New Numbers Support Engaging Clients on Charity

For advisors, recent numbers from the 2021 Bank of America Study on Philanthropy indicate an alarming need for charitable advising from affluent donors.¹ It also suggests a growing interest from younger donors in using giving vehicles and a desire for having charitable discretion. With these insights, there are several key takeaways for advisors seeking to differentiate their practice.

1) A structure for giving is needed.

Nearly 90% of affluent households gave to charity in 2020, while 32% of high-net-worth individuals reported struggling with knowing how much they can afford to give, and only 7% are using a donor advised fund with their giving. This means there is a large opportunity to step into the generosity conversation and offer structure, giving vehicles, and amplify the total value of your services. For strategy on how to enter a conversation on charitable giving with clients, consider these conversation starters.

The study also reported that giving from high-net-worth individuals was up 48% in 2020 from 2017. Using a donor advised fund is an excellent way for families to track their new generosity goals, refine giving decisions over time, and open the door to further increase generosity by accepting complex assets like business interest, real estate, and publicly traded securities.

2) Complex assets expand the opportunity.

With high-net-worth-donors seeking to build better giving plans, now is the time to actively engage conversations with clients on any potential complex asset contribution to a donor advised fund. Some complex asset gifts take time, and for donors hoping to complete a contribution for this tax year, The Signatry recommends starting the process now to ensure a gift is processed by year-end.

Remember, 90% of the average American citizen’s wealth is in non-cash assets, such as stock or business interest. However, because traditional giving tells us to write a check, 80% of giving is done with cash. Chances are, how much your clients can afford to give will largely change after exploring these often-overlooked assets. For more on complex asset gifting, including the benefits of gifting before a sale and a calculator for estimating benefits, visit our asset giving page.

3) Engage the younger demographic in the discussions now.

Another key insight included in the same study was the increase in generosity to specific issues and causes. The jump in support to social, religious, and education causes came largely from a younger audience. During the same timeframe, younger affluent donors saw a large increase in opening and utilizing a charitable giving vehicle.

This trend means that it is never too early to set up a vehicle such as a DAF for your younger clients, who will be thankful for having a foundation as their giving continues to grow and include more complex gifts. Starting the conversation now will prove you as a trusted voice who can empower their values.

4) Take action today.

What can you do right at this moment? The simplest first step is to open your own DAF with The Signatry and with any other financial institution that you may consider recommending to your clients. Statistics have shown that clients want and have greater trust in the advice of advisors who are already actively engaged in charitable giving and personally understand the tools themselves.

Secondly, take a look at our advisor managed accounts, a no minimum balance required opportunity for you to come alongside your clients’ generosity goals. The Signatry is here to help make your clients’ charitable gifts come to fruition. Let me know if there is a way I can help you during a busy year-end.

¹ — 2021 Bank of America Study of Philanthropy: Charitable Giving by Affluent Households