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Wealth Management: It’s OK to Say No

Patricia Poitras does not feel guilty anymore. When charities approach her foundation for donations, she bases her response on two simple yes-or-no questions. If the answers are no, Poitras graciously declines the request without any pangs of remorse or second-guessing her conscience. She did not always follow this strategy, though. About 20 years ago, she and her husband, Jim, established a foundation to support mental health research charities and other nonprofit organizations in their suburban Boston community. Then they established strict guidelines for determining which projects to support: Causes that benefit brain or cognitive science research are considered, as are causes that benefit people in their hometown of Belmont, Mass. Solicitations that do not meet one or the other criteria are denied—period. “I don’t—any longer—feel guilt,” says Poitras, who donated about $1 million last year through personal gifts, a community-based foundation, and the family’s own foundation. “We did when we were younger. Back then, we were a little bit unsure if we were making the right choices. You do want to help everybody, but you can’t.”

The key to guiltless giving, Poitras believes, lies in first establishing a charitable strategy and then adhering to it as the deluge of solicitations pours in, which inevitably happens as a family’s wealth—and the public’s awareness of it—increases. Adopting a three-tiered approach is one effective method for guiding your philanthropy, says David Borden, director of investments for the financial services division at the Boston-based accounting company Carlin, Charron & Rosen. “There’s long-term planning, which is about five to 10 years or even longer, and sometimes is referred to as planned giving,” explains Borden. “Then you have your one-year, intermediate-term giving, and that should be reevaluated annually based on who you’d like to help that year and what your goals are for that year. And then you want to keep what I call a ‘smaller pile’ for the miscellaneous events that come up throughout the year, such as different banquets and functions.”

Because the new year has just begun, now is a good time to reflect on your own approach to giving. Many families, particularly those with generations of wealth, already employ a financial plan similar to the one Borden describes to determine where to distribute their gifts. This type of preplanning becomes even more critical in new-wealth households, because, unlike the multigenerational wealthy who have a historical perspective to draw on, charitable giving for the newly affluent can be a trip into uncharted waters. “The newly wealthy want to help everybody,” says Borden. “They’re more inclined to say yes, and they’re more easily influenced because often they haven’t done their research yet on all the different charities.”

Personally researching an orga nization serves a dual purpose. As a

potential benefactor, you will have information to help you decide whether you wish to contribute, how much you will contribute, and for what specific purpose. If you decide to decline a request for funds, your research indicates to the charity that your decision was well-thought-out and reasoned rather than random and uncaring.

Because the Poitrases have clearly defined parameters for giving, they do not have to spend much time exploring the background of each solicitor. Patricia Poitras would like to respond to all requests, many of which do not meet the requirements for her charitable donations, but without a staff, she is unable to. “I feel badly for the people who go through the trouble of putting together a big proposal,” she explains. “I’d rather be called first. It certainly would be more helpful. Because when [the organization] is outside the research subject area, we focus within a geographic area and give locally within that area. So if a proposal comes from outside, we won’t consider it. And we’d never give money to somebody we didn’t investigate.”

The J.A. and Kathryn Albertson Foundation in Boise, Idaho, takes the investigative process one step further in that it does not entertain requests from unfamiliar organizations. A staff member must recommend the proposal in order for it to be considered.

“We never bring anybody in that one of us has not heard from personally,” says Sharron Jarvis, a former executive director of the foundation and now a senior advisor. The foundation, formed by grocery store magnate Joe Albertson in 1966, donates a portion of its resources (estimated at the close of 2001 to be nearly $625 million) solely for primary and secondary education in Idaho. As a result, it is frequently the target of software makers, textbook publishers, and other school-related groups hoping to receive funds from the foundation, which has given more than $150 million to education. “[Consultants] come in with a canned presentation. That’s how these people survive,” says Jarvis. “We listen to the canned speech, and then we say, ‘Let us tell you what we really need from you. Let us Idaho-ize it. Let us personalize it.’ Education is a many-billion-dollar business, and these groups look at a foundation like [the Albertsons’] that has this kind of money, and they think, ‘Surely you cannot do without us.’ Well, most of the time our thinking is, ‘Yes, we can.’ ”

While rejecting requests from worthy organizations may be awkward or uncomfortable, refusing funds to a group that you have given to in the past, even infrequently, can be downright difficult. Still, many wealthy patrons occasionally face such a situation. “The best thing you can do is be well-prepared with your planning,” advises Borden. By being prepared, you can confidently explain to a group why your focus has shifted from its cause to another, softening the blow. “If they think it’s random, feelings are going to be hurt, and you don’t want people talking poorly about you just because you’re not giving money to them.”

Communicating your intentions as early as possible helps, also. The Albertsons’ foundation, for example, gives groups more notice when funds that it provided in the past are going to be denied, and many times, it offers to help find an alternative source of funding—such as local businesses—to keep successful programs running. Problems often arise because a thorough explanation did not accompany the initial or previous donations, says Patricia Poitras. “You can give to operational support, or you can give to a discrete project,” she explains. “If it’s a discrete project, it’s usually agreed upon that this is a one- or two-year commitment and then that’s it.” When money is given to a group for operational purposes, it is imperative to specify the duration of the gift. If you are funding a new organization, be clear that once it reaches maturity, or should have reached maturity, the cash flow will end.

Conducting some personal introspection before agreeing to give funds to a charity, a local organization, your alma mater, or a medical cause is also helpful. Deciding what your values, beliefs, and interests are, as well as determining who you are and what you stand for will go a long way toward choos ing the appropriate applications for your money.

“What’s your tolerance?” asks Jarvis, the advisor to the Albertsons. “For how long do you want to have your money out there? Are you willing to put it out there for three to five years and know that along the way you’re going to have to hold your breath, so to speak, and wait to see what the results are?” If you are uncomfortable with such a situation, turn down requests for start-up funds or long-range commitments and look for organizations that can use your donation to produce results quickly. These could include groups that are raising money for art acquisitions for a new gallery or even for purchasing playground equipment for a local park.

Finally, be flexible. A group may not fit your plans for long-term giving, and it may not meet the requirements you have set for charitable contributions, but no one lives in a vacuum. Occasionally, you will want to deviate from your financial plan. In fact, many people find themselves giving compassionately from time to time, such as to a local charity golf tournament, and it is almost impossible at those moments to be completely strategic. This is the type of situational charity for which Borden advises setting aside a fund for miscellaneous giving. The key is

to keep this fund small. “You don’t want to leave too much money in there,” he cautions. “This should not be your largest piece. If you don’t keep it small enough, then you’re going to end up saying yes to everybody.” Or feeling guilty when you decide to say no.

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