According to the latest Sunday Times Giving List, seven of Britain's top 10 philanthropists are all self-made millionaire entrepreneurs and, between them, gave almost £1.5bn to charitable causes in 2007 alone. Business people are no longer content simply to throw their money at a cause and bask in a sense of well-being – a keen eye for business has become just as crucial to the process as financial support.

As in Anthony d'Offay's case, the most astute and successful philanthropists are beginning to approach giving in their personal lives as they do their business investments. This new breed of giving has been named "venture philanthropy" (or VP) – where a very wealthy individual, usually from the world of business or enterprise, demands to see a social or financial return on his or her investment.

For those considering VP, it is important to view the process in the same way as you would a traditional venture capital investment, whether you intend to invest in commercial enterprises run by charities and their holding companies in order to accrue financial returns, or directly in charities in order to achieve a measurable social return on investment (SROI).

For those who are planning to donate significant amounts of money to charity, it is crucial to first conduct thorough research and analysis into the options available and to speak to somebody who knows what they're doing as part of a general wealth management strategy. Even choosing the right charity can be a difficult task. While the value of a charitable organisation to the recipients of its services may be obvious, measuring its impact in more quantitative terms can be hugely complex. Analysts will measure a number of factors, from improvements in wellbeing to cost savings in the public sector, and explore various charities' risks and organisational capacities in order to understand the complexities and subtleties of attempting to cure social problems.

Venture philanthropists need to communicate regularly with the charity's management to discuss due diligence, oversight and accountability. They should also ensure that there is a clear exit point, when a project either becomes self-sustaining or a larger donor takes over its funding. As a result, most VP terms are relatively short (on average three to four years), although some may last for longer than 10 years. Without proper advice, however, few people will have a clear idea of the length of their involvement, meaning that the investment can lose all effectiveness over time.

Professional advice is also essential to ensure that the selected charity receives the full benefit of the philanthropist's generosity by maximising tax efficiencies. There are a number of options available, the most well-publicised being Gift Aid, through which the charity can claim an extra 28p on every £1 donated by a higher rate tax payer. Donations of shares, securities, land and buildings are exempt from capital gains tax and it is also possible to claim personal tax relief. In addition, donations to charity made in a will are paid before inheritance tax is deducted.

All of this, however, is purely the mechanics of giving. The really important decisions are both subjective and objective – what type of charity will best suit the philanthropist and, of the competing charities, which will give most bang for the buck. On both of these counts, professional advice is crucial: a good wealth manager will help his or her clients to make the best of both decisions by offering them the choices of investment, whether commercial or charitable, that are the best available in the market.

Charlotte Platts is regional director, HSBC Private Bank, Leeds.