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How to help clients achieve sustainable philanthropic giving

Fifty-seven percent of philanthropists surveyed said advisers are necessary collaborators to achieve sustainable results

Dec 20, 2016 @ 3:32 pm

By Steve Prostano and Julie Shafer

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Philanthropy that delivers lasting results is as important as ever to affluent clients — especially here in the U.S. What's changing, however, are the tools, trends and strategies wealthy philanthropists are using to build sustainable charitable legacies.

Not surprisingly, the U.S. remains the global leader in the amount of wealth donated or pledged to philanthropy, according to the fourth annual BNP Paribas Individual Philanthropy Index. A full 38% of American philanthropists with more than $5 million in investable assets plan to leave at least one-third of their fortune to charity — more than individuals in any other region in the world.

The report reveals key traits of U.S-based affluent philanthropists:

• Health-related causes are their top area of interest (60%).

• Personal experience with a particular cause is the main driver behind their philanthropy (43%).

• Charitable causes in their local communities are their main type of gifting (24%).

By combining your clients' personal goals with a deep understanding of the trends in strategic philanthropy and charitable tools, you'll be able to better meet your clients' needs.

SUSTAINABLE LONG-TERM RESULTS

Creating outcomes that are sustainable is a key goal of affluent philanthropists worldwide. Sustainability is the second most important factor influencing those surveyed, second only to the cause itself.

To achieve sustainable long-term results, philanthropists are tapping into several emerging, innovative philanthropic trends:

• Focus on quantitative results: More philanthropists want hard numbers to assess charities and measure the outcomes of their initiatives. As a result, data and analytics are becoming prevalent in the charitable arena. More than 70% of donors say that quantitative measurement of their philanthropy is important to them — and that they are currently using measures to assess future giving.

• Tap new sources of sustainable funding: Sustainable results require secure, predictable inflows of new money. The vast majority of affluent philanthropists (70%) say ensuring steady, ongoing funding is their top method of financing long-term projects.

Impact investing — investing strategies that emphasize social good at least as much as financial returns — has become a key way to supply and sustain funding. More than half of donors cite impact investing as the most promising approach for creating sustainable outcomes. Technology including crowdfunding, online auctions and social media campaigns is also being increasingly tapped to raise money. Expect to see more impact investing and tech-enabled funding going forward, as altruistic and tech-savvy millennials look to align their investing with greater social good.

• Manage philanthropy like a startup: The high-profile philanthropy of tech titans like Mark Zuckerberg and Bill Gates bring a new cool factor to charitable giving that's sparking interest among would-be philanthropists. It's also prompting many philanthropists to adopt some key drivers of startups' success in their giving efforts. More than half of surveyed philanthropists say that collaborating with each other or another organization is the best way to achieve sustainable results. Expect more outside-the-box thinking when it comes to solving global issues as philanthropists look to the startup world for ideas and best practices.

OPPORTUNITIES FOR ADVISERS

These and other trends create opportunities for you to work with your philanthropically-minded clients. Indeed, they're looking to advisers for guidance. According to the report, 57% of U.S.-based philanthropists say advisers are necessary collaborators to achieve sustainable results. Here's how you can help:

Be a connector. Research shows that affluent philanthropists want to collaborate with others like them, and they tend to focus on causes and issues in their local communities. Advisers who can serve as a conduit — connecting like-minded individuals with each other and with the right charitable organizations — will add value.

Partner up. Advisers who don't currently possess deep expertise in philanthropy can build collaborative teams of professionals who have the necessary knowledge and connections. Today's affluent clients typically don't expect their advisers to know everything, but they do expect their advisers to tap resources needed to further their goals.

Help clients build philanthropic benchmarks to guide their giving. Values-based discussions with clients can provide tremendous clarity about the causes and programs that are important to them. Developing a strategic philanthropic vision will help clients define their expectations and better measure the results of their giving.

Steve Prostano is head of family wealth advisers and Julie Shafer is head of strategic philanthropy and purpose investing at Bank of the West's Wealth Management Group.

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