funds , private foundations and planned giving tools such as charitable gift annuities and charitable remainder trusts . Advisors will need to learn how these vehicles function , how they can best be used together , and how they can help a client achieve not only a maximum charitable impact but an optimal financial benefit as well .
The Giving USA Foundation found in its recent research that grant-making organizations , including foundations and donor-advised funds , saw the strongest growth in giving to the nonprofit sector . While donations from individuals are shrinking as a percentage of total giving , foundation giving is up to 19 % of overall giving , and it crossed the $ 100 billion threshold for the second consecutive year . Donor-advised funds have also gained popularity among donors and financial advisors for their ease of use and tax advantages — and because a growing number of donors ( particularly women , millennials and Gen Z ) want to align their investment choices with their core values and charitable interests .
By using more than one charitable vehicle , your clients can not only see increased tax benefits , but also give with more autonomy and make their giving more personal . They can diversify their giving strategies within vehicles , too . For example , our private foundation clients can run their own charitable activities , like clothing drives or tutoring programs , or invest in for-profit mission-aligned companies — or they can give hardship grants or scholarships directly to individuals ( instead of through nonprofits ).
Clients who have flexibility with their philanthropic tool kit are able to customize their giving to not only boost their charitable impact but also enjoy greater tax savings and tax-free asset growth as well .
‘ PhilTech ’ Can Help It ’ s true that formal giving vehicles require clients and their advisors to perform administrative tasks like opening accounts , tracking grant requests and payments , managing expenses , and producing reports . However , software has
Giving circles are a good way for new and experienced givers to pool gifts with other like-minded individuals to make a bigger impact .
emerged that can help make this burden easier , referred to as philanthropic technology ( or “ philtech .”) This technology makes philanthropy more practical and cost-efficient for financial institutions and their high-net-worth clients . For example , there are solutions for foundations that feature a dynamic operational dashboard and integrated expense workflows to help centralize and streamline disparate tasks . Digital tools are also available to help both individuals and enterprises manage donor-advised funds .
Advisors can offer white label versions of this technology to help clients simplify their back-office administrative tasks . As a result , the clients and advisors have more time for strategic philanthropic planning .
Strategy , Impact And Legacy When you ’ re discussing philanthropy with clients , especially those in the early stages of giving , encourage them to be strategic and explore how to make the greatest impact with their charitable efforts . Here are a few things they can do :
• Define their philanthropic purpose . When they can say why they want to give , the answers will guide their giving decisions . But keep in mind that this purpose will likely evolve over time as they discover new causes and organizations they want to support .
• Volunteer . Clients who want to understand a charitable organization and its cause can benefit greatly by serving on its board , where they can share their own professional expertise pro bono and offer hands-on help .
• Find mentors . Your clients can benefit by turning to experienced individuals who can share their philanthropic stories and offer suggestions for getting started and using formal giving vehicles .
• Connect with like-minded peers . Giving circles are a good way for new and experienced givers to pool gifts with other like-minded individuals to make a bigger impact , learn from others and connect with their local community .
Also , advisors should remind clients to measure their effectiveness ( ask how they are making a difference ) both qualitatively and quantitatively when possible to help steer their philanthropy toward success . For example , they could survey the charities they support to obtain feedback — seeking statistical data as well as anecdotes — on their efforts .
Your clients will give for all sorts of reasons , but if they are older , they are often thinking of their legacies . They may want to leave a heritage not just of dollars but of values . To cement those values , you can encourage them to engage their younger family members in their philanthropy by giving them active roles in the family foundation or inviting them to help suggest how their donor-advised fund donations should be allocated . Help them see that philanthropy is a useful tool for fostering multigenerational collaboration , sharing family values , and strengthening family ties , all of which help to build a meaningful legacy .
By gaining more expertise in charitable giving , you can better connect with the increasing number of female clients who will want to use their assets to support their values .
GILLIAN HOWELL is the national philanthropy executive at Foundation Source , the nation ’ s leading provider of enterprise-grade solutions for private foundations , donor-advised funds and planned giving .
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