually buried in all manners of gunk, making them harder for the time-pressed donor to access than for a hungry traveller to find a sugar-free snack in a service station.

The idea behind Guidestar, similar to many that have ridden the internet wave, is based on dispensing important information to the masses for free. However, as demand has ballooned, so has it changed shape.

It is interesting to note that when commentators describe Guidestar’s function, many of them fall back on the terms “charity watchdog” or “evaluator”—The Washington Times and Time magazine provide two examples in the last 12 months. However, this is simply not true. Ernest Hemingway once wrote, “Never mistake motion for action.” He might have added, “And never mistake information for endorsement.”

This misnomer is a serious enough issue for Guidestar to have a “Clarification” announcement on its website, stating definitively that its users should not mistake information for endorsement. Indeed, Guidestar’s mission is clear enough: “To revolutionize philanthropy by providing information that advances transparency, enables users to make better decisions and encourages charitable giving.”

Clear enough then. But at some point services like Guidestar reach a tipping point. The level of information along with the number of people accessing and/or relying on that information combine to confer endorsement. And this is a problem. Guidestar’s own, hard-earned reputation should not be transferred seamlessly to the organisations represented on its sites, but it is. This presents a dilemma; if Guidestar and its ilk are presenting such information. should they be evaluating it as a matter of course?

While charitable giving in the U.S. accounts for less of the country’s gross national income than in other nations, it far outpaces any other country in pure financial terms. Particularly in a context of such heavy lifting, givers feed on information. Indeed a scan of the newspapers during Christmas every year, a key season for donations, often reveals almost unanimous advice: “know your charities.”

Donors are taking this onboard. More than 90%, according to a Guidestar report, said in 2013 that nonprofit performance was an important factor in their giving and one that they wanted to be able to analyze more easily. Conversely, the same donors admitted that just 30% of them actually research the charities their cash reaches.

Guidestar is caught in a conundrum. The majority of charitable donations in the USA are made by individuals, specifically, 73% of the $298 billion that was given in 2011. Concurrently, the vast majority of Guidestar’s users—98% of them—access just the free-to-air raw data that they provide. Guidestar and its competitors have all started to deliver premium services in which they rate, analyze and pass judgment on the performance of the charities they list. For instance in 2012, Guidestar teamed up with the Non-Profit Finance Fund comparing the financial health of nonprofits. It is a practice that has spread. In 2013, 15 of the biggest US foundations launched a “Reporting Commitment” making grants data available. Simultaneously, the China Foundation rated 2,000 of its foundations with an elaborate transparency index.

In these confusing waters, two things are clear: the first is that data use and access are set to be institutional for the entire social economy (with that comes ownership, another thorny question); the second is that raw data services, such as those that Guidestar provides, will inevitably become available at source. Guidestar’s core offering, the 990 forms that tax-exempt nonprofits are obliged to file with the Inland Revenue Services (IRS), has a shelf life. Currently, the IRS is ill-prepared to provide the information that organizations—and the clients they represent—are asking for. The provision of raw data via hard copy or DVD will soon have to give way to more easily accessible digital archives as demand for information continues rising.

So Guidestar is faced with a raft of key questions about its next steps: how can it maintain its core operation but continue experimenting? How can it analyze data without morphing into a full-out advisory service? How will it make open data an asset and not a liability?

Despite the "clarification" on its website, Guidestar already offers extensive analysis. In the recent past it has teamed up with several partners to provide evaluations. Philanthropedia, an internal division of the organization, rates nonprofits according to the work they do, with 2,500 experts reviewing 3,500 outfits in 2012, while Takeaction@ Guidestar measures impact to help identify the most effective nonprofits in particular cause areas. On top of this, a TripAdvisor-style offering, GreatNonprofits, provides personal reviews to produce average user ratings that accompany some nonprofit listings on Guidestar.

These are of course all premium services with corresponding costs. Still, just 2% of Guidestar’s users are paying for them. So surely the key question becomes, is there a paying market for this valuable data? Or, will it too inevitably become free-to-air?

It is a devilish Rubik’s Cube of a problem. Almost all of Guidestar’s users want free, raw data as a compass for their giving, but 90% of those surveyed want their data evaluated and analyzed. Still, just 30% of donors actually bother to research the causes they give to and Guidestar’s paying customers represent a tiny fraction of the pot. Headache? Imagine Guidestar’s and this is before one considers the thorny problem of storing, protecting, and dictating ownership of such data.

Given Guidestar’s history of excellence, it seems likely they will find a way. As our perfect case study, let’s hope they do, and quickly.

When I started VALUEworks, a Zurich-based multi-family office, over ten years ago, two concepts were still rather nascent in the wealth management industry: philanthropic advisory as a service and women as a market. Back then, it was not the norm to put philanthropy at the forefront of wealth and family estate planning as it was a consideration usually reserved for retirement, old age, or even death. At that time, women were also not viewed as the most desired clients and more frequently were considered wives or daughters who married into or inherited wealth with little financial knowledge, let alone decision-making power, of their own. 

