It may come as a surprise to some but experts in philanthropic advising say for most clients, donating to charities is not about taxes and tax planning — issues that typically get discussed toward the end of a tax year as a client's income and the tax liability picture comes into focus.

Rather, a perfect time to have a conversation with your clients about their charity goals, says Samantha Kennedy, a client advisor with U.S. Trust in Houston, would be now — early in the year. 

"The conversation about philanthropy has lots of ramifications, and this time of year is a good one to bring it up with clients," she says, noting charitable giving is often better done throughout the year rather than as a lump sum.

"We talk to families every day about charitable giving and planning for giving," says Kennedy, adding, "Our clients these days are interested in donating their money where it helps to solve a problem and where they can see the results in their lifetime."

The issues revolve around what the clients want to give, to whom, and how they want to give it — all forward-looking matters.

The issues are not about how much can be saved on taxes, an issue which is already dealt with (unlike contributions to an IRA, which can be made at the time taxes are actually paid, charitable donations in a given tax year have to be made by midnight of the last day of the tax year).


It's not that tax considerations aren't important. It's just this is not what philanthropically minded clients care about.

As Sara Montgomery, philanthropic services specialist at Wells Fargo Private Bank in Denver, puts it, "I think generally speaking we find that taxes don't drive why people give, even if they impact how they give."

In fact, a study released last year by U.S. Trust, in conjunction with the Indiana University Lilly Family School of Philanthropy, found that far from seeing charitable giving as a way of lowering their tax bills, fully half of high-net-worth families surveyed said they would give the same amount to charity even if all tax benefits for giving were eliminated. They told researchers their motive in giving the funds is to "do good."

The implications here for advisors could be enormous, especially considering Americans, as individuals, gave a record $335 billion to not-for-profit organizations and activities last year, up 6% from 2012's $316 billion.


Dodee Crockett, a managing director and wealth management advisor with Merrill Lynch Wealth Management in Dallas, says she's been a financial advisor for 30 years, and over that time, most of her clients have come to her specifically because of her own involvement in and expertise concerning philanthropy. 

Crockett explains she has been involved for years in Dallas on issues like homelessness and urban development, even helping to run a local venture capital firm that invests in non-profits called Social Venture Partners Dallas.


She says, "I tell advisors who don't understand this passion their clients have for doing good with their money to just find something they themselves are passionate about, and to get engaged in it. What issue that might be isn't important — it's the passion. Because you're not going to be effective with clients if you aren't giving your own time, energy and money to some philanthropic endeavor."

Crockett says she understands there is "an arc" to developing a practice, and early on advisors can be consumed with building their businesses and may feel they don't have a lot of time, but she says "At some point you, just like your clients, want to move from success to significance." There is a big potential payoff in getting with the charity program.

As Claire Costello, national philanthropic practice executive for the Philanthropic Solutions Group at U.S. Trust says, "We find that one out of three of our clients chooses a financial advisor specifically because that advisor is good at the philanthropic stuff." 

She warns clients "may even change advisors, if they feel that their current advisor doesn't get it."


"There is a lot of value that an advisor can bring to the table when it comes to client philanthropic interests, but it's not in the area of tax planning," argues U.S. Trust's Kennedy, who works with many high-net-worth clients.

"Typically," she says, "we'll meet with our clients and ask them if they have a foundation, who's on the board, and what are the responsibilities of board members."

"We can help them structure the foundation," she adds. "For example, if they want to include children and grandchildren."

Kennedy cites one older couple, for example, who had allocated a pool of money for philanthropy, establishing a foundation to allocate it, headed by a board of family members.

"They created a second-generation and third-generation board, so there were both children and grandchildren on that board."

"Each has a share of the money," she further explains. "They can invest — about $500,000 each. They're just getting started this year, and it will be interesting to see how this progresses."


Crockett notes there is now a CFP philanthropic certification available, so advisors can gain a lot of needed expertise — something she has done herself.

She adds most advisors also have access to departments or outside experts that specialize in philanthropy.

One such expert, Phyllis Silverstein, vice president and philanthropic specialist at Wells Fargo Private Bank, says while some wealthy investors know exactly what they want to fund, others really don't, or only have some general idea, such as education.

"But what does that mean?" she asks. "Poor schools, girls, minorities? Who knows? So I ask them, and I also bring ideas to them." She gives the example of one family that wanted to donate to education in some way.

"I suggested six ideas," she recalls, "and the program they picked was a middle school for refugee girls. The project worked on building self-esteem and on helping the girls to learn to socialize so they could go on to high school." 

"I was expecting the family to push back, but instead, they really got involved," says Silverstein. "And now the girls are being mentored by the staff from this family's company. It's very exciting for everyone involved."

"I'm proud every day that I get to do this job," Silverstein adds. "And to make these kinds of matches."


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