Responses to natural tragedies such as the Victorian bushfires prompt an overwhelming philanthropic response in individuals. But a more structured and planned approach to charitable giving can not only avoid some of the unintended consequences of one-off gifts but potentially opens up a new front on which planners can engage with clients.
Some of the unintended consequences of even well-intentioned giving include piles of goods that simple cannot be put to use.
“There’s only so many toothbrushes and soap that can be used” by the Victorian bushfire victims, for example, says Christopher Thorn, Executive Director of Goldman Sachs JBWere’s Philanthropic Services division, and a keynote speaker at the 2009 Securitor convention in Darwin.
Thorn says there is a growing demand for advice and guidance on philanthropic matters, and planners are ideally placed to satisfy that.
Thorn says that in 2005/06, more than half of all adults who earned more than $50,000 a year gave to a charity and claimed a tax deduction for the donation. The propensity to give is strongly correlated to income. The flipside of this is that when incomes decline, as they have for many clients over the past 12 to 18 months, giving also declines.
“As dollars increase, our clients are looking for planning and structuring,” Thorn says. Clients are demanding “far more input” from advisers on how to structure giving. A properly planned approach to giving can make sure that funding to chosen causes or charities can occur more consistently, and more independently of prevailing economic conditions.
Thorn says surveys have shown that planners increasingly use their expertise in structured or planned giving to differentiate their offerings from other planners.
He says that in 2002, 14 per cent of planners said they proactively raised the issue of philanthropy with clients. By 2005 the number had risen to 50 per cent.
“We think at the moment it’s 60 or 65 per cent,” Thorn says.
Being well informed about philanthropy and planned giving is important for planners because “your clients are passionately interested” in the issue. It’s good for clients, it’s potentially good for a planning business, and it’s good for the recipients of funding.
“It’s a great way to differentiate your offering,” Thorn says.
“It’s a great way to re-engage with clients.
“It’s a great way to introduce new areas of business to clients, in a completely new context.
Thorn says the global financial crisis has had “a huge impact” on people’s ability to make one-off donations to charities and good causes.
“But if an approach of looking at social investment and planned philanthropy is effected, the impact of that downturn can be mitigated,” he says.
“Advisers have a key role to play in [guiding] clients in this space. Co-ordinating it with other wealth management strategies ensures an optimal outcome, and enables more to be given.”
Thorn says being active in this area can have a positive impact on existing client relationships, a positive impact on client retention, and may also be attractive to new clients.
To post a comment, click below. If you are a registered user of the Professional Planner website, please log in to the site before posting your comment.