Much has changed since then. Philanthropy has now become a valuable component of family governance and multi-generational planning for wealthy families. Moreover, the tide for women has shifted. In the US, it is believed women will own two-thirds of wealth in the next decade, driven by generational and spousal transfers. In Asia, a new generation of women is transforming the region’s cultural legacy as more affluent, educated, and empowered women come into the picture. 

Women are wielding more financial power and astuteness. The movement is real, global, and here to stay. However, the financial industry does not seem ready to serve the needs of wealthy women, even though these are more likely than men to work with advisors whom they value highly. A study on Women of Wealth by Heather R. Ettinger and Eileen M. O’Connor published in 2011 showed that women know what they want. They want to be understood and listened to—the whole story, not just the financials. They want a tailor-made approach focused on their unique needs—not a generalization about women issues, or a product. They want honesty and transparency, and a clarity of their undertakings and what the risks involved are. And philanthropy advisors, too, must fully grasp what this means. 

Kecia Barkawi

Much has been written about gender differences in giving. Sondra Shaw-Hardy and Martha Taylor have expertly illustrated these in their 2010 book, Women and Philanthropy. In my twenty years as wealth advisor, I have come to believe that gender differences are important to keep in mind. Yet, still today, many women of wealth continue to face challenges getting customized services. They struggle to find a truly understanding advisor, because they are either patronized or treated differently on account of their gender. In competing to offer services for women, many in the industry have opted for a cosmetic shortcut. As someone once wrote, “Changing the font to pink doesn’t change the service.”

Together with my mainly female team I pursue a sincere and holistic approach that allows our valued female clients to become engaged and motivated leaders in their philanthropy, not wallflowers. 

While writing this article I have reflected on what I have learned from years of philanthropy advisory, but also as founder and CEO of a multi-family office. Below is a list of five key observations which could be useful and equally applicable to any of an advisor's clients.  

1. Understand their journey. Women play multiple roles. They own successful businesses, but are also mothers who care for kids and manage a household. They are wives who support their spouses, and daughters who care for older parents. Where they are on their professional and personal journey matters tremendously to their philanthropic decisions. As Heather Ettinger and Eileen O’Connor highlight in their study, transition issues such as death, divorce, retirement or being caught in the so-called “sandwich generation” of caring for children and aging parents, define the needs, expectations and financial concerns of successful women. Advisors have to approach these phases in the client’s life with deep sensitivity as these roles matter a great deal. Equally important is taking in the big picture on how these roles change over time. A good advisor should think ahead of these transitions.
2. Encourage leadership. While we celebrate how many women have taken the reins of the most influential philanthropies today, there are countless others who remain in the background. Being a leader isn’t easy as it means accountability for financial, operational and strategic decisions. It also implies understanding more fully the intricacies of running a foundation, or spearheading fundraising, or being the face of an advocacy. As advisor I can provide a great service by identifying the personal development needs of my female client, identifying skills or experiences that will help her fulfill her role and be proud of her philanthropic achievements.
3. Address issues of risk. Women are characterized as more risk-averse and conservative when it comes to finances than men. The 2011 Study of High Net Worth Women’s Philanthropy by the Center on Philanthropy reports that nearly 40% of women are not willing to take any risks with their philanthropic investments versus just 22.8% of men. I generally believe in a conservative approach. We women are less prone to overconfidence and tend to plan more carefully for uncertainty. As an advisor faced with a highly risk-averse client, I find providing an educational path the most effective approach to ensuring she feels comfortable with her decisions. It is important to acknowledge and highlight risks and to admit that we cannot possibly know everything and investigate every scenario. Nevertheless, by bringing in experts, organizing open discussions, exchanging useful readings and creating an atmosphere of discovery, we can all learn together. The most meaningful philanthropic engagements come out of such dialogues and exploration. 
4. Connect them to other philanthropists. There are many successful women of wealth who are seeking to make a real difference with their philanthropy. Often they come across the same challenges and obstacles. One of the initiatives I am very proud of is a Swiss-wide network for women in philanthropy which VALUEworks initiated in 2012. By creating a highly exclusive space for women philanthropists to come together to exchange ideas and learn from each other, we can give them the keys to empowering and enriching their own giving journeys. As advisor I am really motivated by the outcome: clients and contacts are inspired, energized and truly appreciate the connections they make through the network. They become more open to sharing their views and talk about problems encountered and to partnering with others, raising their effectiveness and efficiency as givers. 
5. It isn’t all about gender. According to the study of Ettinger and O’Connor a big amount of dissatisfaction of women clients stems their perception that gender is the reason for poor financial advice, disrespect and condescension from the financial services industry. We need to reframe our entire approach so that it is not gender-centric which has the tendency to patronize women, alienating them even further from advisors. Successful, empowered, educated women need and deserve competent philanthropy advice, served to them with care and professionalism. Service providers are better advised to invest their time and resources in creating a tailored approach that makes their philanthropy both socially relevant and personally meaningful. And this way, we as advisors can have a greater impact, too.

If we care about excellent service to our clients - male and female - we need to keep our gender biases in check. What women truly want is to be understood and treated as equally special as every other valued client.