03/18/2014 05:25 EDT | Updated 05/18/2014 05:59 EDT

Smart Philanthropy: Big Hearts Should Have Big Impact

The personal life of Judith Jardine is a closed book. Heiress to her railway baron grandfather's fortune, for 20 years she was rarely seen outside her Tudor mansion in Vancouver. Few photos even exist to document her life. So when she passed away last year, the Vancouver Foundation was stunned to learn she had left the organization the bulk of her estate -- worth $40 million.

Even more heartwarming are the stories of those who experience incredible good fortune -- and promptly give it all away. Like Calgary's Tom Crist, who won a $40 million jackpot in December. He's not keeping a penny. The money will go to various cancer charities in honour of his wife who was claimed by the disease.

We applaud those who use their wealth to leave a legacy of good in the world. But some stories make us wonder if big hearts are always matched with big impact?

Last month a story out of Harvard caught our eye. Businessman Kenneth Griffin donated $150 million--the largest gift in the university's history. The endowment will support up to 800 scholarships. But Harvard is already richer than many private corporations, sitting on an estimated $30 billion in endowments. At a five per cent return, the interest could pay tuition for all 21,000 students at Harvard with money left over.

Then there are the downright weird gifts. Like the anonymous American millionaire who gave $8 million to Australia's Wombat Awareness Organization.

It's difficult to criticize philanthropy. The desire to give back should never be put down. However, it seems to us that some philanthropists do not always take the same thoughtful, researched approach to giving that they do to their stock market portfolio.

We asked Anthony Maiorino, and he agreed with that perception. As Vice President of Wealth Management Services at Royal Bank of Canada, Maiorino has provided advice to many individuals making donations at all levels.

Maiorino tells us that, often, large gifts from wealthier donors are testamentary -- posthumous donations made through wills. Giving decisions are made as the will is being drafted. The person wants to donate for impact, but they just don't have time when put on the spot in the lawyer's office. In other cases, the wealthy donor is primarily interested in the tax benefits, and so wants to see the money donated as soon as possible.

Faced with those constraints, the wealthy donor chooses, in Maiorino's words, "the path of least resistance." They pick a cause with a personal connection -- a school they went to, a hospital that treated a family member, the large well-known charities, or their inexplicable fascination with wombats. They may not stop to ask whether their chosen cause needs all the money they want to give, or if a similar organization might not make better use of the money.

For your money to make a difference, engage in the same financial planning you give your other investments. That applies whether you are a Judith Jardine, with tens of millions to give, or Joe Canadian, with $10,000 you inherited from your parents.

No matter what form your donation takes, do your research. Look at different charities, contact them to find out about the impact they are having. Many financial institutions will have advisors like Maiorino who can help plan your giving as well as your investing.

Diversify your portfolio. Absolutely support established institutions like your alma mater, or organizations tackling diseases like cancer. But try investing in emerging markets too--small start-up charities with innovative ideas for tackling a local issue in your community, like youth homelessness.

Maiorino surprised us with one suggestion: start a foundation. We've always thought of foundations as the domain of the uber-rich, like Bill and Melinda Gates. But according to Maiorino, there is a structure called a public foundation that is easy to establish and manage, and works for donations anywhere from tens of thousands to hundreds of millions.

You set up a public foundation under the umbrella of one of Canada's nearly 200 community foundations, such as the Winnipeg Foundation. A financial advisor or the community foundation can help you get started. The umbrella foundation takes care of the day to day administration, like reporting requirements, while you decide where your money will go.

Public foundations, says Maiorino, allow you to get tax benefits for your donation right away, while still having the luxury of time to research and decide where your money will have the most impact. A foundation can become a family legacy, handed down from generation to generation. It's even something you can get friends, co-workers and others involved in, raising funds for your foundation.

In the end, the difference is not so huge between buying stocks and philanthropic giving. Both are investments--one for your own profit, the other for the profit of humanity. If you want the best returns, you need to put in the time and thought to make the wisest investment.

Craig and Marc Kielburger are co-founders of international charity and educational partner, Free The Children. Its youth empowerment event, We Day, is in 11 cities across North America this year, inspiring more than 160,000 attendees from over 4,000 schools. For more information, visit