The new Venture Philanthropy dialogue

(September 2006) "We must perform a kind of Copernican revolution and give the question of the meaning of life an entirely new twist, to wit: It is life itself that asks questions of man. He should recognize that he is questioned, questioned by life; he has to respond by being responsible; and he can answer to life only by answering for his life." — Victor Frankl, The Doctor and the Soul

Alan knew that the gentleman sitting before him was hungry for a conversation beyond the numbers, benchmarks, and planning strategies. He had responded to Alan’s advertising of "financial life planning" and the promise of a more meaningful dialogue around money. He spent a good 45 minutes talking about gaining financial satisfaction, achieving life balance, and developing a personal definition of true wealth.

The prospective client, after engaging in these discussions, commented, "This was the best discussion around money I have ever had, but," he added, "you need to know something about me regarding money. I’m not interested in making any more, although I would like to protect what I have from unnecessary taxes. What I would really like you to do," he challenged Alan, "is help me bring meaning to my money."

In the course of their dialogue this man mentioned several businesses he owned, which fuelled Alan’s curiosity. And so he asked the man, "How much money do you have?"

"$1.5 billion," was his answer.

Bring meaning to my money As successful baby boomers ramp up the liquidation of businesses or transition to "doing something more meaningful with their lives," we are going to see an escalating interest in what we would characterize as the "Venture Philanthropy" dialogue — a conversation about capitalizing, in a philanthropic sense — on clients’ assets, tangible nd intangible. Your business will move from amassing means to building meaning around the means.

This sentiment is growing and there are not enough advisors in the marketplace that can provide the conversation these people want to have. They are ready to transcend material collections, showpieces, and gain simply for the sake of gain. These individuals want to elevate their game to an altruistic level where they see the investment of their lives and wealth pay inspiring dividends.

Philanthropy trends The Economist predicted that another golden age of philanthropy is staged to begin in the U.S. and around the world. It stated, "There are signs that a new kind of donor is emerging, with a new approach to giving. That new approach includes being more personally involved with their giving and placing a much higher premium on accountability."

According to Bruce Meyerson of the Associated Press in an article in The Daily Star, "While they may not have $26 billion to sock away into a foundation like Bill Gates, many of his fellow baby boomers won’t settle for just writing cheques to their favourite charities."

With a first wave of boomers nearing retirement, and many starting to receive inheritances from their parents, a growing number are establishing family foundations with endowments as small as $50,000 – $100,000. According to Guidestar — a leader in providing comprehensive data on more than 1.5 million nonprofit organizations in the United States — nonprofits are growing at an amazing and unprecedented rate. The wealth created in the 1990s has funded a virtual explosion of family foundations, charitable trusts, supporting organizations, and giving in general. In August 2002, there were 1.1 million nonprofits in the Guidestar database. By August of 2004, the number was up to 1.9 million — an increase of 73 percent in just two years!

Boomers are opening accounts with community-based foundations and setting up "virtual" foundations with donor-advised funds, that allow the individual to decide when, where and how much to contribute. This idea fits the baby boom generation’s approach to life, family, and personal fulfillment.

This generation is more hands-on with their giving than their parents were, opting for personal involvement, local charities and often designing their own approaches for social involvement. According to the Indiana University Center on Philanthropy, people between the ages of 50 to 65 years old are giving the most, with some levelling out at age 65. According to Melissa Berman of the Rockefeller Philanthropy Advisors, a non-profit organization that provides planning and operational assistance to family foundations and charitable endeavours, "many of the older boomers have reached a place in their lives where they have passed the immediate pressures of career building and raising kids to step back and say, ‘What do I want to do with my time and resources?’ "

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