We talk to an expert on philanthropy at a US-based wealth management firm about the demands of supporting certain causes when markets have been so challenging.

With markets gyrating as much as they have and political controversies adding to the mix, philanthropy calls for more composure than usual. 

When markets tumbled after the April 2 “Liberation Day” tariff announcement, only to recover once that policy shifted, it would be easy to understand why philanthropists might have been unclear what to do. Should they give money to causes more quickly, or wait for calmer times?

Keeping donors focused on the long-term picture while being mindful of what is happening in the near term is a means for advisors to prove their “value add” – a more complex task than it might first appear. 

Volatility can be more easily handled if people have already assigned money to a donor-advised fund (DAF) or private foundation. Donors can be flexible about donations and transfers because their money is already set aside. This is a different matter when the money is on a client’s balance sheet.

“Unsettling times are when our clients need us the most. It’s when their values and decisions are truly tested. We’re advising them to develop short-term and long-term strategies that account for volatility and uncertainty as the new normal. Better to embrace it than avoid it and miss out on true impact,” Sara Montgomery, of Plante Moran Wealth Management, told FWR in a recent call. She leads the firm’s family education and philanthropic advisory practices.

Charity has not been immune to the wider economic and political background in recent years. According to National Philanthropic Trust, grants from DAFs declined slightly, from $55.53 billion in 2022 to $54.77 billion in 2023, based on the NPF’s 2024 report. This one-year drop marks only the second decline in grantmaking since it began recording data in 2007. It is also the second-highest aggregate grantmaking value on record, nearly doubling the 2019 pre-pandemic grantmaking total.

Contributions to DAFs dropped significantly to $59.43 billion in 2023, a 21.7 per cent decline. Total charitable assets increased almost 10 per cent to $251.52 billion as the stock market rebounded in 2023 after posting losses in 2022.

NPT also said that foundation giving in 2023 increased to $103.53 billion – rising 1.7 per cent from 2022. Foundation Source, meanwhile, said that the 980 foundations in its 2023 study made a total of 31,373 grants in 2022 representing $865 million in charitable aid. This is a 7.1 per cent increase in grants and 14.7 per cent increase in dollars granted over the prior year.

Speed up or slow down?
In considering the impact of slowing down or speeding up donations, some people might be more cautious in volatile times; others might speed donations up because conditions are more urgent, Montgomery said. 

An important question at the outside is “how much impact are you having with the dollars you are deploying?” she said. 

Montgomery brings plenty of experience from the worlds of wealth management and philanthropy. She has been at Plante Moran since 2019; prior to this, she worked for more than seven years at Wells Fargo Private Bank. Before that, Montgomery was director of philanthropic services at First Western Trust Bank. 

One rule of thumb to adopt in giving, for example, is not to account for more than 5 per cent of an organization’s operational budget, she said. That means increases/decreases in funding will not cause major dislocations.

Another consideration for those who might cut donations or speed them up drastically is how will changing in their funding practices be perceived? Also, Montgomery said, is “how much trust [do donors] have in an organization so that it aligns with what you want in the future?”

“A concern that has been surfacing more is worry about the purposes of charities changing over time which has led some philanthropists to distribute more funds during their life rather than waiting until after they’re gone. Essentially, some donors are accelerating their giving because there’s an immediate need, their values are well aligned with the mission, and they can hold organizations accountable,” she said. 

This point tallies with the idea, as explained here, of putting sunset clauses into a philanthropic organization so that heirs can review what they should continue to do in light of changed conditions and values. 

Sunset clauses aren’t cure-alls but they can mitigate difficulties over time. To give an example of disputes that arise, in late August 2022 a story broke about how two daughters of the late Hollywood movie star, Paul Newman, had sued the Newman’s Own Foundation he had created, saying that its leaders had moved from the actor’s wishes and limited their involvement in its charitable giving. The charity was created in 2005, three years before the actor died. The non-profit controls a food company called Newman’s Own that funds the private foundation with its after-tax profits. In another case (2018), at the University of Chicago, a $100 million charitable bequest to finance conflict-resolution research via the university turned into a row. 

Asking the right questions
Montgomery said that she and colleagues can help advisors with the kind of questions to ask clients and open up the latter to talk about their wishes. 

“Advisors are coming to me with questions related to having conversations about what their clients value beyond money, things like stewardship, family principles and how much to give/leave to their children,” she said. “It’s helpful for advisors to have additional resources and tools to address these less technical but just as important questions. This can be outside some advisors' comfort zones but the conversations can be invaluable for helping clients accomplish their goals.”

Starting a conversation with a client takes judgement and skill. 

An effective way of opening up a client to talk about specifics is asking them about what philanthropy they have engaged in already. One question, Montgomery said, would be: “Can you share some of your most meaningful gifts or community involvement?”

For clients, it is important to establish their “North Star” – what really matters to them – so that when there are changes, they can alter within a broad context, she said.