Asking Clients About Charitable Giving

Some professional advisors hesitate to ask clients about charitable giving because of a number of misperceptions:

• “Asking the question is too intrusive.  It’s none of my business.”
• “I might damage the relationship if I ask.”
• “I don’t know enough about charitable giving to start the conversation.”
• “I would have to ‘sell’ the client on a particular charity.”
• “My client won’t be interested unless there are large tax savings.”
• “A charitable gift will interfere with my client’s goal of providing for his/her family.”

But recent studies of donors and their professional advisors have shown just the opposite:

• Clients want help with their charitable giving and wish their advisors knew more.
• Good charitable advice strengthens the client relationship by providing better service to the client and generating greater client loyalty.
• When considering charitable gifts, clients are generally cause-driven first, tax-driven second (although men are more   motivated by tax savings than women, and tax savings do     affect the size of gifts).
• High-quality charitable planning can meet multiple goals, and can result in a larger benefit to family members.

Clients Likely to be Interested

To an experienced professional advisor, many common client situations are appropriate for raising the charitable question and considering a community foundation.  Beyond the obvious indicators of the financial capacity to make a gift, here are a few situations to watch for: 

• Charitable Interests
  • Your client has contributed regularly to charity.
  • A particular charity, such as a hospital or university, has had a significant positive impact on your client or a family member.
  • A particular issue, such as heart disease, has had a significant negative impact on your client or a family member.
  • Your client gives regularly to his/her church, temple, or other house of worship.

• Family circumstances
  • Your client is unmarried.
  • Your client does not have any children.
  • Your client has children who are financially independent adults.
  • Your client would like to memorialize a loved one, such as a deceased child.

• Concern for self or others
  • Your client wants to provide steady source of income for himself/herself or a family member.
  • Your client expresses concern about “ruining” his/her children with too large an inheritance.
  • Your client is philanthropic and wants to teach other family members about philanthropy.

• Financial Circumstances
• Your client has low-basis capital gain assets that have increased greatly in value.
• Your client is concerned about personal assets that are generating little or no income.
• Your client experiences a financial windfall, such as a bonus, late in the tax year.
• Your client holds a significant amount of assets in a retirement account.

The Advisor's Role in Charitable Giving

Asking a client about charitable giving may seem daunting, but it is an important part of providing complete financial planning and professional advice to your clients.  For a host of reasons, any informed advisor should be prepared to talk with clients about charity. 

• Many clients are already in the habit of supporting charity.
• For clients with substantial estates, minimizing or eliminating estate taxes is difficult to do without some charitable planning.
• Charitable giving can help resolve many personal issues that are deeply important to clients. 

Ways to Start the Conversation

There is no single, “right” way to raise the charitable questions with clients.  And if the client does not respond, or responds unfavorably, the advisor can simply drop the matter. 

To ensure that you are meeting your client’s charitable interests, consider incorporating some of the questions listed below in your normal planning with clients:

• Do you currently support any charitable organizations, including your (church, temple, other house of worship, or alma mater) either by volunteering or by giving financially?
• Are you interested in supporting those organizations in any way after your death?
• Have you ever thought about what kind of personal legacy you want to leave?
• If there were a way to significantly reduce your income or estate taxes that involved a charitable gift, would you be interested in hearing more about that?
• If there were a way to leave more to your family by making a charitable gift, would you be interested in hearing more about that?
• If you had to give away $100,000 by the end of today, is there any group of people, such as needy children, that you would want to help?
• What cause would you like to be known for caring about and supporting?