The media has given charitable giving center stage with Mackenzie Bezos’ recent announcement that she will give half of her $37 billion fortune to charity.
But it’s not only billionaires who are concerned about doing good with their money. In 2017, Americans gave over $400 billion to charity—the first time the $400 billion mark was crossed in history.
It’s clear that charitable giving is important to many Americans. For financial advisors, their needs to be an awareness of how to assist their clients in being charitable — and in how that charity can help keep them financially healthy as well.
Making charitable giving a focus in financial planning and the client experience can help to set advisors apart and better align their values with their clients.
It’s a given that clients want their advisors to help them manage their taxes well. In my experience, though, most often advisors tend to focus on other tax mitigation strategies before considering how charitable giving can play a role in tax-efficient planning.
Advisors are trained to look at factors like education expenses, analyze retirement income, and look years into the future with estate planning strategies to ensure heirs retain most of a family’s wealth. But in doing so, charitable giving tends to be shuffled to the end of the list, if it’s included at all.
Given to the power of charitable giving, this is a critical error.
Discussing a client’s philanthropy can be a touchy subject, but it doesn’t have to be an awkward conversation. Presenting charitable giving as a tax-mitigation strategy can be an easy way to nudge clients toward thinking more about its role in their financial well-being, and make it a natural part of the conversation at the same time.
Strategies for Giving
If you want to begin including charitable giving as a central part of your financial planning process, it helps to know where to start.
First, start by analyzing your firm’s culture. If charitable giving is part of its mission, it will likely resonate more strongly with the people who choose to work with you.
Additionally, consider different strategies for different types of clients.
An ultra-high net worth client may want to establish an endowment or foundation as the most appropriate way for them to give back to causes important to them.