Charitable giving is a win-win for advisors

Philanthropic discussions with clients over issues close to their hearts can only deepen that relationship.

As the holidays approach, charitable giving and, by extension, donor-advised funds are top of mind. Whipsawing markets had an impact in 2022, with total giving down 3.4%, although as markets came back to life in 2023, Schwab Charitable reported a significant uptick in donations over the first six months of the year. Take that, Scrooges.

As Gregg Greenberg explores in his news analysis, advisors can provide a crucial value-add in explaining the benefits of using donor-advised funds from the standpoint of tax efficiency and impact. A client should want to give to a cause for its own sake, regardless of planning benefits, but let’s be frank here — an advisor doesn’t have to be so altruistic.

Aside from the primary goal of helping worthy causes get much-needed cash, advisors can use DAFs to strengthen their own businesses in several ways. Philanthropic discussions with clients over issues close to their hearts can only deepen the advisor-client relationship. Getting to know more about them may also open doors to related communities and future referrals.

DAFs, in particular, are also a way to safeguard your balance sheet. Helping a client support a cause not only builds the connection but also keeps the assets – and related fees – with you rather than involving a third party.

While the biggest impact should, of course, be felt by the beneficiary of the donation, there are clear advantages to making charitable giving a pillar of your advisory experience.

INVESTING LEGEND

The media is prone to anointing superstars prematurely, so it’s only right that when a genuine legend in our industry passes, we pay our respects. Despite the giant shadow of Warren Buffett, whom he helped build Berkshire Hathaway, it says it all that Charlie Munger was successful and revered in his own right.

Much of that was his investing acumen, but his cult following was undoubtedly burnished by his influence on Buffett and his quotable plain talking. Buffett called him the “abominable no-man” because he was so adept at keeping his friend’s enthusiasm in check, but Munger is also credited with broadening Buffett’s philosophy beyond mentor Benjamin Graham’s value principles to include excellent businesses with strong brands and pricing power.

Munger’s wit and incisive views were a large reason why Berkshire’s annual meeting became such a hot ticket. I’ll leave you with a favorite Munger quote: “I think life is a whole series of opportunity costs. You know, you got to marry the best person who is convenient to find who will have you. Investment is much the same sort of a process.”