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Donors Want Goals and Passion, Not Tech Talk About Tax Considerations

“I resolved to stop accumulating and begin the infinitely more serious task of wise distribution.” (Andrew Carnegie)

According to an article in the NonProfit Times by Mark Hrywna – November 1, 2013, wealthy individuals are more interested in talking about their philanthropy in terms of what can be accomplished than how much money they could save through tax considerations.

For parishes in capital campaigns it’s important information about how they should and how they should not be speaking to prospective major donors. One interesting finding was that 90% of financial advisers say that they speak with their clients about their plans and philosophy regarding philanthropy.

For parishes with an endowment program here is an opportunity that should not be missed. Bring together in a meeting all parish CPAs, financial planners, investment advisers and attorneys and inform them of the endowment program, asking them if there is an appropriate moment to open a discussion with a client about considering the parish in their estate plans that they do so. Many, many bequests have been received by parishes because someone suggested to someone that they consider this possibility.

Wealthy individuals and their financial advisors differ widely about their discussions on philanthropy and other things related to charitable giving, according to a new study. And when discussions do veer toward philanthropy, advisors tend to come at it from a technical perspective rather than goals and passion.

Less than half of affluent people surveyed are fully satisfied with the philanthropic conversations they have with their advisors, according to “The U.S. Trust Study of the Philanthropic Conversation: Understanding advisor approaches and client expectations.”

U.S. Trust partnered with The Philanthropic Initiative (TPI) on a nationwide study, conducted this past August of more than 300 wealth advisors, trust and estate attorneys, accountants and other tax professionals and a random sample of 120 High Net-Worth (HNW) individuals with $3 million or more in investable assets who are actively engaged in charitable giving.

Advisors seem to underestimate their clients’ desire to talk about charitable goals and passions while overestimating the importance of tax benefits as a motivation for giving.

Twice as many advisors (71 percent) say that they raise the philanthropic discussion from a technical perspective — focusing on tax considerations or wealth structuring, for example — compared to those who do so beginning with their clients’ philanthropic goals or passions (35percent).

Almost 90 percent of advisors said they discuss philanthropy with at least some of their clients and 71 percent make it a regular practice to ask about their interest in charitable giving. At the same time, just 55 percent of individuals said they discuss philanthropy with a professional advisor.

Once discussions are initiated, 41 percent of advisors say further philanthropic discussions also center on technical issues, compared to 38 percent who tend to focus more on their clients’ charitable goals. The disparity is far wider among affluent individuals. Some 63 percent of individuals find that ensuing discussions with their advisor about charitable giving tend to center on the more technical issues compared with 27 percent who said discussions center on their charitable goals, values and interests.

Despite these disconnects, almost three-quarters of individuals who discuss philanthropy with an advisor still believe such conversations are important, and more than 80 percent think that their advisor plays an important, if not very important (33 percent), role in their charitable giving.

Other findings in the report included:

  • One third of advisors said they are the one to initiate discussions with clients while clients initiate them just 20 percent of the time. About half of individuals who said they discuss philanthropy with their advisors reported that they typically start the conversation while advisors initiate it 17 percent of the time.

  • Advisors indicated that they are more likely to bring up the subject of philanthropy once they have better knowledge about a client’s personal (40 percent) or financial goals (47 percent), or when they know a client volunteers or is active in the community (43 percent). On the other hand, 34 percent of individuals believe the topic should come up at their first meeting and 90 percent agree the discussion should begin within the first few meetings with an advisor.

  • Among advisors who discuss philanthropy with clients, nine out of 10 encourage them to give to charity but half percent prefer to wait until they have accumulated at least $500,000 in liquid assets and a quarter put a starting point at $3 million or more. More than 40 percent encourage giving regardless of asset level. NPT


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