The last few months of the year are often filled with client conversations, many of which will touch on philanthropy because acting before year-end may generate tax advantages. These meetings might also verge on tangential, personal aspects of the client’s life, including personal values, family relationships and legacy planning.
Getting Started
Keeping the following things in mind will help you and your clients make the most of your conversations about philanthropy:
It’s not just financial
Clients’ interest in philanthropy isn’t necessarily limited to tax savings. Probe to understand their desires and needs and tailor your dialogue accordingly. Just because you’re a financial professional doesn’t mean your clients expect you to operate in a strictly financial capacity. Trusted advisors are frequently likely to serve as logistical and strategic resources to support broader objectives, and these may include their charitable interests.
It’s an ongoing opportunity
Even though year-end is an optimal time to discuss philanthropy, consider addressing it at other times of the year as well, and make it a regular part of your check-ins, especially with clients who would benefit from (or desire) a longer runway for planning.
It doesn’t have to be a solo expedition
Extracting the greatest value from a formal giving program can be a complex activity, especially if it involves a substantial investment or multigenerational collaboration. Consider turning to specialists who provide complementary expertise to yours and can provide insights around the legal, tax, compliance and planning aspects of the process.
Three Stages
Your conversations will vary depending on where your clients are in their philanthropic journeys. There are three possibilities: those who are just beginning to consider their options; those who are actively comparing charitable vehicles; and those who have already established giving programs. Clients in each of these stages will have different questions and need a different type of guidance.
Key Questions for Each Stage
Below are five key questions for each of these stages. They will help you and your clients uncover the core goals, priorities and challenges necessary for developing effective solutions.
Stage 1: Engaging With Aspiring Philanthropists
- Do you currently support causes and organizations? How and why?
- Have you or your extended family been affected by the issues and problems facing society? To what extent does your experience motivate your charitable interests?
- Would you be interested in exploring the possibilities beyond checkbook philanthropy?
- Is it important to leave a legacy for yourself and/or your family? How would you like to be remembered?
- Do you see this as a family activity or something you want to pursue on your own?
Stage 2: Choosing the Right Charitable Vehicle
- Is it critical for your gifting activity to remain anonymous? Do you need anonymity for all donations or just some?
- How much control do you want over the process, operations, administration and assets of your charitable activity?
- Do you want your charitable legacy to end with you or be passed to your family?
- Is traditional gifting to nonprofits sufficient, or would you like to explore creative forms of giving such as awards, scholarships, running your own programs and giving directly to individuals in need?
- How will you fund your charitable vehicle, now and in the future? Have you already earmarked funds for major or multiyear gifts that may require separate agreements?
Stage 3: Refining and Redirecting for Results
- Does your current philanthropic program reflect your original vision? If not, why?
- Do you have the resources and guidance you need, for example, for crystallizing your mission, involving younger generations, governance, compliance, gifting policies and best practices?
- Are you receiving the maximum tax advantages for which you are eligible?
- Do you track the results and impacts of your gifts? Are you satisfied with your current program, or do you need more transparency to understand how you could make more of a difference?
- Are you anticipating significant changes (for example, personnel transitions, influx of capital) in the next few years that could impact your philanthropy?
Hannah Shaw Grove is a senior executive at Foundation Source, the nation’s largest provider of support services to private foundations. The firm works in partnership with financial and legal advisors as well as directly with individuals and families.