InFocus: Philanthropy

Involving the family in charitable planning

Involving the family in charitable planning

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More and more families are looking at philanthropy as a shared experience and a way to give back to community, according to Hilary Pearson, president of Philanthropic Foundations Canada.

“Families want to learn and give together. They look to their trusted family advisors for expertise around philanthropy as well as around their investments and estates,” says Pearson. “Whether through donor advised funds or a family foundation, often the family will meet and decide together where and how they want to put their money to work.”

Many wealthy individuals want to involve their children in the act of giving – so the conversation is really about values and making a difference, says John Hallward, the chairman of The GIV3 Foundation.

“Don’t just talk to them about tax savings – frankly that misses the boat. It’s about having an impact and giving back as a family; and that’s what we need financial advisors to appreciate,” adds Hallward.

Marvi Ricker, vice president and managing director, Philanthropic Services at BMO Private Banking agrees that talking to family members is something advisors should feel comfortable suggesting, and it’s a good idea to include this step when developing client plans.

“Many of the families that I work with are creating private foundations,” says Ricker. “I talk to all family members individually to get their input into the mission statement for the foundation, and get them involved in developing a strategy for giving.”

A recent trend among wealthy clients is what has been called the “Bill Gates and Warren Buffett” effect, where individuals are choosing not to leave everything to their children, but instead preferring that the majority of the estate go to doing good work in the community, and much of it while they are still alive to see it.

 “Many donors choose to continue supporting their favourite charities through charitable bequests in their will,” says Norma Cameron, principal of The Narrative Company and board member of the Canadian Association of Gift Planners.  “I always encourage them to discuss their plans with their advisors and family members – to ensure their gifts are structured in the best way possible to avoid them from failing.”

It’s far better to follow a ‘no surprises’ approach and let family members know how monies will be distributed – including charitable giving.  Why?  Because not doing so may result in the gift failing, through wills being contested, and the survivors may decide to “blame the advisor” and take their business elsewhere.

In fact, recent research strongly supports the need for advisors to involve both husbands and wives in all financial planning discussions.  Given that women generally outlive men, one sobering statistic shows that in the first year following the death of the husband, 80% of Canadian women switch advisors.

“The research tells us that if the relationship hasn’t been built with the couple during both their lifetimes, the wife may seek out an advisor that provides a more holistic, family-oriented approach to philanthropy,” says Cameron.

Having that holistic approach with the client and the family helps to foster that message of giving and caring for others – something that can be passed along down through the generations.

This is good for the family, good for the community and good for your business, says Cameron.

Look in the coming weeks for more 10 Ways articles:
Identifying legitimate charitable organizations and their impact

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With the vast majority of Canadians contributing to charities each year, philanthropy presents an array of opportunities as well as challenges for professional advisors. According to recent Ipsos Canada research  wealthy Canadians are looking to their financial advisors to play a role in helping and advising them about their charitable giving. This series of 10 articles explores various topics around philanthropy as well as providing insight and resources to help you enhance your philanthropic conversations with clients. Follow these links for more information: e-resources for professional advisorscontinuing education in philanthropy, and starting a foundation.