This news service recently talked to Citi Wealth about how the philanthropic world continues to evolve.

Philanthropy among high net worth individuals is about far more than putting names on the sides of buildings and writing large checks. Many philanthropists have long been more concerned with hands-on giving and making a lasting impact. That focus appears stronger than ever.

Getting the most out of one's philanthropic dollars and energy isn't straightforward, however. There are challenges in avoiding duplication of effort, protecting privacy, and preventing philanthropic goals from being misrepresented in the media or political arena.

Helping HNW and ultra-HNW individuals navigate these issues is central to the work of Karen Kardos, head of philanthropic advisory at Citi Wealth. She recently spoke to Family Wealth Report.

"If you want to make an impact with philanthropy, you must run it as a business," Kardos said.

"We will always need traditional grant-making," she said, referring to disaster relief efforts, for example. "Now the question becomes, 'How do we rebuild the community?' I feel that that is philanthropy's role."

The demands are relentless. The philanthropy sector is operating at a time when many global challenges remain unresolved, she said. For example, only about one-third of the UN Sustainable Development Goals (SDGs) are on track, she said, citing recent figures from the World Economic Forum.

Philanthropy, on its own, cannot solve every complex problem. What it can do is deploy capital that has a catalytic effect, drawing in other capital and making broader change more likely, she said.

Philanthropy can strategically deploy charitable assets to mobilize other investors toward positive-impact initiatives, thereby amplifying the impact of its own capital. Kardos highlighted four key approaches: seeding early-stage ventures; supporting expansion into new regions or client bases; sustaining opportunities over the longer term; and paying for successful outcomes from impact investments.

Family Wealth Report asked Kardos about the early-stage venture approach.

"When new opportunities for impact enter the early stages of research and development, they may not fit the profile that investors typically require," she said. "Although they may become revenue-generating at some point in the future, they typically have a long runway to profitability or are so early stage that the nature of the product, and the financial returns it might generate, are not yet clear. This is where a below-market-rate loan or equity investment can be made.

"While philanthropic capital is used in the initial research and development phase, the hope is that commercial investors will step in later. As such, philanthropy funds the ecosystem, building and de-risking the pilot efforts that give rise to mature, large-scale opportunities for impact investors," she said.

Turning to the point about scaling into new regions or client bases, Kardos said: "An initiative might have been proven in one region or for one client base, but expanding into another region, pivoting to address an underserved client base, or even reaching economies of scale present novel challenges, alongside an opportunity for significant impact.

"Commercial investment seeking market-rate returns might not be sufficiently flexible to support an enterprise's expansion. Here, philanthropy can again fill the gap and, by doing so, unlock social impact. In this case, philanthropy need not act alone. Instead, strategically deploying capital can change the profile of these opportunities and crowd in traditional investment alongside philanthropy," she said.

Her comments illustrate how the role of a philanthropy advisor at a large bank has become increasingly complex. Advisors serving HNW clients must help them think carefully about how to deploy philanthropic capital effectively. Sometimes that means explaining that simply writing a check to an art gallery and having a family name displayed prominently may not be the best approach. In some cases, giving $10 million outright to a worthy cause may be less effective than helping intended beneficiaries build sustainable businesses or investing in education. In that respect, philanthropy advice increasingly resembles investment advice: capital should be allocated where it can achieve the greatest long-term impact.

Kardos said one of Citi Wealth's value propositions is its ability to advise clients who are already working on specific projects and connect them with others pursuing similar initiatives.

"What takes up a lot of my time is educating philanthropists about the opportunities that are out there," she said. Examples include encouraging philanthropists to deploy capital during their lifetimes rather than waiting until death for their charitable assets to be distributed. "Many want to engage their children earlier in this."

The benefits of collaborating with other philanthropists is a theme that private banks and wealth advisors have made for some time. As an example, through the UBS Optimus Foundation, UBS encourages philanthropists to pool capital, expertise and networks to tackle complex social and environmental challenges that would be difficult for a single donor to address alone. Other banks engage in the philanthropy side, realizing this is an important issue for clients, emotionally and intellectually. At JP Morgan, to give another example, the bank emphasizes strategy, governance, collaboration and impact measurement, treating philanthropy as a disciplined, long-term component of wealth management.

DAF boost from DC
Because of recent legislative changes, there has been a "huge" rise in donations to US donor-advised funds (DAFs), she said.

The One Big Beautiful Bill Act, which reduced several tax benefits for high-income donors starting in 2026, prompted many advisors to encourage clients to bunch charitable giving into 2025 to take advantage of tax benefits before they expire. US taxpayers who itemize can deduct charitable contributions only to the extent that they exceed 0.5 per cent of adjusted gross income. For taxpayers in the highest federal income tax bracket, the charitable deduction rate is reduced from 37 per cent to 35 per cent of the fair value of the gift.

One benefit of DAFs is that donors' identities can remain private - an important consideration, Kardos said.

The DAF sector is large: US DAFs had assets of $326.5 billion in 2024; there were about 3.6 million DAF accounts and grants to charities from these structures stood at almost $65 billion, according to the latest Annual DAF Report (published by the Donor Advised Fund Research Collaborative, which has taken over the report previously produced by the National Philanthropic Trust). The largest DAF sponsors are Fidelity Charitable; Schwab Charitable; National Philanthropic Trust; Vanguard Charitable; and Silicon Valley Community Foundation.

Outputs and outcomes
Kardos also reflected on the distinction between "outputs" and "outcomes" in philanthropy.

"Outputs are tangible in nature as the immediate results or direct products or services, while outcomes are the effects or changes that follow the outputs. Many families and foundations struggle with whether their donations are having an impact or creating the lasting change they want to make, wondering if their granting is creating the positive change they desire," she said.

"Since outcomes occur gradually over time and are influenced by many external factors, it's not easy to attribute them to one specific program or grant. Typically, outcomes are measured in research control trials. This is why multi-year giving is impactful for nonprofits. Funders need to be in it for the long haul to really assess outcomes."

Kardos also stressed the benefits of collaboration.

"As you move into co-creating initiatives and co-funding existing initiatives, there are benefits to both funders and the nonprofits they support. For the funder, pooled resources from many funders can help ease the resource requirements of a single funder. Typically, more complex problems can be tackled with greater resources.

"There are additional experts at the table from other funders, so you gain more expertise and a diverse set of insights and perspectives. This also provides the opportunity to convene nonprofit partners working together on an initiative so they can learn from one another and course-correct as necessary.

"For the nonprofit, greater resources for an initiative can mean more funding. There are also economies of scale in the request for proposal (RFP) process and the monitoring and evaluation process. Typically, there is one RFP and one standard reporting process, rather than different requirements from each funder. The convening is also a valuable opportunity for peer learning and knowledge-sharing among participating nonprofits," she said.