Giving to others usually suggests that donors feel they have enough for their own needs. But as bonuses, raises, and jobs themselves have disappeared and portfolios have shrunk drastically, many clients (and advisors) are facing a painful decision. Unless they reduce their support of other family members and beloved charities, they may put their own long-term financial security at risk.
Saying no to loved ones and favorite causes is always difficult. If you or your clients are dreading the sadness and disappointment of others who may have relied on you, here are some suggested ways to deliver the message.
Q: I just advised my client not to count on being able to make his usual big contribution to a foundation that helps inner-city schoolchildren. He's afraid that forgoing his annual donation will force the organization (which he helped start) to cut back on staff and services. But his work income and investment portfolio both took a major hit this year, and his wife feels they shouldn't part with money they may need later for retirement. To give, or not to give?
A: Although it may be unwise for this client to continue giving at his previous level, I think it's important for him not to reduce his contribution to zero. Economic considerations aside, there's a sound emotional reason for this advice. When people give time, energy, and support to a cause they believe in, it improves their self-esteem. Here, they feel, they are helping to make a difference, no matter what else is going on in their life.
Sarah Ban Breathnach, best-selling author of Simple Abundance, told me how important this outlook has been to her. When she was an impoverished writer having to ask her husband for grocery money every week, she decided to walk her own talk by living the principles of simple abundance "on a cellular level." The day she decided to tithe 10% of her grocery money to her church was the day she went from living in "poverty consciousness" to experiencing true abundance. "I feel that if I can give away 10% of what I have, I must have more than enough," she told me.
While you're helping your client determine an amount he can reasonably afford, you might suggest that he enhance his contribution by volunteering as a tutor or giving in some other way that suits his talents. I'd also encourage him to spread the word about his foundation to friends, colleagues, and his extended family. He may be able to find new sources of funding–and allow others to experience positive feelings of abundance, too.
Q: My clients never started a college fund for their twins because the grandparents (on the mom's side) promised to foot the bill. Now the two boys are high school juniors, and expect cost to be no object when they go to college. However, the market collapse has left Grandpa and Grandma in no condition to pay $300,000 for Ivy League schools. They feel terrible about not having put the college money somewhere safe. The parents also feel guilty for having defaulted on their responsibility to pay for their kids' education. Though far from wealthy, they have too much income to qualify for need-based scholarships and grants. Who should break the news to the twins–and how?
A: I would suggest that you host a meeting for the grandparents as well as the twins and their parents. The professional neutrality of your office will help prevent emotional meltdowns and encourage a more rational discussion of the alternatives.
At this family gathering, the older folks can honestly tell the boys that the college funding everyone counted on is no longer available. If they are so inclined, they can apologize to the kids for the lack of vision that contributed to this situation (although top investment professionals were equally blindsided by the widespread market crash). More importantly, everyone can brainstorm how to plan for college in the new circumstances. The sons need to accept the possibility that unless they get merit scholarships, Ivy League schools may be out of the question.
Washington Post columnist Michelle Singletary, who was raised by a frugal grandmother, once told me that children value higher education more when they pay for at least part of it themselves. Though I came from a background where parents were expected to foot the entire bill, I've come to see the wisdom of her perspective.
The boys will be upset, of course. It may be necessary to bring in a family therapist to help them deal with their anger, as well as the feelings of shame and inadequacy that the parents and grandparents may be struggling with. But if everyone works together to process their disappointment and begin planning possible solutions, the sons may learn to value their education more highly, and the family may come out of this financial calamity stronger than before.
