Often, people will make charitable donations to provide support in response to a crisis or humanitarian need. This type of giving can be an emotional response to an issue, as people will likely donate to a cause that’s close to their hearts. This was apparent during the global pandemic, which saw donations go up around the world.
For more statistics on charitable giving globally, please have a look at the embedded PDF.
Charity and Philanthropy – What’s The Difference?
While charitable giving is encouraged, it can often be interchangeably confused with philanthropy, which is also linked to giving, but looks to address the root cause of a social issue and takes a strategic, long-term view. Charitable donations can be part of philanthropy, but people involved in the latter can also take part in advocacy work.
Certainly, a sizable amount of donations made worldwide in a given year will be made through philanthropists and philanthropic organisations. However, what helps distinguish between charity and philanthropy is an individual’s motivation. Philanthropists are naturally charitable givers, but they choose to do so in a structured way. In many cases, they also expect a ‘social return’ on their giving.
Knowing which aspect of giving to engage in is something that individuals can learn more about when working with wealth structuring professionals. Dr Edgar Paltzer provides legal advice for clients in this aspect and professionals such as Edgar Paltzer can guide individuals on the various legal aspects to consider when giving.
From Charity to Philanthropy
An individual with a charitable spirit will want to give, even if they have little. Philanthropists usually have a little more and want to take a more long-term approach to their contributions. The decision to take this more strategic approach is often brought about by a significant change in an individual’s liquidity status, such as acquiring an inheritance or proceeds from selling a business.
The question is, then: which process, charity or philanthropy, is better? On one hand, achieving permanent solutions to some of the social issues faced by communities is possible through targeted, strategic and collaborative effort (philanthropy). However, many of these issues have immediate needs that need resources and manpower, aspects that charitable giving is valuable for.
As such, rather than think of which approach is the ‘best’, it’s much better to see them as distinct approaches that work towards the same goal. One isn’t better than the other, but they each have a place in solving social problems.
For more information about charitable and philanthropic giving, you can view the attached video.