Having deep knowledge of charitable giving strategies is in demand among advisors, with about 90 percent of the wealthiest U.S. households making charitable gifts each year.¹ It can also aid in building ties with the next generation of clients. Young investors not working with an advisor are twice as likely to prefer one who can help with charitable giving when compared with those 59 and older.²

For many financial professionals, the philanthropic component of financial planning is also an important part of job satisfaction. Guiding clients on the ways they can support causes meaningful to them and help build the world they want to live in can be empowering. The work of Jacob Needleman, an author and professor of philosophy, builds on this idea: That financial planning is deep down about supporting our clients’ quests for meaning.³

So, how can you become more involved in helping clients navigate charitable giving? We’ve gathered eight thoughtful questions that can enhance the advisor-client relationship and ensure that charitable giving is integrated seamlessly into a client’s financial plan.

1. “Reflecting on this year, what significant life events might inspire future charitable giving?”

Maybe your client experienced something extremely heartbreaking, such as a loved one being diagnosed with cancer. Supporting a charity that helps fund cancer research could potentially be of interest to them.

Or the opposite could be true: Your client may have had a positive experience and discovered a new passion for playing golf. They could channel that passion into their giving, donating to an organization like First Tee that helps disadvantaged youth learn to play.

Using this question, you can get your clients thinking about the things in their lives that they’re grateful for, or that they want to change, so they can problem-solve with their charitable dollars.

2. “Is there a prominent philanthropist, past or present, whom you admire?”

Social norms and signals have an impact on charitable giving. Russell James, a professor in the Department of Personal Financial Planning at Texas Tech University, has been publishing interesting research on this subject. He has found that when a donor identifies with another donor they feel a kinship with, they are more likely to turn feelings of generosity into action.⁴

When you ask this question, you’re asking the client to not only identify a giving role model, but also reveal their preferences and values. That can help you in customizing charitable giving strategies. Here are a few notable philanthropists that may help in this discovery exercise:

• Warren Buffett, the Oracle of Omaha and a signatory of the Giving Pledge, has famously involved his family in his giving. He relied on his sister Doris to vet charitable endeavors until she passed away in 2020. “Warren loves to make money and I love to give it away,” she famously said. Do your clients see philanthropy as a way to share family values and play to family members’ strengths?
• Chuck Feeney, businessman and founder of the Atlantic Philanthropies who recently died at age 92, became known for giving away his entire fortune while alive, much of it anonymously. Does your client prefer anonymous donations, or do they prefer “giving while living” as Feeney did?
• Mackenzie Scott, an author and philanthropist, has shaken up the world of philanthropy with big, unrestricted gifts. Perhaps your clients would like to follow suit, concentrating on making a donation with a big impact.

3. “What tools for vetting charities are you familiar with?”

Your clients may want to give to charity but don’t want to get stuck with a case of donor’s remorse. Fortunately, there are ways to vet a charity before writing a check, including Charity Navigator, GuideStar, and CharityWatch. Nearly 65 percent of advisors said few of their clients use these digital tools, so simply sharing these resources with them can be useful.⁵

4. “How would you like your charitable giving to integrate with your estate plan?”

From a charitable provision in a will to complex trust structures, there are many ways for clients to incorporate their favorite causes into their estate planning.

Adding a charitable provision to an estate document is becoming more common among affluent households, with 16 percent using this tactic in 2020 versus 13 percent in 2017.⁶ With the current estate tax exemption set to drop, this is an important topic to discuss with clients so you can formulate a thoughtful plan. Read our Candid Conversations: Estate Planning guide for more on how to approach this often-challenging topic.

5. “What do you know about impact investing? Would you like to explore this further?”

Impact investing has caught on with high-net-worth investors. Nearly double the number of affluent investors said they participated in impact investing in 2020 compared with 2017 figures.⁶

If you’d like to learn more about this topic yourself, read Navigating the Rise of Impact Investing as an Advisor.

6. “How would you like your family to be involved in charitable giving?”

Philanthropic habits tend to help build strong family ties. A Fidelity Charitable survey showed that 81 percent of consumers who experienced a family tradition of giving described their family as very close.⁷ A third of those people said their extended family was very close.⁷

Parents play a particularly crucial role: 38 percent of people raised with strong giving traditions point to their parents as the biggest influence.⁷ Involving family in charitable giving conversations can solidify a legacy of giving back.

7. “One of the benefits of having a charitable giving strategy is maximizing your charitable dollars through tax efficiency—is that something that interests you?”

It’s dangerous to assume your wealthy clients know how they can make the most of their philanthropy. Almost half of affluent donors said they see themselves as amateurs when it comes to charitable giving.⁶

Ask whether your client is open to new ways of structuring their giving, such as bunching donations. They might be habituated to simply writing a check, but a qualified charitable distribution or a gift of appreciated securities has the potential to make more of an impact.

8. “How can I best facilitate communication with you about your charitable giving?”

Finally, give your clients a chance to voice their preferences. Perhaps they want to talk about big gifts for year-end deadlines each year. Or maybe it’s an extremely integral part of their life, and they’d like to bring it up at each quarterly meeting and start tracking their impact over time. Allow your clients to share how they’d like to approach this topic.

Opening Lines of Communication

These eight questions can help you gather insight as you tailor a philanthropic strategy to your clients’ needs and preferences. Showing genuine interest in what each client finds meaningful can go a long way in building trust and loyalty.

Through clear communication, you can create a truly great—and meaningful—client experience.

For more on maximizing charitable giving, watch our webinar Top 10 Charitable Planning Strategies for Financial Advisors.

Sources:

1. “Generosity Across the Income and Wealth Distributions.” National Bureau of Economic Research, May 2020.

2. Fidelity Charitable. “Young Investor Priorities: Why Charitable Planning Matters,” September 2023.

3. The Psychology of Financial Planning. CFP Board, 2022.

4. James, Russell. “People like Me Make Gifts Like This.” LinkedIn, March 2023.

5. Key Wealth Institute. “How to Maximize the Impact of Your Philanthropic Giving,” 2023.

6. Merrill Lynch / Age Wave. “Leaving a Legacy: A Lasting Gift to Loved Ones,” June 2019.

7. Fidelity Charitable. “Family Giving Traditions.” September 2018.

DISCLAIMER: The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.

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