We talk to Rockefeller Philanthropy Advisors about its recently-issued research into the time horizons involved in giving, how to frame such decisions, and the implications. It demonstrates how the pandemic and other developments have forced donors to make big choices.
A number of organizations, such as the UK’s Queen Elizabeth Trust, have built approaches that involve time-limited giving/donation, Tarasov said.
There could be some asset allocation/investment implications when managing the money that charities have, depending on the time horizons of their giving, she said.
Large pools of capital, such as the famous case of the endowment fund of Yale University, have developed a specific asset allocation approach - heavy exposure to illiquid areas such as private equity and venture capital - because the expected requirement for funds is steady. Large family offices, with multiple members and generations hoping for an income, might adopt a similar approach. By contrast, a person aiming to retire or build capital for a specific event might take a different approach to investing. So it is with different philanthropy time horizons.
The Giving Pledge (Warren Buffett, Bill Gates, Jeff Bezos, others) is a particular example of how time horizons work. According to TGP’s website, “Through joining the Giving Pledge, signatories commit to give the majority of their wealth to philanthropy. Many signatories have and will exceed that benchmark. Some make a series of very large gifts over a short period, while others establish a program of smaller, regular gifts distributed over many years. Each signatory’s approach to philanthropic giving is deeply personal.” Donors pledge to give at least half of their wealth away.
Rockefeller’s Tarasov mentions another idea: “mission-aligned” investment where the mission dictates the time frame and the speed of contribution. The goal or purpose of philanthropy sets the time-frame rather than the specific wishes of a donor.
Different approaches appear to be catching on in specific countries, possibly driven by culture, economics and experience.
The time-limited philanthropy approach appears to be most popular in the US and Australia, Tarasov said.
And if that situation were not complex enough, Tarasov added that there can be issues to resolve when different members of a family disagree about philanthropy, causes, and the time horizons.