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Financial Planning > Charitable Giving

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Charitable Giving: Expand Your Horizons to Make More Sales

By giving your clients creative options for charitable giving, you can do well for yourself by helping them do good.

The numbers are staggering: Charitable giving totaled $248.5 billion in 2004, according to the Giving USA Foundation. It’s not just for the rich; many folks with modest assets give generously.

Profiting from charitable giving starts with winning the client’s trust, establishing a relationship and demonstrating your expertise. After you’ve warmed up your prospect and connected as a human being, ask questions such as: “Do you plan to leave any of your estate to your church or other charity?” “Do you have a gifting strategy to help lower your taxes?”

Clients find this refreshing. They see you’re not just looking for a sale or pushing a product. Instead, you’re showing that you’re evaluating their entire financial situation and are providing alternatives that your competitors do not. The client thinks, “I should work with this person!”

Let’s look at some of the alternatives for implementing a gifting program.

Life insurance offers a great way to give to charity. Perhaps your client or prospect already has all the insurance he or she needs. You can suggest designating a portion of the death benefit to go to a favorite charity. This doesn’t give you an immediate sale, but again shows that you’re offering solutions and smart thinking.

But perhaps you do have a client who needs more life insurance and who wants to support a charity. Allocating some to the heirs and some to charity is a kills-two-birds-with-one-stone strategy that demonstrates your innovative thinking and helps you walk away with a bigger sale. If the client’s estate is taxable, this move will reduce estate tax.

Annuities also offer many giving options. One of the simplest steps is to change the beneficiary to a charity. If the annuity is past the surrender period, you often can replace the old annuity with a new annuity that offers better features or a higher interest rate.

But often clients have annuities that still carry surrender charges. Suppose the annuity surrender period won’t end for two more years. You can help the client change the beneficiary now and look to a future sale. Program your computer to give you a reminder to follow up 90 days before the surrender period ends. The seed that you plant in 2006 will likely blossom into a sale in 2007.

Setting up an annuity to provide lifetime or a period certain of income for an individual or a couple is frequently an attractive option. When the owner(s) dies, the remaining principal goes to the designated charity.

You’ve undoubtedly seen pitches from colleges and public television stations offering such deals to their alumni and viewers. These deals have the advantage of being prepackaged; the donor just has to sign on the dotted line.

While that’s stiff competition, there’s no reason you can’t set up a charitable gift annuity on your own. The donor can choose any qualified charity, and you can work with any reputable insurer. A gift annuity pays roughly 6% to 12% depending on the donor’s age, and a portion of the gift is tax-deductible.

Besides making retail sales, there’s the potential of going “wholesale.” Consider approaching a local college, your church or synagogue, local public TV station or other charity and asking if the organization has a gifting program. If it doesn’t, you could possibly set one up and be named the agent of record–and that could be lucrative.

Annuities are a specialized sale. Even if you’re a whiz at selling life insurance and investments, consider making a modest investment in annuity sales training. Various print and audiovisual materials are available that show you how to navigate the rapids of the annuity sale.

IRAs offer giving opportunities too. The average IRA is now worth $75,000. Some people who have rolled over their 401(k) plans have IRAs that are worth hundreds of thousands of dollars.

A typical situation is where the wife will inherit the husband’s IRA on his death. If you ask questions, you might discover that the widow would like to give all or part of the IRA to a favorite charity or two.

This makes perfect sense because the charity will receive 100 percent of the proceeds. Alternatively, heirs wouldn’t get all the proceeds because the entire balance of the IRA is taxable. (The tax is on “income in respect of a decedent.”) So, it makes perfect tax sense to leave some IRA assets to charity while leaving ordinary assets to family members.

With charitable giving, it’s always vital to think past what’s right in front of you and look past the typical beneficiary. Think about the future, about the possibilities for your client and their assets.

If you ask your clients and prospects enough questions, you’ll uncover the information you need to recommend more solutions. And when you’re selling solutions, not products, you’ll find that you’ll make more and bigger sales and generate more referrals from satisfied clients.

With all that extra income, you’ll need to start thinking about your own charitable giving!

Wilma G. Anderson, known as The LTC Coach, is president of Senior Care Associates. She is a nationally known sales trainer and author of several sales systems, including Annuity Sales Gold. She can be contacted at [email protected].

‘If you ask questions, you might discover that the widow would like to give all or part of the IRA to a favorite charity or two.’


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