For Estate Planning Professionals

How Do I Start a Conversation With My Clients About Faith-Based Giving?

Recognize it as a key component of financial and estate planning.

This can help you get over the hurdle of thinking that you are soliciting a charitable gift.

Recognize that it can help solve everyday tax, estate, and financial planning problems while adding value to a client's family and community.

For clients whose assets are concentrated in a small number of assets, it gives them access to the value of the appreciated asset, and eliminates the capital gains tax that would otherwise be owed if they were to sell the asset.

For clients with significant assets who need to generate additional income, it converts unrealized capital gains into cash flow, and saves income, gift and/or estate taxes.

Know your client.

For example, entrepreneurs are more likely to be charitable than people who inherited their wealth. A 1990 study by Cornell University economists Robert Avery and Michael Rendall showed that for every $1,000 of entrepreneurial wealth, an entrepreneur will give $4.76 to charity. In contrast, the inheritor will give $.76.

Identify the best times to introduce the concept of faith-based giving.

These include when a client comes to you to create an estate plan, a client initiates the discussion about philanthropic planning, a client is preparing to sell a family business, or when a client needs additional cash flow but wealth is tied up in highly appreciated assets which do not produce sufficient income.

Focus on living goals.

Like estate planning, charitable planning is a way to exercise control when so much about life and death is out of our control.

Keep the plan simple.

Don't make faith-based giving seem like a chore to the client.

Remember that philanthropy is about more than tax savings.

Faith-based giving offers clients a little immortality -- a vehicle for their interests, passions and hopes for the future. (From "The Donor Advisor: The Critical Role of the Advisor in Family Philanthropy")

Don't gloss over the details.

How involved does the client wish to be in directing gifts? How much will family be involved, and for how long? What level of management will be required? These questions all have an impact on how you structure the plan. (From "The Donor Advisor: The Critical Role of the Advisor in Family Philanthropy")

Ask, then listen.

Let your clients do their own thinking. Encourage clients to use their own business and management skills in their charitable planning. Recognize that raising questions of philanthropy does not imply a moral judgment on your part. It's your responsibility to ask all the questions relevant to a client's interest. (From "The Donor Advisor: The Critical Role of the Advisor in Family Philanthropy")

Take your time.

Thoroughly discuss a client's values and motivation for giving before moving on to choosing a charitable giving vehicle.

Involve the family.

Encourage clients to consider ways of involving other family members, especially children, as early as possible. This can offer a family a rare opportunity to work together towards shared goals.

Be prepared to start the conversation.

Have some questions ready to introduce the subject of charitable planning during the initial conference with a client. For example:

"Would you like to provide for anyone other than your children? Parents? Family members with special needs? Charities?"

"Are there charitable causes you give to annually that you would like to remember at the time of your death?"

Recognize the power of altruism.

Whether wealthy or not, all clients have a desire to feel good about their estate plan.

It's not too personal.

Faith-based giving is no more personal than any of the other decisions you help clients make. Planning is about all the things you can do with your money. This is one of them. (From "The Donor Advisor: The Critical Role of the Advisor in Family Philanthropy")

Set a good example.

Donors establish longer, more meaningful relationships with advisors who have a personal charitable commitment, whether volunteer work, pro bono professional work, or financial support for their charitable causes, and who are not afraid to talk about it. But be sure to refrain from specifically promoting your own giving agenda. (From "The Donor Advisor: The Critical Role of the Advisor in Family Philanthropy")

Explain – or avoid – confusing words.

Planned giving: This usually implies a deferred charitable gift, something other than a simple cash gift here and now.

Legacy: This can mean the intangible gifts of values and example one leaves at death, or the disposition of property in a will, trust document or beneficiary designation.

Philanthropy: Most potential donors have a charitable heart, but do not always recognize that as philanthropy. Link questions to the client's everyday concerns and interests, like their church, their alma mater, and other organizations they care about and are involved with. (From "The Donor Advisor: The Critical Role of the Advisor in Family Philanthropy")

Know what's available.

Be familiar with the various community foundations in a client's geographical area, as well as good sources of charitable giving information.

Don't assume.

Be alert to your own possibly false assumptions. For example, a client who lives frugally may have saved a million dollars. Or a couple with young children might be ready to leave a percentage of their estate to charity.