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Financial Planning > Charitable Giving > Charitable Giving Deductions

How to Uncover Clients’ Real Charitable Goals

By Heather Zack

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What You Need to Know

  • Understanding clients’ motivations, rather than focusing on the financial benefits of charitable giving, can help deepen relationships and even build business through referrals.
  • Gathering basic data at the outset of the relationship sets the framework that philanthropy will be a cornerstone of your planning discussions.
  • It’s important to help clients learn how to measure charitable impact.

With the holiday season upon us, so are thoughts of charitable giving. Financial advisors are uniquely positioned to ensure that their clients’ giving satisfies philanthropic goals, as well as functions within their financial plan.

We know from various charitable giving studies that donors generally aren’t motivated by the tax savings they may get from making charitable gifts. Instead, they care about donating to worthy causes and about making an impact with their gifts. Often, they also may have a personal connection to the charities they support.

Understanding clients’ motivations, rather than focusing on the financial benefits of charitable giving, can help you deepen your relationships and potentially even build your business through referrals. But how can you uncover those motivations? And then how can you apply them to an impactful giving plan?

Understanding “The Planning Horizon”

In their book, The Right Side of the Table, Scott and Todd Fithian present the concept of “The Planning Horizon.” They explain that conversations that take place above this horizon address your clients’ deepest and most personal intent for their wealth, while conversations that take place below the horizon focus on the products and strategies that can help clients carry out their intention.

Nowhere is this strategy more effective than in discussions about philanthropy.

If incorporating philanthropy into your practice is important to you, begin by adding questions about charitable giving to your client intake forms. What organizations do your prospective clients give to each year and in what amounts? How do they give—by writing a check or donating assets?

Gathering this basic data at the outset of the relationship sets the framework that philanthropy will be a cornerstone of your planning discussions. More important, this offers your prospective clients an opportunity to tell you about the formative experiences that have sparked their passion for giving back.

Sample above-the-horizon questions look like this:

  • What is your connection to the cause?
  • What sort of impact would you like to make on this cause or your community?
  • How, ultimately, would you like to see your wealth used to benefit society?

The insight you gain from asking these questions will inform not just the charitable planning you do with your clients, but all of the planning you do. You’ll be able to align your planning framework with their deepest needs, which will, in turn, result in a more impactful financial plan.

Measuring Impact

Of course, clients want to ensure that the portion of the wealth they set aside to support certain causes will go to supporting those causes and not be spent on administrative or other costs. For that reason, it’s important to help clients learn how to measure charitable impact.

Some websites allow you to research various charitable organizations. Recently, CharityNavigator.org rolled out Impact & Results scores on hundreds of charities, adding another layer of due diligence to its existing star ratings, which measure the financial health, accountability, and transparency of various organizations.

Another resource, GiveWell.org, provides a directory of charities that have been identified as doing the most good — in terms of lives saved or improved — for every dollar donated. Finally, EffectiveAltruism.org and the Center For Effective Philanthropy (cep.org) provide a host of online resources to help donors give with impact.

In his book, Giving Done Right, Phil Buchanan, president of the Center for Effective Philanthropy, says that donors should consider three main questions in judging the impact of their giving:

  • Does your giving match your stated goals and strategies?
  • Do the organizations you support provide compelling evidence of progress?
  • Who are the big givers supporting the same goals and strategies you support, and can you learn about their efforts and assessment of progress?

Consider getting involved in your clients’ discussions with their prospective charitable recipients to see how their planned gifts will be used and to put mechanisms in place to measure and confirm the impact.

By taking advantage of a topic that is certainly top of mind right now, you can begin uncovering the deeply meaningful experiences that inspire your clients’ passion for philanthropy and spark further opportunities for charitable giving while also benefiting your clients’ overall financial plan.

Heather Zack, JD, LLM, MSFP, CAP, is the manager of advanced planning at Commonwealth Financial Network, member FINRA/SIPC, a registered investment advisor.

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