What to sort out before the money lands

Two philanthropic advisers on how sudden wealth affects you, and the three things to set up now.

Right now, an unusually large number of people in tech are on the edge of an extreme wealth event. Through a tender offer, IPO, acquisition, or vesting equity, they will go from a salary to tens or hundreds of millions of dollars almost overnight. This post is for them.

We are Jack Lewars of Ultra Philanthropy and Chloe Cockburn of Just Impact Advisors, two philanthropic advisors with 18 years of combined experience. Jack focuses mainly on global health; Chloe focuses on U.S. criminal justice reform. We have watched many people go through this transition, and we've seen people make avoidable mistakes. Our goal is to help you feel less overwhelmed and more prepared before the money arrives.

As we each run a philanthropic fund, we could benefit if you follow some of this advice. Weigh it accordingly.

If you only have a minute, make a plan now to do these three things:

1. Pick a small group of trusted friends and advisors, and ask them today to help keep you on track.
2. Talk to a tax advisor before any liquidity event. Some of the biggest decisions, like how and when to give shares, can't be undone after a sale.
3. Write down two numbers: how much you'll give in your first year (we suggest at least 1% of your wealth), and how much of your time you want to spend on giving.

How will sudden wealth affect me?

You don't need to become "the type of person who has extreme wealth," whatever that image means to you. You are the same person you were six months ago. However, the money will change how the world relates to you.

You will no longer get honest feedback. Almost everyone around you will have a strong incentive to keep you happy and stay in your good graces. Very few people will tell you an idea is bad, and almost no one will point out a mistake. Without feedback, it gets harder to stay considerate, keep growing, make good decisions, and, above all, course-correct from bad ones.

It can get lonely. Wealth doesn't make you less human. You can still feel sadness, doubt, and fear. But people are rarely sympathetic to a rich person who is struggling, especially when the wealth itself is the cause. That makes it hard to talk openly, which can lead to isolation.

You may struggle to find purpose. If you've spent years driving toward professional success and financial independence, "making it" can leave a surprising vacuum. What now?

You'll face a flood of requests and decisions. You'll suddenly be able to solve many problems, for people you love and for the wider world. That can be exhilarating, and also overwhelming: where do you start, and where do you stop? Everyone in your life, and many strangers, will know you could help them. Meanwhile, the setup phase brings an enormous number of decisions.

Each of these challenges has a practical response, and most of them work best if you put them in place early.

What should I do before the money arrives?

Choose your inner circle now

The most important thing you can do is surround yourself with people who respect your humanity, whom you can be open with, and, most of all, who will challenge bad ideas. Choose them in advance. Look for:

• people who don't venerate wealth for its own sake;
• people who knew and understood you before you were rich;
• people with the character and skill to give you honest feedback; and
• advisors who have worked with others through sudden wealth.

Make feedback routine

Unless you proactively ask for feedback, don't expect anyone to give you any, ever. And unless you encourage critical feedback specifically, and show people that it's safe and even rewarded for them to share it with you, any feedback you get will be extremely gentle.

You will need to create a structure and the right incentives to receive feedback. This can be as simple as having a standing agenda item for feedback from an advisor or friend you meet regularly, so that it is easy for them to raise things, and committing to being open and thoughtful in response. You can also include giving feedback explicitly in the remit or performance targets of anyone you employ.

Tell your wealth managers what you actually want

You'll need wealth managers to organize your assets and handle taxes. Remember that their job is to protect and grow your money, and they are usually paid a percentage of the assets they manage. Absent specific instructions, they will work to keep money in your name.

If growing your wealth isn't your goal, find managers who will support other goals, and give them explicit direction. For example: up to $X for your own living costs, up to $Y for the people in your life, and the remaining $Z to give away. Make those numbers explicit.

Get tax advice before any liquidity event

In the US and UK, giving appreciated shares to charity, including a donor-advised fund, generally lets you avoid capital gains tax on them and deduct their full market value. That often works best before a sale or IPO is locked in, because once a sale is effectively certain, some of the benefit may be lost. Where you live, how you set up trusts, and how much you give in which tax year can also make a big difference. Rules differ between jurisdictions, so talk to a tax advisor with charitable-planning experience before the money lands.

Set a system for personal requests

We often hear newly wealthy people ask: how do I handle friends and family asking me for money? We suggest that you create a simple policy, so that every ask doesn't become an agonizing judgment call. You can change it later. Two examples:

• Say yes to any request up to $5,000 without deliberating, capped at $100,000 per year.
• Proactively give a set amount to the people closest to you, and make clear there won't be further gifts for at least a year.

Either approach gives you breathing room. It also spares people close to you from feeling they need to choose between your friendship and asking for money they genuinely need.

