Why you should chat charity

Like anything else in your client’s portfolio, charitable dollars are money that needs to be managed and CEO and founder of Charitable Impact John Bromley is imploring the industry to get in the game of helping clients with charitable giving.

Bromley discusses how the current state of the economy is a double-edged sword, causing many to disengage from charitable giving but also making the tax effectiveness of donation an even more attractive option. He argues it’s incumbent on financial professionals to be able to guide clients with sophisticated advice to help them find purpose and leverage the inherent tax incentives.

Charitable giving has a role in Canada’s wealth industry, Bromley says, making the argument that advisors need to step up and be more proactive in managing these funds. “Be a pro at investment management, asset allocation, and customer relationship development,” he urges.

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James: [00:00:19] Hello everyone and welcome to this WPTV special. My name is James Burton, managing editor of Wealth Professional Canada, and today I'm delighted to welcome John Bromley, CEO and founder of Charitable Impact, which was recently named a WP five star wealth tech provider. Now, John started his career in corporate finance, working with PWC and RBC Capital Markets before going on to work with his father, Blake Bromley, one of the world's foremost experts in charity law. After developing a deep understanding of the charity sector, John recognized the need to make giving more accessible and more effective. So with that in mind, he launched Charitable Impact its mission to nurture the generosity within each person and bring the resources to creating change in the world to everyone. John, welcome to WPTV. 

John: [00:01:10] Thanks for having me. I'm really happy to be here. 

James: [00:01:12] Let's kick things off then. So with Canadians disengaging from charitable giving in record numbers. How can you help Canadians reengage with charitable giving? 

John: [00:01:22] Yeah, it's true that there are fewer people participating in giving than we're last year or the year before, and those people who are participating are giving less of their money away. One of the reasons we think that is, is the big, big reason is generally speaking, there's nowhere to go to learn about charitable giving. Right. And one of the one of the symptoms is that is where do you go to get objective giving advise? You want some advise about a mortgage? You want some advise about stocks and bonds, investment, you know, asset allocation. I know where to send you. You want some good, solid, sophisticated, objective advise about how to go about approach your charitable giving. There's nowhere really to go. So we believe the solution is to build a tool and a support organization that's focused entirely on donors and the people that work with donors like investment managers, accountants, lawyers, etc.. 

James: [00:02:19] So this is obviously directed specifically at our audience. Why should wealth managers and financial professionals chat charity with clients? 

John: [00:02:28] Charitable giving is, first of all and is, there's money and there's time. So let's focus on money. So when people give charitable donations, we're talking about assets, assets here. So it's really important that investment managers understand that. Charitable dollars are money and they need to be managed first of all. Second of all, that there's really strong tax incentive to make donations in Canada and in particular donations of publicly traded securities. Right. So publicly traded securities are arguably the most tax and the most tax effective form of giving. So it's really important for investment managers to be proactive about bringing these types of ideas to their clients. Hey, you've got a bunch of capital gains. Did you know we can help offset it in this type of way, number one? Number two, they have to be able to react to clients who are already charitable donors who should want to be looking at using publicly traded securities to carry it out. Right. So what I encourage investment managers to do and managers to do is instead of trying to dive in deep and understand everything possible, charitable giving and become a pro at it when they need to really be a pro at investment management, asset allocation and customer relationship development. We really sort of say recognize that charitable giving is a massive part of the economy. It's a really important way to create tax credits and tax effectiveness for clients, and it's a big part of what gives people meaning and purpose in life. So in the same way that you help them with vacations and retirement, help them with charitable giving. 

James: [00:04:17] Now, charitable impact recently reached the $1 billion milestone, so congrats on that. But we have a looming recession, arguably, and historic inflation rates. How do you think that will impact charitable giving? Do you anticipate a decrease, for example. 

John: [00:04:34] Charitable impact. First of all, reached the $1 billion mark as Canadians are generous and we provide provide a fantastic service to help them become better donors. Right. So when you see economic headwinds, whether it's inflation or recession or these types of things, tough capital markets like the what we're seeing in today's environment, there's two ways to answer the question. Unfortunately, it's not going to be a super clear one on the one hand. Right. There's less reason to give. Maybe there's less capital gains in the market. You're feeling more poor. You're thinking maybe a bit more about yourself. That's one reason that can or reasons that can lead to declining engagement with charitable giving from donors. On the other hand, however, when there's recession and inflationary pressures that that make it harder to to live a particularly on the margins of society. You know there's it's more clear that relieving poverty is important, that helping people who can afford to do advance their education is important to help the sick, who can otherwise provide for themselves is absolutely critical. And we live in this world where climate change is constantly a part of our everyday dialogue. So the question is not it doesn't lead to a clear answer. But for people who sort of get fearful and retrench in times of recession or inflationary pressures, those are the types of people well who won't give as much. For the people who lean in and say, this is a time for me to do more with the abundance of assets that I have. Those people end up giving more. As a historical note, giving does come down a little bit. Historically, when you look at the data with with giving, with recessionary pressures, but the numbers aren't substantive, right? So it's not an area that is as cut and dry as I'd like it to be, to give you a shorter answer. 

