In the current economic environment many high net worth donors are grappling with tough questions about how much they can afford to give and who to give it to. As a result, they are increasingly relying on their financial and legal advisers for advice.

 As a philanthropic advisory firm to high net worth donors we’ve been in the unique position, over the past ten years, to observe and facilitate the growing integration of the philanthropic discussion among and between legal and financial advisors and their clients.  This is still a relatively new phenomenon in an area where taxes and financial planning have dominated conversations about lifetime and at death distribution of funds.
 
In the current economic environment many donors are grappling with tough questions about how much they can afford to give, how much will really make a difference, and which organizations to continue to support and which to give up. As a result, they are increasingly turning to their financial and legal advisors for advice on how to make fewer dollars stretch further.

The expectation of philanthropic guidance from professional advisors was reinforced in a 2008 Bank of America study of high net worth donors which stated that the percentage of donors who consulted financial and legal professionals about their philanthropy had more than doubled from 2006 to 2008.  These numbers are likely to increase as donors, scarred by the indelible mark the recession has left on their psyches, seek out guidance on how to become more deliberate and strategic in their philanthropy. In fact, a recent survey of institutional funders—including family foundations—by the Foundation Center revealed that 75 per cent are expecting to emerge from this crisis being more strategic in their charitable giving focus.
 
Despite doomsday reports about the overall decline in charitable giving expected this year and next, giving continues even with diminished resources. A recent report on 2009 year-end giving by the nonprofit software company Convio echoes what we have experienced with our own clients; that even in the face of their own financial losses, donors are responding to the needs of a nonprofit sector suffering from simultaneous revenue cutbacks and growing demand for their services.  Indeed, the Bank of America survey showed that “giving back to the community” and “feeling moved by the difference a gift can make” were greater motivations for giving than “feeling financially secure”. 
 
The changing dialogue around charitable giving, combined with the lingering economic recession, present an unparalleled opportunity for advisors to institutionalize an effective process for supporting their clients’ charitable interests. The critical first step is to be informed, to be comfortable with the subject and with either initiating the conversation with clients or responding to their queries.

You may consider consulting local and national philanthropy resource organizations that provide valuable information about best practices in U.S. and international giving. To name a few: National Center for Family Philanthropy, Council on Foundations, Grantmakers Without Borders, regional associations of grantmakers and Philanthropic Advisor Networks (PANs)—networks of professional advisors interested in better understanding their clients’ philanthropic needs.
 
A philanthropic advisor with deep, specialized knowledge can also help you to navigate the philanthropic landscape. Adding this expertise to your client-centered team of professionals can assist you in helping your clients to apply the same creative and strategic thinking they use in business and financial management to their charitable giving.
 
Addressing your clients’ philanthropic interests and concerns can also improve your practice’s bottom line. By introducing this service into your mix, you will find that not only are your relationships with clients stronger, but they are also sustained for the long-term…which translates into building relationships with the next generation. Bear in mind that despite the recession, the $41 trillion dollar intergenerational wealth transfer predicted by the Center on Wealth and Philanthropy has not been revised downward (the $41 trillion figure assumed a conservative 2 per cent annual increase in net wealth between 1998 and 2052), and a considerable amount of that wealth transfer will be dedicated to philanthropy.

In addition, the Bank of America study reports that over half of parents surveyed said they are increasingly involving their adult children in philanthropic decisions. Clearly, the next generation will have money to give away and will be heavily involved in doing so.  For this generation, discussions of heirs and taxes will not be sufficient to meeting their legal and financial planning needs.
 
By enhancing your philanthropic knowledge now—at a time when your clients are looking to become more strategic in their giving—you’ll be positioned to add value to your practice and preserve your client relationships for years to come.