Tighten your security and privacy

Once word of your wealth spreads, you may be the target of scams, phishing aimed at your accounts, unsolicited pitches, and occasionally physical risks. There are security consultants who can help you manage this, but a few tips are: lock down your accounts with hardware security keys; think twice before sharing your finances or whereabouts publicly. If you'd rather give quietly, some vehicles, like donor-advised funds, allow you to give anonymously.

How should I approach philanthropy after a liquidity event?

Giving can answer several of the challenges above at once. It offers a new source of purpose. Distributing money can relieve the burden on you. It's a rational response to having enormous abundance while seeing deprivation around you. And it can keep your relationships more normal: if people know you've committed most of your wealth to charity, especially through an irrevocable vehicle like a donor-advised fund, fewer of them will see you as a solution to their problems.

Get money moving in year one

The most common pattern we see is a donor who makes a plan and then doesn't follow through, because work and the other demands of the transition take up so much time and energy. Leaving philanthropic money unspent becomes a burden for you and a real loss for the causes it could have helped.

Whatever your long-term plans, commit to getting a set amount out of the door in your first year. We suggest at least 1% of your wealth as a baseline, given to organizations rather than parked indefinitely in a donor-advised fund. You can certainly go higher than 1%: this number is meant to be small (compared to your total giving capacity), yet meaningful in dollars, to get you past the initial hesitation around giving. The easiest way to do this is to hand an initial amount to people you trust, so your money starts helping right away while you figure out the structure that suits you.

Delegate more than feels natural

Going from excellent engineer or founder to skillful philanthropist is a long journey, and it may not be your comparative advantage. Most of the world's most impactful philanthropists delegate heavily, through expert-led funds or by hiring staff. You don't have to drop everything and go all-in with your time.

Philanthropy is unusual in that experts are often expected to defer to the client, even if they believe the client is wrong. Losing a client's goodwill is too big a risk, so advisors tend to tell clients what they want to hear to keep the work going. That's a problem, because, on most grant decisions, a good fund manager or field expert knows more about the grantee and the field than the donor does. Second, money creates change mainly when it follows a coherent strategy. On this point, while we encourage delegation, be mindful that generalist consulting firms often tap into expert knowledge for recommendations, but lack the knowledge in the cause area to combine those grants into an impactful portfolio.

One type of delegation involves giving to expert-led philanthropic funds, which have several benefits. You can access expertise without having to hire someone; you can make a one-time contribution rather than having to stick with something for years, and you spread the risk with other donors. Giving through funds also ensures that if you change direction in a few years, you won’t have to massively disappoint grantees when you stop giving, which is a hazard of giving directly to organizations.

Separate your money from your time

Many donors want to be "more than a check." We suggest treating these as two separate questions. Your skills and interests are not automatically useful to the causes that can most benefit from your funding, and the two do not have to come as a package.

Think carefully before making giving your whole identity

Making philanthropy your entire purpose has real downsides. It can lead you to micromanage your team. It can slow your giving, because who are you once the money is gone? And it can fill your life with meetings and conferences full of people thinking about your money, which is draining.

We suggest deciding early how much time you want to spend on giving; that choice should shape your whole process. Be honest about which decisions you're equipped to make. Donors are rarely the best final decision-makers on strategy, hiring, theory of change, or evaluation, though they can contribute to all of them.

Finally, if you hire someone to lead your giving, make sure their style matches yours. We often see new donors from tech hire a foundation director steeped in conventional philanthropy, then discover a mismatch in pace, boldness, and analytical rigor. Pick someone aligned with your risk tolerance and ambition.

Why start planning now?

Coming into extreme wealth can feel daunting and, when you're working flat out, it's tempting to put off thinking about it.

However, some decisions, like tax timing, can't be undone, and others are easier to make beforehand than retroactively.

Start with the three steps at the top of this post: choose your people, talk to a tax advisor, and write down your first-year giving and time commitments. That will give you a solid foundation for the opportunities and challenges to come.

Jack Lewars is the founder of Ultra Philanthropy, an independent advisory that helps major donors give for maximum impact, and is the fund manager of its Mid-Stage Global Health Fund. He advises donors giving up to nine figures a year, and is Chair of Trustees at High Impact Athletes. Talk to him about your giving.

Chloe Cockburn is the founder of Just Impact Advisors, an independent advisory, and is the fund manager of the Just Impact Fund, launched with an initial major contribution from Open Philanthropy (now Coefficient Giving), whose focus is on reducing incarceration in the United States. In addition to running the fund and advising donors on this cause area, she provides general strategy consulting and support to donors getting oriented. You can read her Substack here and contact her here.

We used Claude to suggest improvements and flag gaps, as well as for proofreading. All opinions, primary drafting, and final edits are ours.