Do you want to keep your philanthropy private?

Despite their enormous wealth and generous giving, several of the world’s richest individuals did not make it onto the Chronicle of Philanthropy’s list of the top 50 US donors in 2022. Notably absent were novelist MacKenzie Scott, who has donated over $14 billion (£11.4 billion) since 2019, and Melinda French-Gates, who co-leads the Gates Foundation with her ex-husband Bill. Perhaps they didn’t donate in 2022, but it is more likely that they opted to keep their charity donations private.

Elon Musk, who ranked second on the 2021 list of top US donors, did not make the top 50 in 2022. However, he was later added to the list in an update following the public disclosure of a surprise filing with the Securities and Exchange Commission (SEC). The filing revealed that Musk had donated nearly $2 billion worth of Tesla stock to an undisclosed charity, which remains unknown.

There are many reasons why a donor might want to keep their giving private. Some are worried about public criticism. Others are concerned that they will be overwhelmed by subsequent funding requests.

Mark Zuckerberg and his wife, Priscilla Chan, handed out over $3 million in grants to aid the housing crisis in the Silicon Valley area. This was criticised in the press, as the housing was in an area that saw median house prices almost double to around $2 million between 2012 and 2017. Stories such as these can make potential donors anxious about public scrutiny.

Lyn Tomlinson, Head of Impact and Philanthropy at Cazenove Capital, says this is an issue with the media rather than philanthropy. “The reality is that society needs wealthy individuals to make philanthropic donations. We should encourage them to give rather than attacking philanthropists when their donations are public,” she says.

"Having brilliant philanthropists being openly generous encourages their peers and normalises giving"

- Lyn Tomlinson, Head of Impact and Philanthropy at Cazenove Capital

Another reason to keep donations private is that many philanthropists do not have capacity to field requests from other charities seeking funding. With over 160,000 UK charities trying to raise money every year, being visible with your giving does mean receiving unsolicited approaches for funding. Well-meaning donors are then required to turn down great charities which are not aligned with their mission, which is not ideal.

There are plenty of measures that can be taken to keep donations out of the public eye. Equally, with the right support, there is no reason why a donor should have to keep their giving private.

Here are three things to consider before making a large donation:

• Research your cause

While this may seem obvious, it’s important to research the charity you want to donate to thoroughly to make sure that it is reputable and aligned with your values before giving away a large sum. Once you’ve donated, you can follow up on it to make sure that it is being used as intended and ask for updates on the impact it is making.

Being strategic about who you give to, and how, can help your money to have a much bigger impact than it might do otherwise. The same planning can help to ensure public donations stand up to criticism.

To make sure you are executing your philanthropy well, ask yourself whether you are funding areas that already have lots of money. Is this the best use of your resources? Lyn recommends that donors always take a step back and look at the problem they are trying to solve, then look at who’s doing brilliant work. Identify who is doing brilliant work but is not well-funded and financing that gap and innovation is where you can create significant change.

• Use a charitable structure that meets your needs

If you’re not comfortable making a public donation, several vehicles are designed to keep charitable gifts private. One example is a donor-advised fund (DAF) which does not identify the donor, even to the charity receiving the money, unless authorised by the donor. DAFs also offer a faster way to give with the same level of tax relief that charities and formal structures can offer. Contributions made into a DAF, which is a registered charity, can’t be withdrawn, but the donor, acting as adviser to the fund, can choose which charities should benefit from any distributions.

• Speak to an expert

If you’re not using a vehicle that guarantees donor privacy, speaking to a public relations (PR) expert or philanthropic adviser can help you to plan ahead and avoid potential PR pitfalls. For example, giving a large sum to a prestigious organisation that already receives plenty of funding could be criticised. However, ring-fencing a section of that money so that people with under-privileged backgrounds have better access to that organisation can mitigate that.

If you have any questions about any of the topics raised in this article, don’t hesitate to contact your usual Cazenove Capital contact.