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

10 tips to make charitable giving count

A 2008 study from the Center on Philanthropy at Indiana University found that only 5 percent of high-net-worth individuals consider themselves experts in charitable giving. The same study found that 52 percent of those individuals relied on their financial advisor for guidance when making donation decisions.

By learning about tools available to donors and the benefits of different types of gifts, you can show your commitment to your client's philanthropic goals. We teamed with Charity Navigator (www.charitynavigator.org), the nation's largest and most-utilized independent evaluator of charities, to compile 10 tips to ensure your client's gift will work towards their charitable goals.


Define your client's giving goals -- All giving decisions should begin with a conversation about your client's philanthropic goals. Help your client isolate a specific charitable cause that is most central to his or her personal beliefs, and guide them towards defining desired outcomes.

Conduct your own research -- Obtain copies of a charity's three most recently filed Forms 990 - organizations are required by law to provide these upon request. The 990 provides a wealth of knowledge, including executive compensation, what types of expenses the charity is incurring, and what kind of assets the organization has on hand. It is essential that the client's funds are used responsibly, and a little due diligence is imperative when deciding which charities deserve their support.

Ask the right questions -- Before your client makes a contribution, suggest they talk with the charity to learn about its accomplishments, goals and challenges. They should be prepared to walk away from any charity that is unable or unwilling to participate in this type of conversation.

Concentrate your client's giving -- When it comes to financial investments, diversification is the key to reducing risk. The opposite is true for philanthropic investments. The best way to show commitment to a cause is to support one or a few charities with larger donations, ensuring your client's money will lead to lasting and meaningful change.

Make a long term commitment -- Savvy donors support their favorite charities for the long haul. They see themselves as a partner in the charity's efforts to bring about change. They know that only with long term, committed supporters can a charity be successful. Be sure to discuss this with your client and help them develop a long-range giving plan.

Maximize your client's deductions -- Determine the tax status of the organization your client wishes to support. Donating to public charities allows your client to deduct up to 50 percent of the value from his annual adjusted gross income, while giving to private charities will only allow for up to 30 percent.

Determine additional giving benefits -- Many charities have exclusive privileges reserved for large donors. Ask about print recognition, invitations to special functions, or naming opportunities for your client - rewards that far exceed the standard logo coffee mug.

Avoid the capital gains tax -- Any appreciated assets that a client has had for more than one year are subject to a long-term capital gains tax. By donating these assets to any 501(c)(3) organization, your client can avoid the tax and deduct the full market value of the gift.

A gift that keeps on giving -- Establishing a family charitable lead trust for your client provides ongoing support to a favorite charity while allowing a donor's heirs to receive the assets at a later time - without having the value of the gift subjected to outrageous estate taxes.

Follow up with the charity -- Any charity deserving of your client's on-going support will be responsive and willing to assist both you and your client through the entire donation process, including after the gift is given. Be sure to continue the conversation; if something isn't working, encourage your client to speak up.

Reprints Discuss this story
This is where the comments go.