Financial plans: Motivating clients through philanthropy 

Charitable giving is a powerful topic that, unfortunately, is often overlooked by advisors. Among 421 wealth advisors surveyed last year, only 20% reported regularly bringing up charitable giving in their meetings with wealthy clients, and another 45% of these advisors said they discuss it “occasionally.” The rest said they bring it up “rarely,” only if the client brings it up, or even avoid the subject altogether. How often are you asking clients about their giving plans? 

If you are not asking, this is a missed opportunity, particularly during the first quarter. Early in the year, trusted advisors can tap into charitable giving motivations to help clients get organized across the board on all their estate planning and financial matters. Indeed, tax time is a great time to start this process because you and your clients are already reviewing assets and income as you prepare for 2023 tax filings.  

Bigger picture, the subject of charitable giving paves the way for a discussion about the basics of estate planning. Many clients are simply not aware of the meaning and importance of critical elements, such as: 

• The difference between a will and a living trust, and how charitable wishes fit in to these documents 
• Why it’s critical to be intentional about how each and every asset is titled so that the assets actually pass as intended (which requires making a comprehensive list of assets in the first place) 
• The dangers of hurriedly filling out life insurance and retirement plan beneficiary designations and why these documents are absolutely critical components of a financial, estate, and charitable plan 

• Reasons for having both a “living will” and a durable power of attorney, both of which have a major impact in the event of incapacity 
• A reminder to make sure someone in the family knows where to find a list of logins and passwords 

Even though charitable planning is just one of many steps in your work with clients, it can be an excellent catalyst for helping clients understand why they need that comprehensive estate and financial plan you’ve been encouraging them to complete. The team at the Community Foundation is happy to help with the charitable components of your service to clients. We look forward to making it easier for you to address all of your clients’ needs.   

Case Study: Your clients may find that organizing their giving through one or more funds at the Community Foundation will make their lives easier. Establishing a fund at the Community Foundation is an easy way to organize and track charitable giving. For example, a client can make a single, tax-deductible contribution each year to the Community Foundation, to be added to their donor-advised fund. An especially tax-savvy technique is for the client to make this contribution using highly-appreciated stock. After the stock has been transferred to the Community Foundation, the proceeds from the foundation’s sale of the stock are used for distributions to support your client’s favorite charities – with no capital gains tax liability. No matter how many different charities receive support from the fund, the client in this example still has just one receipt to keep track of charitable donations for income tax deduction purposes.