Charitable giving is a substantial force in the United States. According to Giving USA, Americans donated $471.44 billion in 2020—and 69 percent of that was given by individuals. A recent study on Charitable Giving by Affluent Households conducted by Bank of America in partnership with the Indiana University Lilly Family School of Philanthropy found that nearly 90 percent of affluent households gave to charity in 2020, and the average giving per affluent household increased from $29,269 in 2017 to $43,195 in 2020—a 48 percent jump!
With statistics like that, it’s no surprise that the majority of financial advisors agree that talking to clients about charitable giving is important—but it turns out that most of us are bad at it. According to a 2013 study of The Philanthropic Conversation conducted by the U.S. Trust® in partnership with The Philanthropic Initiative, less than half of high net worth individuals felt that professional advisors—wealth advisors, trust and estate attorneys, accountants, and other tax professionals—are good at discussing personal or charitable goals with them.
A 2018 U.S. Trust® Study of the Philanthropic Conversation found that this disconnect may, in part, have to do with how advisors broach the subject, with 71 percent of advisors saying that they raise the philanthropic topic from a technical perspective, as opposed to opening by discussing their clients’ goals or passions. The study also revealed that advisors overestimate the financial drivers leading clients to be philanthropic, with 46 percent of advisors believing that reducing tax liability is a primary driver of charitable giving, but just 16 percent of high net worth clients feeling that way. In fact, only 5 percent of clients surveyed indicated that they would reduce their charitable giving if the estate tax were eliminated and only 42 percent would reduce their charitable giving if income tax deductions for donations were eliminated.
This immediate dive by advisors into technical solutions paired with inaccurate assumptions about clients’ motivations can leave advisors and clients feeling like they’re engaged in two separate conversations.
Source: How-To Geek
According to Scott Fithian and Todd Fithian, authors of The Right Side of the Table, “The single most dysfunctional element of planning for affluent families is the tendency for advisors to move too quickly into solutions... Everyone at the table is so preoccupied with the beauty of the solutions, they forget to notice that the wealth holders haven’t decided what they really want to solve.”
This tendency to immediately focus on the “How?”—the tools, strategies, and tactics—can leave clients feeling unheard, frustrated, and overwhelmed. Instead, consider kicking off with the “Why?”—seek to understand clients’ goals, values, and interests by asking open-ended questions, like:
- What causes are you drawn to? How do you hope to engage with those causes?
- How has your past giving reflected your hopes for a better future?
- What opportunities were you provided in life—or what opportunities do you wish you had? How might you provide that to someone else?
- What would you like to change or preserve in the world?
- Who will join you in this work?
- How will you experiment with or revise your charitable plans?
- What do you hope to accomplish in life that you have not yet done?
“Your last will and testament is your final teaching. What do you want to say?”
Rabbi Mordechai Liebling
Listen actively, ask follow-up questions, and summarize your clients’ responses back to them in your own words to ensure you fully understand their intent. Then move on to the “How?” of potential solutions, while continuing to ask questions to confirm you are heading the right direction, such as:
- How do you feel about the work we have done so far?
- Are there any expectations you have that are not yet satisfied?
- Do you have any questions or concerns about our current direction?
Technical knowledge is necessary to help clients incorporate charitable and tax strategies, but if we truly want to advance their highest aspirations for self, family, and society, we need to first work with them to understand and articulate those goals. A successful meeting is one in which the client leaves feeling heard, fulfilled, and empowered to achieve meaningful impact—not simply relieved to have concluded a necessary technical conversation.
There are many options to leverage charitable giving to meet clients’ philanthropic and financial goals. Finding the best way begins with a broad and open charitable conversation. As you work with clients on philanthropic planning, please know that the Foundation is always available as a resource. Don't hesitate to contact us if you’re interested in learning more about our services and how we can assist.
About The Columbus Foundation
The Columbus Foundation serves more than 3,000 individuals, families, and businesses that have created unique funds and planned gifts to make a difference in the lives of others through the most effective philanthropy possible. The Columbus Foundation is Your Trusted Philanthropic Advisor® and is one of the top ten largest community foundations in the country.