Advising Celebrities and Athletes on Charitable GivingAdvising Celebrities and Athletes on Charitable Giving
These clients have exciting opportunities to turbocharge their donations.
Millennials and Generation X celebrities and athletes are driving incredible amounts of giving these days. Think Lebron James’ I Promise program and off-the-court activism. Leonardo DiCaprio’s outspoken support for the environment. And Serena Williams’ turn as a Goodwill Ambassador for UNICEF. But beyond eye-popping donations, their inventive approach to using their platform is equally remarkable.
The age of social media and a national reckoning around racial inequity are compelling prominent athletes and entertainers to take bold stances that publicly articulate their values. That’s leading celebrities to give in more innovative ways as they find opportunities to leverage their household names and star power to dramatically showcase their beliefs.
Time-Honored Giving Techniques
Celebrity giving isn’t new. For decades, cultural icons like Dolly Parton, Elton John and Oprah Winfrey have felt the urgency to give back to their communities or to a cherished cause. And in general, celebrities and athletes make powerful philanthropists. Why? Most are innately passionate people who’ve trained all their lives to be the best. Once they find a special interest, they tend to give it their all. And for many, giving back to the community becomes a big part of their brand.
There are many vehicles for celebrities to express their philanthropic intent, including establishing a donor-advised fund (DAF) or private foundation (PF). PFs tend to hold special appeal because they offer the greatest amount of control. They’re not without pitfalls, though. Many athletes start foundations with good intentions but are unaware and often ill-prepared for the responsibility, complexity and public scrutiny that comes with the day-to-day operations and decisions. Since anyone can see where grants have been made, high-profile individuals must ensure their donations stay “on brand.” That makes them ideal for those with a well-developed philosophy of where they’d like to give.
DAFs, on the other hand, offer anonymity. They tend to be “turn-key” and are a great way for those starting on their philanthropic journey to get their feet wet and explore which giving areas they’d like to fund. They also offer the ability to fund in a high-income year—such as when your client signs that first big contract—capturing the tax savings without having to make an immediate decision on where your client would like to donate. Sometimes combining a DAF with a private nonoperating foundation makes the most sense. Whichever vehicle your client chooses, keep an eye on newly introduced legislation called the Accelerating Charitable Efforts (ACE) Act. If passed, the ACE Act would significantly change the requirements imposed on both DAFs and PFs.
Turbocharged Giving
Beyond these tried-and-true strategies, some pro athletes and entertainers turbocharge their giving by leveraging their brands. Consider pop star Ariana Grande. The noted BLM advocate dramatically boosted the sales of a Black-owned coffee shop in South Los Angeles just by posting videos on her Instagram of her shopping there.
Then there’s iconic rapper Snoop Dog, a partner in a plant-based snack food company called Outstanding Foods. A percent of sales goes to Snoop’s favorite charities, including the Equal Justice Initiative. Increasingly, athletes and entertainers aren’t just sitting on the sidelines anymore, mere passive observers of what’s going on with their charity organizations. They’re embracing more active roles in management and vision and engaging with philanthropic advisors.
Innovative Giving in Action
As the strategies below show, with the right advice, celebrities and professional athletes can take their charitable giving to the next level. What do all of them have in common? They amplify impact by heightening visibility, wielding influence and changing narratives. Here are some possibilities to discuss with your clients:
Tap into your fan base: Think Houston Texans’ star, J.J. Watt raising over $40 million for Hurricane Harvey relief. Or Ellen DeGeneres teaming up with Samsung to donate $1 for every retweet of her iconic selfie from the 2014 Oscars—a move that raked in $3 million for St. Jude Children’s Research Hospital and the Humane Society.
What to watch for: If your client goes this route, consider a fiscal sponsorship. These vehicles allow your clients to accelerate their impact by accepting donations from fans then directing them to a specific project, grant or event.
Pump up the volume: For those in the public eye, seemingly “small” gestures can make an outsized statement. Michael Che provided rent relief for NYC tenants in his grandmother’s building in the wake of her death from COVID-19. Milwaukee Bucks star Jrue Holiday and his soccer legend wife Lauren gave $5 million from his salary to fund a social justice fund in the wake of George Floyd’s death. And Robin Williams’ actress daughter Zelda donated $69.69 to local homeless shelters on what would have been his 69th birthday—while inviting fans to do the same.
What to watch for: Discuss with your client the most tax-efficient way to carry out the plan.
Plow in profits/proceeds: Many stars ensure a portion of their product or merchandise sales help fund causes near and dear to them. Michael Jordan donated $2 million of his proceeds from “The Last Dance” documentary to food banks during the pandemic. Kylie Jenner steered $500,000 of her Kylie Cosmetics line sales to fund a new teen cancer lounge. And the Duke and Duchess of Sussex contributed $112,000 to Feeding Britain with profits earned from the broadcast of their 2018 wedding.
What to watch for: Planning is the key to success. You need to help your clients determine their capacity to give, while remaining on track to achieve their other financial goals. It’s also crucial for you to help them ensure their generosity is being put to good use by recipients or grantees.
Your clients can extend their reach even further by aligning the investments in their PF or DAF with their values through responsible investing. These strategies make it their mission to take environmental, social, and governance factors into account as part of their investment approach. Even your client’s core assets can be harnessed for good.
Advice for the Altruistic
Entertainers and professional athletes are at the forefront of some of the most cutting-edge giving in the world today. But few innovate alone. Savvy philanthropic advisors help them ask the right questions: Do you want to leverage your name and brand by affixing it to a PF? How involved do you want to be? How important are tax considerations? Advisors can also help identify charities that match their client’s mission while establishing how those nonprofits will deploy funds and provide metrics to measure their impact.
Clare Golla is Managing Director—Head of Endowment & Foundation Advisory, Adam Sansiveri is Managing director —head of the Nashville Private Client Group and Co-Lead Sports and Entertainment Group and Stacie Jacobsen is Senior Vice President and Director—Wealth Strategies Group and Co-Lead Sports and Entertainment Group, all at Alliance Bernstein.
