Advisor to Advisor: How to have the charitable conversation
July 1, 2019
You learned what your clients aren't telling you in the first installment of our Advisor to Advisor series. But what are the best ways to broach the topic of charitable giving? More than 70% of HNW clients indicate that discussing charitable giving with their advisors is important to them1. Talking to your clients about their philanthropy is an excellent way to get to know them better and deepen your relationship.
Here are a few conversation starters:
"What causes are important to you? Do you have a favorite charity or charities?"
Gauge the charitable intent of your clients. How philanthropically minded are they? Some of your clients may give to charity via a check or through a giving tool. Some may be involved with nonprofit organizations. Ask how they are helping currently and how they want to help going forward. If they have difficulty articulating and overall charitable approach, you have the opportunity to demonstrate how a strategic approach will lead to a greater impact with their philanthropy.
"To what degree is minimizing taxes a priority?"
What's your client's priority: Reducing taxes or increasing philanthropy? Or both? There are tax benefits associated with different types of charitable assets and giving tools. To minimize what clients pay in taxes, help them think holistically about what they want to give to their heirs versus what they want to give to charity. If increasing philanthropy is their main interest, they'll likely want a giving tool that invests charitable assets for potential gain.
"Are you familiar with the different charitable giving vehicles that can support your philanthropic goals?"
There are a range of giving tools, which vary by cost, method of distribution of funds to charity, level of administrative control, legacy options, tax-effectiveness, and level of anonymity permitted. A donor-advised fund could be a good fit for a client who wants to, have the option to contribute multiple asset types, separate the timing of contributions from grants, and consolidate their giving.
"Do you want your family to participate in philanthropy during your lifetime? How about after you pass?"
Does your client want their family to be an active part of their philanthropy? Many donors tend to think of philanthropy as a fundamental responsibility and wish to instill that value in their children. Families can create a charitable plan together so they can work strategically in their philanthropy. This is a great opportunity for you to also engage the children and grandchildren of your clients, who may become your future clients themselves.
"What will your charitable giving legacy be?"
Your clients may have many ideas for how they want their charitable giving legacy to look. Or they may need to be prompted to think about the big picture. Who do they want to involve in their charitable legacy? Family? Charities? Other beneficiaries? Take this opportunity to discuss how giving tools can be incorporated in estate planning.
Increasingly, advisors are introducing their clients to our philanthropic accounts. Donor-advised funds are an effective tool for minimizing tax implications and managing philanthropy through life events. In addition to your client's current team, offer to bring in additional charitable giving experts like Vanguard Charitable for additional perspectives.
Our mission is to increase philanthropy and maximize its impact over time. We want to support you as you help your clients reach their philanthropic goals.
1U. S. Trust, The Philanthropic Conversation: Understanding Advisor Approaches & Client Expectations, July 2018.