CHARITABLE PLANNING

Joe Mrak

With the emergence of new technology , advisors can be more active partners in their clients ’ charitable giving .

CCORDING TO THE NATIONAL PHILANTHROPIC TRUST ,

Americans made charitable donations of nearly half a trillion dollars in 2022 . Some $ 319 billion of that came from individuals , while $ 105 billion flowed from foundations . Yet despite those huge numbers , research has found that philanthropy is not a major area of engagement between financial planners and their clients , even with clients of significant wealth .

There are surely many reasons for this gap , but I ’ d like to point out a big one : Advisors are not using technology in this area the way they do everywhere else .

Consider that a number of sophisticated tools have emerged in the investing , banking and planning spaces that can help advisors perform at scale many complex processes — such as constructing portfolios , monitoring for risk exposures and customizing estate plan documents . This has helped advisors better engage and service their wealthy clients , especially in areas such as retirement planning , tax-efficient investing , cash management and wealth transfer to the next generation .

Where are such tools when it comes to the giving space ? Why aren ’ t giving and legacy getting the same treatment ? Surely technology has been embraced by foundations and philanthropists . But not enough advisors are talking about that .

There are many ways for people to give . They can make direct donations . They can open donor-advised-funds . They can create vehicles for planned

Technology has been embraced by foundations and philanthropists . But not enough advisors are talking about that . gifts , including charitable remainder trusts ( CRTs ) or charitable lead trusts ( CLTs ). Those who have achieved greater net worth levels can go on to do more sophisticated work by establishing charitable foundations .

But no matter what vehicles people choose , advisors should be using tech in a way that makes them more active partners with their clients on philanthropic matters , offering wealthy givers turnkey services and the ability to implement their mission easily and efficiently .

New “ phil-tech ” can help advisors support people who are new to giving as well as experienced philanthropists . In the early stages of the philanthropic journey , technology can help givers open charitable vehicles quickly and frictionlessly , help them find potential nonprofits whose mission fits their objectives and help confirm the tax-exempt status of charities with the IRS to ensure the gifts are tax deductible . As giving becomes more complex , there are many tools that can streamline the grant proposal process : The grant documents can be created with pre-populated templates , and there are two-way portals that allows donors and grantees to collaborate .

There are also tools that automate grant payments once those proposals are approved . More tailored tech simplifies the unique tax-reporting requirements of foundations and charitable trusts and helps board members and trustees be more effi-

JANUARY / FEBRUARY 2024 | FINANCIAL ADVISOR MAGAZINE | 23