Does Your Client Want To Be a Philanthropist?

People get interested in philanthropy for many reasons. Some recall the expression: “If you are not part of the solution, then you are part of the problem.” (1) Others feel they have been very fortunate in life and want to give something back. Others feel they cannot single handedly help individuals with complicated needs, but they can support an organization bringing many donors together. Others want to support medical research. Some might even be social climbers. Does your client want to be a philanthropist?

Let us look at several ways you can help them make this happen.

  1. Start by setting a budget. Your client sets money aside to educate their children. They plan for capital improvements to their house. It makes sense to establish a budget category for charitable giving. This removes it from “How much do I have in my pocket today” to the potential to make more meaningful gifts.

  2. It is OK to give a little to a lot of organizations. Suppose your client has decided $2,000.00 is a manageable number to give to charity this year. They do not need to decide on one organization worthy of the entire $2,000.00 or four winners each getting $500.00. They could choose twenty organizations each averaging $100.00 or forty each getting $50.00.

  3. Donate now, disburse later. Your client could setup a Donor Advised Fund with their financial services firm. This allows them to contribute money in the current tax year, registering that as a contribution, yet disbursing it in next year or so. This can be a good strategy if they know the capital campaign at their favorite nonprofit is coming down the road.

  4. Research before giving. Perhaps you get those phone calls from “charities” asking you to make an immediate contribution over the phone. What do you know about them? Are they a scam? You see ads on TV and wonder “How much of my gift actually supports the charity’s mission?" The IRS has a website to help you determine if they are a real charity. (2) There are websites like Guidestar (3) and CharityNavigator (4) that can help you do online research.

  5. Membership. Many organizations like museums give people the opportunity to affiliate by becoming a member. This often comes with benefits, like the ability to attend an exhibition opening before the general public.

  6. The annual appeal. Many nonprofits send out a letter in the last quarter asking for donations before year end. Statistics show many Americans give towards the end of the year. (5) You might have paid to be a member, but this is another opportunity to ask for money. Over the holidays, many people are in a generous mood.

  7. Attend charity galas. Many nonprofits do event-based fundraising. They hold galas and social events. This is often an opportunity to dress up and mingle with community leaders and fellow donors. Only a portion of your ticket price goes towards the mission of the organization, but you have a good time and get to meet like-minded people.

  8. Expect to be cultivated. If you are a financial advisor, you are familiar with deepening client relationships and expanding “share of wallet.” Nonprofits are good at this too. Expect to get some attention either by mail or in person, asking you to step up to a higher level of membership or donation.

  9. Gifts do not need to be cash. Contributing appreciated stock with long term capital gains can be a good strategy. (6) Instead of your client selling stock, paying tax on the gain and then writing a check for a reduced amount, they can donate shares of stock to the charity, get the larger amount recorded as donation and not pay capital gains on the appreciation.

  10. Remember them in your will. Many charities know some donors cannot give much now, but are willing to remember the institution in their will. This type of giving has names like legacy giving. You do not need to rewrite your will, you might simply name the charity as a beneficiary for your IRA account.

There are many ways your client can become a philanthropist. This is another area where you can add value to the client relationship.


Related: How To Engage With Strangers at Community and Cultural Events