For those with a charitable heart, they know the secret: the very act of giving makes us happier. As advisors, you have the great privilege of helping your clients discover how best to meet their philanthropic goals. Helping to deepen their connection with their money, then direct it with soulful purpose is some of the most powerful work you can do. Here are a few ideas of ways you can foster these important conversations with your clients.
Designing Your Financial Legacy
The title of this MQ tool might sound like it is part of an estate planning conversation, but it is clear that a legacy is really developed over a lifetime.
You can use the “Designing Your Financial Legacy” worksheet as a conversation framework between you and your clients. It's designed to gather information regarding their current charitable activities and financial contributions. It will also clarify their priorities in gifting, whether it be of their time, talent or treasures, and highlights how these three resources holistically intersect. In your role as a trusted advisor, you’re the only person asking the key question, "Do you feel your financial legacy plan accurately reflects your values and priorities?" Their answer highlights whether or not your client is living in alignment with what is most important to them.
While the IRS defines a charity as a 501(c)(3) organization, clients may expand that term to include family. Therefore, we’ve included a question on this worksheet that will help you explore this question.
It can also open a dialogue around obstacles (real or imagined) that may be inhibiting their charitable inclinations. Perhaps they don't know how much they can afford to give; maybe they aren't sure how to measure the effectiveness or trustworthiness of a particular cause. Helping a client remove these barriers can empower them to lean into their true philanthropic ambition. Like with most MQ tools, it's essential to provide a copy of this worksheet to each member of a couple to uncover the similarities and differences in their perspectives.In your role as a trusted advisor, you’re the only person asking the key question, Do you feel your financial legacy plan accurately reflects your values and priorities? Click To Tweet
Develop a Philanthropic Philosophy
Another idea is to work with them to develop a philanthropic philosophy. It ought to be relatively brief (2-4 sentences) and serve as a guidepost for gifting. It should:
1) Revolve around their core values.
A great place to start is to provide your clients with the values on their “Key Elements for Creating Your True Wealth Plan” worksheet. Recapping the top 3 or 4 can help get them thinking about their top priorities.
2) Identify what makes a "good" organization.
This is, of course, a subjective evaluation. Some clients want to get very specific (e.g., "religious affiliations that support the homeless in our community”), and others prefer to use funding metrics (e.g., what percentage of a donation supports programs and services vs. administrative expenses). Finding patterns or themes in the organizations they've supported previously can help get them pointed in the right direction.
3) Specify how the gift amount is determined.
Some clients use the tithing method; others prefer to give the same dollar amount every year. A few months ago, David Yeske and Elissa Buie shared their values-based financial planning policy approach to withdrawal decisions during this MQ webinar. Regardless of how you get there, it's useful to have this information included in the statement.
An example of a philanthropic philosophy might be:
"I strive to support organizations that spend over 90% of program expenses on education, equal rights, and the environment. I aim to donate at least 50% of my required distribution annually."
Notice the use of flexible words like "strive" and “aim." The goal of creating a philanthropic philosophy isn't to place limits on your clients; it's to give parameters as a starting place as you revisit the plan. When on the cusp of a decision or change, it continually points clients back to their legacy plan.
A secondary perk of this brief statement is that it's easily sharable. A framework like this can expand a giving nature into a legacy and instill generosity for generations to come.
Share the Love of Giving
Some philanthropists will want the brick with their name on it. Others will take up the 'anonymous' position of the plaque. Wherever your client's fall, one thing that most philanthropists have in common: they want to share the joy that comes from giving with their families. Having resources to help your clients explore giving circles and donor-advised funds will deepen the work you do as you guide clients in their giving decisions.
"Whatever you spend is gone. Whatever you keep, someone else gets. What you give is yours forever." — Dr. Wil Rose
Great insight and tools. I highly encourage advisors to take their personal journey of generosity to lay the groundwork for walking alongside clients. We need to walk the walk, before we talk the talk. Living a generous life is so rewarding.