From the August 2009 issue of Boomer Market Advisor • Subscribe!

10 Questions for: Sarah Libbey

Sarah Libbey - President of the Fidelity Charitable Gift Fund

Boomer Market Advisor: What's the biggest surprise when it comes to the family dynamics of charitable giving and leaving a legacy?
Sarah Libbey:
Men overwhelmingly name their spouses as their primary influencer in charitable giving, while women are more likely to name a range of influencers that include their spouse, extended family, friends and co-workers. Women almost take a team approach to making the decision, and want a variety of opinions. Likewise, most men say they defer to their spouses on which charities to support and how much money to donate.

BMA: You recently undertook a comprehensive study on the subject of women and the future of charitable giving. What was the impetus for the study?
We were seeing more women than men call in about their gift fund account, so we said, "Let's take a closer look to see if it's a real trend, and if so, what's making it happen?"

What was the main conclusion?
High-income women are the most sophisticated of all givers. They're more likely than men to use planned-giving vehicles such as donor-advised funds, charitable-remainder trusts and private foundations; and they are most likely to use securities for donations. Women have always had a hand in their household's charitable outreach. But that role is evolving as women increasingly create their own wealth and become the beneficiaries of wealth transfers because they live longer.

BMA: How has the ongoing economic crisis affected their giving?
Our study found they are more likely than any others to give additional money during challenging economic times. It's hard to quantify directly but my sense is, anecdotally, that's true. And they're more focused on local causes. Our granting activity out of the gift fund is up. So women are continuing to put their money where their mouth is, so to speak, when it comes to charitable giving in challenging times. One-third of givers fall into the "empathetic giver" group. They give the most in challenging economic times because of need. And they are the most likely to respond to a cause when personally touched by a disease, illness or tragedy.

BMA: Is a family culture of charitable giving something that's learned and passed down through generations?
When asked about their family legacy of giving, both male and female givers generally agree that giving has always been a tradition in their family. It's something the women especially want to teach and instill in their children.

BMA: Are there resources available to help instill this culture of giving?
We've started our Gift-for-Giving program, which is an e-gift that can be given to a family member or whomever. The recipient can make a donation, and it comes right out of the giver's bank account, but the gift is made in the name of the recipient. So parents, for instance, don't have to set up a different granting account for their children. But the children do all the research on prospective charitable organizations.

BMA: What are they looking for in their research? What qualities of the organization are most important to them?
Virtually all donors we surveyed agree that it's necessary to research the organizations in order to ensure credibility. Eight out of 10 charitable givers research how much money goes directly into funding programs rather than into overhead. Almost three out of four charitable givers said they would likely support an organization that would benefit their own communities (this again confirms the locally-based giving by most women).

BMA: How much do they typically give?
The average charitable giver donated 6 percent of gross household income in 2008 with a vast majority giving up to 10 percent; they consider charitable giving a part of their overall financial plan; and they define a philanthropist as someone who donates at least $100,000 a year or more.

BMA: You mentioned "empathetic givers" and how they account for one-third of the female giving demographic. How did the others break out?
Mainstream contributors were the majority, at 52 percent. This group is the least likely to give more in challenging economic times because of greater need. When decreasing giving year over year, they're the most likely to keep the same number of charities and decrease the amount they give. Reactive contributors give the smallest donations as a percentage of income. They're the most likely to cut back on charitable giving in challenging economic times. They also are the least likely to think of charitable giving as part of their overall financial plan. A very small percentage is what we call pioneering givers. They're most likely to contribute to organizations that are lesser known or to support new causes. They give away the most money as a percentage of their income. They use credit cards and securities for donations more than any other group, and they are more likely to be influenced by a philanthropist in the news.

BMA: What does all this mean for advisors?
Since women are most likely to use planned-giving vehicles, this means they're taking the time to educate themselves, and it makes sense that they'll do that through the advisor.

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