Advisors who aren’t getting involved in planned charitable giving strategies with their clients are missing out on potential opportunities and ways to strengthen the advisor-client relationship, experts say.

Many advisors give back to the community in the way of volunteer time and their own personal contributions, but a huge opportunity exists to suggest charitable giving options to their clients. Not only does a push to uncover philanthropic motivations benefit the community at large, helping a client to take charge of and organize their charitable giving helps advisors connect with clients and solidify the relationship.

Patricia Lovett-Reid, senior vice president at TD Waterhouse, says it often doesn’t even occur to most people to give more to charity until someone suggests it. As it stands right now only 7% of Canadians have left a gift to charity in their wills. Part of that stems from the fact that only 51% of Canadians have a will at all. “Many more would give if you simply asked,” she says.

She points out that charities are among the fastest and most efficient ways of delivering community and social services, and as government funding continues to decline, more charitable organizations than ever are looking for donations to help offset the shortfall.

For advisors, encouraging clients to consider a planned approach to charitable giving can start simply by asking if they are aware how much their estate would pay in taxes if they were to pass away. “Do you really want the government to be one of you primary beneficiaries?” she asks.

From there, she says there are several steps to organizing “the mish-mash of receipts that may or may not be aligned to who you are.” The first step is to help the client identify their values. “These are non-negotiable, the things they care about the most,” says Lovett-Reid. “It’s very personal.”

Things like smoking, for example, can imprint on a person and stay with them if they had a family member who died of lung cancer. “You all have a non-negotiable and you connect with it,” she told a group of advisors, estate, trust and tax professionals gathered at a Canadian Cancer Society seminar on charitable gifts in Toronto on Tuesday. “That’s where your values start.”

Jo-Anne Ryan, vice president of philanthropic advisory services at TD Waterhouse Canada, says a study conducted by the National Center for Family Philanthropy, a U.S. based non-profit philanthropy group, found that clients expect advisors to raise the question of charitable giving.

The study also revealed that clients tend to develop longer relationships with advisors who help them to organize and effectively plan their philanthropic pursuits and that clients want advisors to help them implement charitable plans during their lifetimes. As well, business owners expect advisors to help them make the best use of their skills and expertise, if possible, in the process.

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    • Once clients have clearly identified their values, deciding how and when they want to contribute, whether they want to contribute locally or to a larger scale organization are followed by doing proper research and due diligence on the chosen charities to find out how much money goes to administration and how reliant they are on donations.

    Graham Hill, personal giving coordinator at the Ontario Division of the Canadian Cancer Society, says 80/20 is a good rule of thumb. Since charities are also businesses, some administration costs are reasonable and necessary, but it helps to research whether or not the charity is keeping those costs under control. Typically, a reasonable split involves 80% of the donation going to the charity’s cause or mission, with the remaining 20% or less going to administration.

    Finally, he suggests talking directly to the charity group and getting them involved in the discussions early. The savvier ones will offer resources that will make the advisor’s job easier.

    Filed by Kate McCaffery, Advisor.ca, kate.mccaffery@advisor.rogers.com

    (11/08/05)