Ivan Ang of Fitzpatricks shares his insights into philanthropic advice with Simon Mumme.

Ivan Ang has explored the intersection of philanthropy and financial advice from most angles.

A partner in the Fitzpatricks financial planning firm in Sydney, Ang has “been down the rabbit holes of what works and what doesn’t”, and is still honing his methods of effectively guiding clients’ philanthropic ambitions to success.

In Australia, where the inclusion of philanthropy in financial advice is relatively new, “advisers have to do their own research and thinking” about strategic giving, Ang says. This can make incorporating philanthropy into their value proposition “a tough road – particularly when you have to run a business”.

In America, advice on strategic giving is widely practised and represented at the industry level by the Association of Advisers in Philanthropy, of which Ang is a member. Apart from a bi-monthly meeting for philanthropists and advisers, convened by the Sydney Community Foundation, there are few, if any, formal collegial networks in Australia through which advisers can discuss strategic giving.

“It’s at the point where a lot of people are interested in it, but where do they go?” he asks.

Like others in the field, Ang is willing to share the lessons he’s learnt from two years of advising clients about philanthropy. While gaining the requisite technical knowledge is important, it is essential for advisers to clearly understand clients’ philanthropic goals, he says. In many cases, these differ from their past levels of giving.

“The starting point is not, ‘Let’s try to sell them a PAF’. It’s about what they want to achieve,” he says.

“The gatekeepers – accountants and financial planners – rarely think about it that way and ask the right questions.”

He says most people aspire to give in some way: medium-income families might sponsor a child in the World Vision program, or write a cheque for The Salvation Army’s Red Shield Appeal.

These are often reactive, knee-jerk gifts. They are admirable, but most people would usually like to give more than this if they had more capital to offer. Here a strategic approach can solidify their philanthropic goals and enable them to donate more money.

Advisers should not gauge clients’ appetite for philanthropy by simply asking how much they gave away last year, and then include this figure in a fact-find, Ang says. That’s reactive. To begin drafting a strategic plan, advisers should ask clients how much they would like to give each year.

“If it’s $10,000, then find out how much they need to save in order to do that. At that point, you’ve fulfilled giving obligations from a strategic point of view,” he says.

Decisions about how to deploy the money – whether directly from a bank account, or by committing it to a community foundation – then follow, and may depend on the amount the individual wants to give. Advisers should know if a trigger event is approaching, such as the sale of a business, and if this could make a private ancillary fund (PAF) attractive to the client.

“It’s all to do with the questions that you ask,” Ang says.

“The wrong move I’ve seen is to have too much focus on creating a foundation or community foundation account. If you use that as a starting point, you’re creating a problem for yourself, because if that’s the approach you’re taking with clients, it may not come into fruition for some time – until they have a trigger event and can afford to do it.

“Obviously there are things that could put it off-kilter, like the global financial crisis or if business isn’t going well, but these things will affect all other parts of the financial plan as well. Then you have to have the discussion with clients about what they want to give up. Do they want to give up their giving plan or discretionary spending?”

It also behoves community organisations and advisers to maintain a rapport, because a strong relationship between charities and their sources of funding can deepen understanding of the financial challenges faced by community organisations. In turn, charities will see the benefits of enriching their partnerships with donors – who may introduce them to like-minded friends.

Such long-term relationships assist charities with “their plans, reduces marketing expenses and helps them develop a wider network of committed givers”, Ang says.

They also complement other methods of fundraising, such as doorknock appeals and government grant-seeking. Another bad move is to exclude the family from large giving plans.

“The purpose of philanthropy is more than giving to worthwhile causes but the ability to create a legacy within your family,” he says.

“And the legacy is the heart of giving.”

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