As the majority (87%) of financial advisors surveyed in a poll released Wednesday, July 21, by the Fidelity Charitable Gift Fund expected clients’ taxes to rise, fully one quarter (26%) said they also expected clients to raise their level of charitable giving to offset the increase. An additional 48% expect the level of donations by clients to remain constant, even though overall in 2009 the level of charitable giving was down and the economy remained uncertain.
The 2010 Fidelity Charitable Gift Fund “Advice and Giving” survey received replies from more than 500 advisors over a broad spectrum of firms from wirehouses to independents and insurance and bank broker/dealers. The poll found that only 52% of advisors actually offered charitable planning advice to their clients without those clients having introduced the subject first, with 44% citing a belief that philanthropy was a “client’s personal decision” as the reason not to broach the subject. However, 63% believed that clients would be interested in it; 31% did not feel knowledgeable enough about the topic to bring it up.
Interestingly, fully 82% believe that donor-advised funds are valuable options for clients, and 39% believe that such funds will be on the increase over the next five years. In a statement, Sarah C. Libbey, president of the Fidelity Charitable Gift Fund, cited several advantages such funds had over private foundations as a giving strategy: “[d]onor anonymity, fewer administrative burdens, lower costs and greater tax advantages.” In addition, advisors added simplified giving (75%), ease of administration (74%), and the ability to bring “an immediate tax deduction but [grant time to donors] to decide where to disburse grants (65%),” as well as other reasons to use funds.
Being proactive about charitable giving with clients offers advantages, too, chief among them relationship building, cited by 80% of advisors who incorporated charitable planning in their practices, keeping assets under management (61%), and multigenerational relationships (56%).
The Gift Fund poll also offered three suggestions to planners who want to start the conversation with their clients: mention its use as a financial strategy as well as philanthropy; show clients which assets are the most beneficial gifts, and explain why; and be prepared to help them select the right means of giving.