Last month, I wrote about the most common mistakes advisors make when talking with clients about charitable giving, such as putting too much emphasis on the topic of tax benefits or waiting for the giving season to introduce the subject.
One of the things I mentioned is that it can be problematic to think about giving in isolation. Not only does it make good financial sense to coordinate giving with your clients’ overall wealth management, but it shows them that they can trust you with a more personal piece of their portfolio.
Once you have started the conversation, you should dig deeper, asking your clients specific questions so you can make this more personal for them. That will mean a stronger relationship with you.
Before we get to the questions, first we must consider where our clients are in their philanthropic journey.
For Those Just Starting
First, you’re going to want to ask a different set of questions for clients who are just starting to think about committing to philanthropy.
As I’ve written before, their interest might have nothing to do with money. Instead, they might want to create a permanent legacy, unite their family through their shared activities or give back to the community where they made their wealth. So instead of leading with the tax benefits of giving, you ought to start by asking clients what they’d like to achieve. After you’ve opened this exchange of ideas, you can ask them the following questions about their aspirations.
• How important is charitable giving to you at this point in your life?
• Are there issues or problems facing society that have also touched your family?
• Are there personal goals you’ve set for yourself that philanthropic giving could accomplish?
• What causes or organizations do you currently support and why?
• Are there charitable causes or specific organizations that you would like to support but you haven’t had the opportunity or time?
• How would you like to be remembered? What kind of legacy do you want to leave?
• Do you want to engage your family in your philanthropy, or do you envision it as more of a solo project?
For Those Looking At New Charitable Vehicles
The next set of questions are for those clients comparing the features and benefits of different charitable vehicles. When they reach a certain level of wealth, many clients are ready to move from checkbook philanthropy to more formal giving vehicles, something more organized that helps them with their tax planning.
These questions will help you determine which charitable vehicle might be the best fit.
• What motivates you to establish a charitable vehicle? Are you considering one in particular?
• How important is having control over the assets you’ve earmarked for charitable use? Do you want to have control over grant decisions?
• Are you planning to include your family in your philanthropy? At what level of involvement?
• Will you want to go beyond traditional gifting to other forms of support, such as loans, international giving, scholarships, awards and donations made directly to individuals and families in need?
• Is anonymity a must? For some donations? All donations?
• Do you want to be able to reimburse charitable expenses?
• How would you like to fund your charitable vehicle, both initially and in the future? What level of funds would you like to start with? What types of assets do you plan to donate? Do you have highly appreciated personal property or real estate that you would like to contribute?
• Would you like to hire staff or compensate family members for their philanthropic work?
• How long do you want your philanthropic legacy to continue? Do you want your family to retain control over your charitable assets in perpetuity?
• Do you want to run your own charitable programs (for example, a winter coat drive, holiday food baskets or a training camp)?
• Are you planning any major gifts or multiyear commitments that might require a formal agreement with the grantee?
For Those Experienced Family Foundations
By the time your clients start a private foundation, they’re going to be working at a more sophisticated level. But even families who have had foundations in place for years face challenges you could help address.
The following questions can help you uncover what’s working well and where there’s room for improvement, so you can talk to your clients about their foundations and assess their needs.
• What motivated you to start your foundation? Is it living up to your original vision?
• How do you administer it? Which parts of running a foundation are easy and which are more onerous or time-consuming?
• How much time do you spend on foundation administration? Can you keep up with everything that needs to be done?
• When you need guidance or have a question, to whom do you turn to talk about funding, compliance, mission, governance and grant making?
• What measures have you taken to minimize the risk of compliance problems?
• How does your family work with your foundation? Would you like them to be more involved?
• Are you satisfied with the results you’re getting from the grants you’re making?
• Do you feel like you’re making a real difference?
• What are the ways in which you see your foundation changing in the next five years? Do you anticipate a new generation getting involved in its day-to-day operations or the board, or an influx of assets from the sale of business or inheritance? Are any trusted advisors set to retire, and are the family members spread out geographically?
• How do you connect with other like-minded funders and stay on top of trends and best practices in philanthropy? Would you like to network with other foundations like yours?
By engaging with clients wherever they are on their journey and using the interactions to probe their biggest concerns, as well as their deeper fears and dreams, you can provide invaluable information and better develop your relationships. If you are equipped with a range of questions, you can make the most of each conversation, improve your philanthropic support and, eventually, broaden the scope of products, services and advice you offer clients.
Hannah Shaw Grove is chief marketing officer at Foundation Source, the nation’s largest provider of support services to private and family foundations.
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