Making a Difference with Climate Philanthropy

Mar 13, 2023

There are many ways to make a meaningful impact in climate philanthropy. Here are five approaches to consider.

Key Takeaways

  • Many philanthropists want to help mitigate climate change but don’t know how to have an impact.
  • There are a range of options to consider depending on your priorities.
  • There are simple ways to start and more sophisticated approaches as you gain experience.

Many philanthropists recognize that climate change is a critical issue: A 2022 Center for Effective Philanthropy survey found 60% of U.S.-based foundation leaders agree that climate change is an extremely urgent problem. Some 85% believe it’s one of the top three most important problems to address right now.


For current and aspiring philanthropists, however, it can be challenging to know exactly how  to help with the greatest impact. Traditionally, foundation leaders have relied on grantmaking as the cornerstone of their climate philanthropy, but there are many more strategies at your disposal.

Consider shifting your grantmaking efforts towards local climate-related needs while maintaining your core mission and focus areas.

Morgan Stanley Private Wealth Management partnered with the Aspen Institute, an international nonprofit organization for humanistic studies, to conduct an exclusive, co-branded report on climate philanthropy, producing several case studies in effective giving. Here are five examples that may help you determine what approach works best for you.


1.   The Aspiring Climate Philanthropist

If you’re an aspiring philanthropist, you recognize the importance of mitigating climate change, but have yet to determine how to meaningfully engage in philanthropy.


Next steps: Consider working with a Private Wealth Advisor to set up and donate to a donor advised fund (DAF), such as the Morgan Stanley Global Impact Funding Trust (MS GIFT). Contributions to a DAF, a 501(c)(3) public charity, are eligible for a federal charitable income tax deduction. Your donations can remain invested—and potentially grow tax-free—while you decide which climate charities and beneficiaries you’d like to support. In the case of MS GIFT, you can donate complex assets, including shares of privately held companies, cryptocurrency, real estate and art.


Case study: A software entrepreneur sells his company and, for the first time, has an opportunity to think about climate philanthropy in a meaningful way. With the help of a Private Wealth Advisor, he sets up a DAF and begins donating appreciated stock before the sale of his company closes. This allows him to avoid some capital gains taxes while he searches for climate organizations he believes can most benefit from his support.


2.   The Climate-Lens Philanthropist:

Your mission doesn’t focus exclusively on climate issues, but you recognize climate change as an important global challenge. You may be wondering how climate change impacts the organizations you currently support—and whether you can expand your approach to help those organizations mitigate the risk. 


Next steps: If your philanthropic focus hasn’t traditionally related to climate change, ask yourself how it might impact the organization you currently support. Consider applying a climate-lens to your grantmaking efforts while maintaining your core mission and focus areas.

Case study: A family foundation that has long supported local healthcare begins making grants to organizations, governments and health centers with a focus on helping disadvantaged communities manage the increase in extreme weather. Additionally, the foundation helps to reduce the use of fossil fuels and mitigate climate risk by supporting the expanded use of electric ambulances in the region. 


3.   The Climate Philanthropy Leader:

You have fully embraced climate-change mitigation as a core mission and are committed to providing long-term support for grantee partners. You are applying a climate-focused lens to your foundation’s investment and grantmaking strategy. As you explore the full range of philanthropic tools, you may be thinking about how to take your efforts to the next level.


Next steps: Consider engaging directly with grantees, for example by sharing your expertise and introducing them to other experts. You may also consider encouraging other philanthropists to engage in climate funding or rallying with other funders around certain causes.


Case study: A philanthropic couple has been concerned about climate change for four decades and decides to establish a small foundation. To maximize resources, the foundation focuses on providing early-stage funding to support climate-focused programs that they believe have the potential to attract larger investors. In addition, the couple actively participates in a global philanthropist community and takes the initiative to educate fellow members about climate change.

You may want to consider creating or updating your estate plan to help your heirs keep as much of their inheritance as possible.

4.   The Investment-Led Philanthropist:

You approach climate issues mainly through sustainable investing. But as you learn more about various for-profit investment opportunities, you recognize a need to also support nonprofit organizations that are contributing to climate solutions. 


Next steps: Consider a combination of public and private market investments alongside strategic philanthropic support for nonprofits. In addition to grants, you may want to consider investments that align your foundation’s mission and values with its investment strategy.


Case study: A successful investor with a longstanding personal interest in climate action runs an investing fund for a multi-family office. The fund, initially focused on environmental, social and governance (ESG)-screened investments and public equities, is interested in expanding into new climate-focused markets. By partnering with an impact investing advisory firm, the fund can be more intentional in its climate investment strategies, often funding privately held, early-stage climate solutions companies. The fund also aligns its philanthropic giving with its investment focus, steering grants mainly to climate-focused organizations that have adopted a market-based approach to their climate action.  


5.   The Climate Action Integrator:

As an “integrator,” you’re fully committed to addressing climate change as your primary philanthropic mission. You may be implementing a comprehensive philanthropic and investment strategy to address climate change, including grantmaking and mission-related investing. On a personal level, you may be actively participating in climate change advocacy efforts. As an organizational leader, you may be seeking to share your knowledge of climate issues and encouraging other funders to get involved.


Next steps: Consider how to leverage all assets to maximize climate-driven action. This can include embracing elements of the climate-lens philanthropist, climate philanthropy leader and the investment-led philanthropist.


Case study: A multi-generational foundation recognizes climate change as a critical global challenge and seeks to maximize the impact of its activities. This includes applying a climate lens across the foundation, being an early investor in climate efforts like mitigating greenhouse gas emissions and educating other funders who want to take a deep dive into supporting climate action. 


Looking to the Future

There is no “right” level of engagement for climate philanthropy, but there are many ways to meaningfully get involved. It’s important to stay focused and open-minded, so you can determine the best approach for you. A Morgan Stanley Private Wealth Advisor can help you consider all of the options and tools available to you that can help you make an impact. 

Funding Climate Action: Plan for Philanthropists

Morgan Stanley Private Wealth Management partnered with the Aspen Institute, an international nonprofit organization for humanistic studies, to conduct an exclusive, co-branded report on climate philanthropy, producing several case studies in effective giving. 

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