Reputational risk of philanthropic giving

Date: 04 Oct 2017

Citywealth

Reasons for partaking in philanthropy range from the purely altruistic to the less selfless, while charitable giving can also be an important PR device. In the US it’s deeply embedded in social norms and values, especially when it comes to prominent individuals. For example, in 2010, forty of the US wealthiest individuals established The Giving Pledge, aimed at encouraging billionaires worldwide to pledge at least half of their wealth to philanthropic endeavours. Today, The Giving Pledge comprises a network of 170 of the world’s wealthiest individuals, united in the public eye by their commitment to philanthropy.

From a reputational perspective, however, it’s prudent to keep certain concerns in mind whenever you consider making a significant charitable donation. The charities with which you align yourself can be hugely revealing about you and your values, and it’s important to consider this in line with public perception.

So, what to do? Start by following these three basic steps when considering donating to a charitable cause:

Your personal privacy perspective

Do you want to promote your philanthropy, or would you prefer to invest or partake anonymously? In the US, federal law requires that large donations in some instances be a matter of public record, although in some instances there are ways to address this. Although anonymous investing is common, to mitigate the risk you should remain mindful of the causes you donate to, and ensure that they correlate with your personal brand.

Be informed

Educate yourself thoroughly on the charity’s aims and objectives and conduct some due diligence. Alternatively, get a financial or legal advisor to look into this for you, before making a substantial contribution or, if you want to make a more commercial philanthropic contribution, consider looking into firms which offer impact investing services as they will perform their own stringent diligence on the companies with which they are affiliated. Ensure you keep tabs on the charity and your investment to make sure it is meeting your own personal objectives, while continuing to adhere to your own personal values.

Your scope of involvement

Consider how involved you will want to be with the charity post-donation. Continued involvement could expose you to greater scrutiny in the event that the charity’s endeavours are later questioned.