Intelligent charitable planning: The next big thing in wealth

Research shows that given the means, most people (with the help of their advisors) want to leave a legacy and contribute to causes that are important to them. However, few have access to sophisticated giving vehicles — they are limited to one-time or recurring donations to hand-selected charities. Advisors often have the relationships, tools and mindset to support long-term giving on behalf of clients, but too few are leveraging those advantages for charitable giving.

Meanwhile, donor-advised funds have been around for nearly a century and can help solve the problems of the mass affluent who want to leave a legacy, but they are also underutilized. The reality is DAFs are a valuable part of the advisor tool kit, putting more control in the hands of people who use them and laying the foundation for community-oriented giving, assuming it has the technological infrastructure to truly bring like-minded people together.

WHAT IS COMMUNITY-ORIENTED GIVING?

The power of giving rises greatly when it is a community experience, and DAFs are well suited to support this approach to philanthropy. For example, multiple people can give to a DAF, making it the perfect way for a family to unify and coordinate its giving.

This same benefit can extend beyond families and households to other types of communities, too. Just as social media has allowed like-minded people to find each other to share knowledge, a DAF paired with community-building tools can allow any group — co-workers, neighbors, club members, etc. — to support common causes, while providing all the tax and legacy-building advantages of a DAF (like giving in a specific year for the tax benefit and then letting that money grow through investment before contributing at a later date).

CHARITABLE GIVING IN THE WORKPLACE

For many working-age individuals, the company that employs them is one of the most important communities they belong to, or at least where they spend much of their time. By evolving the workplace community into an accelerator for charitable giving, we can bring more people into the world of philanthropy.

For example, Morgan Stanley, in partnership with Tifin Wealth, now offers DAF access as a workplace benefit that employers can provide to their workers alongside 401(k)s and health savings accounts, making philanthropic planning more relevant for people across different earning thresholds.

Employers can also offer employee matches on contributions, create “charitable spending accounts” that set aside a certain amount for gifting each year, and let employees build tech-enabled communities around their giving interests.

In a world where people are passionate about causes and looking for ways to make a difference, these giving-centered benefits can be a key to attracting and retaining talent.

GOOD FOR THE WORLD, FOR PEOPLE, FOR ADVISORS

Offering a DAF as part of a comprehensive financial planning package can allow advisors to involve themselves in the giving process like never before, empowering them to attract new clients and deepen existing relationships through engagement around causes and issues that matter to their clients.

In speaking with clients, advisors can point to these foundational principles:

• Building community: Engaging family, friends, and others in the giving process strengthens human connections while providing greater impact.
• Enabling impact in many ways: Contributions to charities help the world, investment growth multiplies impact, and community connections enrich the lives of those giving.
• Simplified experience and benefits: A tech-enabled DAF makes it easy to optimize tax impact, has no minimums, and allows the advisor or firm to manage the program — the same trust that people put in their advisors with regard to their investments.

Finally, in addition to strengthening advisor/client relationships and increasing share of wallet, it keeps those invested funds within the advisor’s preferred vehicles. This allows the advisor to continue managing those assets as well as capture fees that would otherwise be paid to a third party. It also uses tools that make the end-to-end experience easier and more intuitive for clients — for example, Tifin Give’s solution uses AI to research charities, align giving with investing, allocate giving funds to family members and more.

Charitable planning can and should be a pillar of the advisory experience, just as retirement planning is today. From an advisor perspective, the same skills apply — talking about long-term goals, the impact of long-term planning, and directing investments.

In much the same way that long-term financial planning has transcended the realm of the rich to become accessible to the masses, so, too, can intelligent charitable planning.

Cor Hoekstra is executive vice president and chief revenue officer at Tifin Wealth.