Giving with Warm Hands: A Wise Perspective on Philanthropy

Americans have long been among the most financially generous people in the world, a virtue that has been very evident to me in the nearly three decades I’ve been working with clients as a financial advisor. Many of my clients have created big-hearted bequests in their wills in the hopes of using their wealth to make the world a better place after they are gone. I fully support their thoughtful generosity, but more often, I am asking them what seems to me an important question:

Why not give now?

My question may be unexpected, but it is not entirely a new idea. Over the past few years, philanthropy has been undergoing a quiet revolution spurred in part by a younger generation of donors who are giving away their fortunes more strategically than previous generations. One of the most important concepts to emerge from all this is known as “giving with warm hands”.

What exactly does that mean, warm hands? Essentially, it means giving money away now while you are living rather than waiting to make those gifts until after you’ve passed away. This new generation of donors is not interested in so-called “checkbook charity”. That seems passive to them. They are determined to make a difference in the world they live in by distributing their wealth faster and more thoughtfully.  In a way, they do not see it as giving; they see it as investing in a better future. They are also demanding more transparency, more accountability and real impact from the organizations they support.

As I see it, there are many benefits of giving now with warm hands. For one, you get to witness the immediate impact of your gift in bettering the lives of those in need or in promoting values that are important to you. Your gifts also mean you are still an active and vital participant in your community and beyond. Instead of complaining about the problems of our nation and the world, like many of us do, you get to change it — today. That’s downright invigorating!

Consider the example of one of my longtime clients, an 86-year-old retiree who lives in Tucson, AZ. Here’s how she tells the story of how she recently embraced a new philanthropic plan: “I don’t have deep pockets, but I’m enjoying a comfortable retirement. I’m also a news junkie. I believe passionately in a free press and I think that good journalism has the power to save us from all sorts of dangers. In my will, I’d indicated that I wanted to donate money to certain programs and institutions including the University of Arizona School of Journalism.”

“I was a little skeptical when you proposed that I make those gifts now,” she told me. “But as soon as you showed me that I could afford to do that without endangering my financial security, I didn’t hesitate a nanosecond. Right away, I established a scholarship for journalism students to travel so they can investigate in person what’s really happening and keep us informed.  Helping train young journalists is my way of ensuring that our nation’s free press will last forever. That means a lot to me.”

Another benefit of giving with warm hands is the ability to structure how your gift is used by the nonprofit organization or charity.  Most enlightened groups will welcome and encourage your participation; they want you to see the impact of your dollars at work. After all, your joy and pride in giving can be infectious and inspire your family and friends to do the same.

That was the experience of another one of my clients, a couple in their 70s. After I approached them with the concept of giving while still living, they immediately made a significant gift to a program that provides teachers in their community with supplies for their classrooms.  As former educators, they were worried because the school district, like many others across the nation, has had to cut budgets. As a result, teachers either have to do without essential supplies or use their own money to pay for them.

After donating the money for supplies, the husband exclaimed to me with obvious delight, “that was a lot more rewarding and fun than the river cruise we took last year.” He continued chuckling, “I didn’t have to get on a plane!”

Of course, giving while still living is a relatively new concept. Some clients take a while to warm up to the idea. Typically, their first concern is whether a program of accelerated donations will threaten their financial security especially if they live to a very old age or encounter serious health problems. The safest bet, to most of them, would be to wait to make bequests until after they have died.

As a trusted partner in prudent financial stewardship of  their money, I would never suggest a program of making gifts if there was a possibility that giving generously now would derail a secure retirement later.  Together, we work through their financial plan carefully. Using TCI’s sophisticated programs, which weigh all the possible dangers including recession and market volatility, I can show a client their risk of running out of money is virtually nil.  Once they see the numbers, they are always reassured.

That’s typically the first hurdle to overcome, but there are others. Clients worry that their children or grandchildren might disapprove or resent them for giving away money that they may feel entitled to inherit. Rarely have I found that to be that the case, but those fears can be present.

Money—especially inherited family money—can be fraught with emotion and entitlement. Communication is the antidote. To allay my clients concerns, I usually propose a family meeting. Parents have an opportunity to explain why an accelerated program of philanthropy is meaningful to them now. We’ll also talk about the specific charities and causes they wish to support and why.  More often than not, their children and grandchildren reassure their parents they fully support their donations. Open and honest discussions are vital.

Once we’ve worked through those concerns, clients sometimes voice a practical hesitation, “Is this going be a hassle?”, they’ll ask me. After all, their wills have been drafted, signed and the pot of money has been thoughtfully divided. Not to mention, many found those tasks tiresome or stressful to begin with. Now that it is done, why tinker with the plan?

From my point of view, their questions are easy to answer. Once you have made the decision to give while still living, you get the fun and the deep satisfaction of considering how and where you want to change the world today.  Your lawyer, your accountant and I will tidy up the administrative details. It’s worth tinkering with the plan because the effort—and the results—will be more gratifying than you could have imagined.

I believe this because I speak from experience. Several years ago, my wife Lisa and I realized that we too were able to have a secure financial plan that allowed us to give with warm hands. That was the beginning of a new philanthropic journey for us.

Throughout  our marriage,  we had always made donations to charities that were meaningful to us—and some to those that made a particularly appealing pitch at the end of the year when we are all thinking about peace on earth and goodwill towards  all. But Lisa and I decided we wanted to learn more so we could practice more effective philanthropy and get to see the benefits of our donations in our community. After doing some soul- searching, we chose to concentrate on two areas that were close to our hearts: children and education. (Lisa had been a teacher for about ten years before leaving to raise our family; my college degree was in education though I went into business after graduation.)

Our research yielded some unexpected but important concepts. Lots of small, scattershot donations aren’t as helpful as a larger, targeted gift. In fact, small donations are time-consuming and costly for charities to process; they also make it more difficult for them to do long-term planning.  Ultimately, Lisa and I chose to concentrate our philanthropy on two organizations. One is the TCI Foundation and its primary program, 3rd Decade, which helps teach financial literacy to young adults who are just starting their careers and families.

The other organization close to our hearts is Casa de los Niños. This nonprofit provides innovative programs to prevent neglect and abuse of children and support at-risk families in Tucson. We’ve met with some board members,

the staff and some of the families that have been helped by our donations and those of other generous folks. These gifts have enabled Casa de los Niños to make an important shift from rescuing children from difficult home situations to early intervention programs that foster strong families.

Seeing the results of our money at work now, especially in the lives of vulnerable children, has changed me. Seeing the impact firsthand is why I’m a vocal advocate of giving while living.  I like to imagine the ripple effect of all the lives in our community that will be changed in years to come by mindful generosity now.