Having a conversation about philanthropy builds a bond between clients, advisors
A 2014 BMO study shows that clients feel they aren’t having ‘meaningful conversations’ about charitable giving with their advisors
It can almost seem counterintuitive for a financial advisor to talk to clients about the best way to ensure that the money they’re managing goes to charity.
But that conversation can help build a stronger relationship between advisors and clients, while ensuring that a charitable donation offers the greatest impact most advantageous tax implications.
How that conversation is handled is almost as important as having it at all. In a survey published in the 2014 BMO Philanthropy Report, 91 per cent of advisors said that they were having ‘giving conversations’ with their clients. But only 13 per cent of clients reported that they were having ‘meaningful conversations’ on that subject with their advisors.
“Some advisors are doing a terrific job,” says Kathy Hawkesworth, director of donor services at the Edmonton Community Foundation (ECF) an organization focused on building endowment funds that enhance the quality of life in the city. “But often we receive calls from people who tell us that their advisor hasn’t talked about this subject, or didn’t know how to work through the client’s request.”
She notes that some clients are subjected to the ‘name your charity game’, in which they’re put on the spot and asked which charities they want to give money to.
“Often, donors aren’t sure which charity they want to support,” she says.
“That’s where advisors can strike up a meaningful conversation with their clients, asking them what sort of cause resonates with them.”
To help with one approach to having such conversations, ECF provides donors with a ‘values list’, a non-exhaustive list of words that might describe or include some of their interests and values. “We look for themes and then draft suggestions around those words,” Hawkesworth says. “It’s an exercise that advisors can adopt for their clients. We believe that better questions lead to better answers.”
Hawkesworth also wants advisors in the area to consider ECF’s charitable model: The creation of endowments that can provide ongoing support to charities once they reach $10,000 in value or more. Professional investment firms retained by ECF manage the investment pool.
ECF then grants a percentage of each fund year over year (currently four per cent) for decades and generations to come.
An advisor portal at the ECF website helps to inform advisors about issues around charitable giving, endowment or otherwise at www. ecfoundation.org/advisors/
Philip Renaud, partner, estate solutions at Duncan Craig LLP in Edmonton routinely advises clients about charitable options, including establishing an endowment with ECF.
“If they have a general charitable intent but are uncertain of how to direct it, we might get into a discussion about charitable causes with which they feel a connection,” he says. “We can discuss the pros and cons of making an absolute charitable gift or whether to establish an endowment, and whether it’s something they want to do now or as part of an estate plan. The ECF has been doing a wonderful job of promoting the idea of an endowment and we’ll often refer our clients to them.”
Duncan Craig lawyers also tell clients about their own corporate endowment, created at ECF.
“We had been going through an exercise to identify the values of the firm,” says Greg Miskie, COO of Duncan Craig. “We valued relationships, integrity, expertise and community. Phil and I put our heads together about how we could express ‘community’ in a meaningful way. He had worked with clients to set up a number of endowment funds with ECF. We have been part of this city for 125 years and the idea of benefiting the community on a legacy basis appealed to us.”
The firm established the Duncan Craig Community Fund in 2011. Yearly donations have grown the fund to about $100,000.
“Our employees spend most of their waking hours with us, but the things that are most important to them exist outside these walls,” says Miskie. “There are other things that move them.”
Each year, employees vote to identify the three top charities identified by fellow workers as important to them.
“Last year, we learned that three people have had families who have been dramatically affected by Alzheimer’s in ways we would never have otherwise known,” says Miskie. “We then have the ability as an organization to express support for these people. It’s an enormously meaningful exercise.”
Hawkesworth notes that knowledge about charitable giving and the role of endowments is slowly growing in the advisor community, although there’s more to be done.
“If every advisor had a meaningful conversation with each of their clients about charitable giving, the estimates of collective impact are enormous,” she says.
“Each advisor has the opportunity to be instrumental in enhancing our communities by simply having a great conversation with their clients about what matters to them.”
Often we receive calls from people who tell us that their advisor hasn’t talked about this subject, or didn’t know how to work through the client’s request.