James: [00:06:31] No, that's a great answer, John. So just moving along. What do you mean when you say charitable impact? Is the donor advised fund for everyone? Aren't the AF's for the wealthy? 

John: [00:06:42] No. Donor advised funds are not for the wealthy. That's a construct of financial institutions, in my opinion, who think of donor advised funds only as asset gathering accounts. Now, there's nothing wrong with thinking about a donor advised fund or a private foundation as an asset gathering strategy. You do want to serve as a financial institution, people who care about charitable giving because it is an asset based economy. But and it's a big but. But charitable giving is for everyone. Everyone can be a donor, right? So when we talk about being a donor, advised fund for everyone, it's first and foremost about accessibility, right? Regardless of what charities you care about giving to, regardless of how much experience you have with charitable giving and regardless of how much money you choose to give away, charitable impact is a place that welcomes you and brings all the sophistication to you. Whether you're giving $100 a month in cash off a credit card or $100 million in private company shares, or $350,000 of publicly traded securities or $50,000 worth of Bitcoin. Right. So it's really. It's really about saying everyone can be a donor, everyone should be a donor. And we welcome you at Charitable Impact, regardless of how much money you choose to give away. You know, one anecdote, just for what it's worth on this, you know, Bill Gates, who is known to be a big donor, didn't start out a billionaire. Right. So it's really, really important that we don't look at like kids, for example, and people who have less money today and say, well, no, sorry. Like you can only participate in creating change in the world if you if you have lots of money. Right. It's not like only people who are rich are allowed to vote. Right. So donor advised funds are simply should be simply looked about at as bank accounts strictly for charitable giving. Right. Something that's like a bank account for charitable giving. And banks provide bank accounts to everyone in the hopes that one day, if they're interested in asset gathering, that they go on and do more and more transactions and they go and gather more and more assets over time. And that's the way we encourage investment managers and bankers of any kind to look at the charitable economy. You've got to develop donors in the same way you have to develop financially literate human beings. So critically important that donor advised funds are for everyone, regardless of where you are in your charitable giving journey at the beginning, in the middle or at the end. 

James: [00:09:25] Excellent. Thanks, John. Now, just tying all this together, what do you see the role of charitable giving in Canada's wealth industry? 

John: [00:09:34] First of all, it's really unfortunate that there's nowhere to go to get objective giving advise. I mean, it is worth calling out that you can't just walk into your financial institution of choice and get help with your charitable giving. Right. And that's really different when you think about a savings account or a mortgage. Right. So one of the things charitable Impact does as an independent donor advised fund who's not bank affiliated, is we go to the banks and the investment managers and say, Hey, you can use our tool to help your clients with charitable giving. So message number one is particularly the investment managers get in the game of helping your clients with charitable giving, whether it's to help them save money with tax or to help them create meaning and find meaning and purpose in their life by helping them give back. The reality is that for most people, those two things come together. The more tax effective giving is, the more impact you can create on the ground in the communities you care about. And that then leads into maybe a more wholesome, focused answer for your question, which is the role charitable giving place. Charitable giving is a massive part of the Canadian economy, right? There are four major charitable heads in Canada just to run through to give you some sense of how broad charitable giving can be. Anything that advances education is charitable. So you care about your schools, you care about teaching kids, basically, or adults anything. It can be charitable at law, advancing religion, your church, your mosque, your synagogue. It's all charitable, right? Relieving poverty. Anything to do with helping relieve poverty ends up being charitable. The fourth head is basically anything that the courts have said is charitable. This is where art falls in, you know, environment, etc., etc.. So what Canadians need to understand is that the stuff they care about change in the world in the vast majority of cases can be changed in part through charitable giving, giving time and giving money to registered charities. And that's what they need to learn, right? What we don't need to teach Canadians is about generosity. What we do need to teach Canadians is how to go about getting engaged with your time and money to spend on the things you care about. And this is where investment managers can fit in to say, Well, I can't tell you what church to go to or what's the best university. Even though the university they went to, I'm sure is the best. What they can do is they can say, Look, I can help you with our affiliation with charitable impact. I can help you give assets away super tax effectively. I can help you manage those assets, you know, after the tax receipt until you're really ready and confident in what charities you want to give to and then it's on to you. And charitable impact makes it super easy for you to find and give to those charities. 

James: [00:12:41] That wraps up another WPTV special. Thank you so much, John, for joining us and sharing your insights into charitable giving. 

John: [00:12:48] Thank you for having me. Thanks for focusing on the topic. It's really important to me and to Canadians. 

James: [00:12:54] You can find more information on John and his team at charitableimpact.com and don't forget to check wealthprofessional.com for all the latest news and views on the industry and if you haven't already, feel free to sign up to our free daily newsletter. I'm James Burton. Until next time.