A FA’s knowledge of charities that they find by encountering their communities, through advising clients or by their own public service, would be a boon to any client looking to make a charitable impact. But when coupled with analytical training and a long practice of developing strategies, FAs are helping clients make even more of an impact than they would on their own.
Recently, we’ve discussed the long conversation Financial Advisors may be having with their clients who want to step in and help their local economies suffering in the wake of the pandemic. We discussed how job security, family financial security and long-term plans needed to take priority. We also discussed emotional investing and its role in a client’s decision to direct more of their income or assets towards charity. Now, as the pandemic moves into its continuing phase and life gets slightly back to normal, we can look back and see that clients really did move more of their treasure towards charity. As philanthropic software giant Blackbaud recently stated in its study charitable giving was up 8% last twelve months.[1] “Additionally, charitable giving experienced a 17.1% increase in online fundraising in the past 12 months ending in September 2021 compared to the previous 12 months ending September 2020.”[2] In the wake of the increased giving, it might be helpful to think about how financial advisors are a major part of this trend.
According to the American College of Financial Services, financial advisors play five key roles in charitable giving:[3] they help clients maximize philanthropy; they help clients shape their charitable goals; they connect clients to charities in their communities; they incorporate giving into long term financial plans; and they cheerlead client’s big ideas. In short, a financial advisor’s training in identifying goals and finding key themes and elements helps plan effective strategies for clients for charitable impact, in ways clients might not be able to assess themselves.
Financial advisors have one other quieter impact on charitable giving: they are incredible community partners. Recently, FAs have begun to take more of a role in their communities in political and civic engagement.[4] FAs may get kudos for how they sponsor little leagues or help sponsor individual charitable events, but that’s not the whole of it. FAs often help nonprofits by serving on advisory boards and acting as trustees. They frequently provide free training to nonprofits in fiscal planning and understanding complex investment products, like donor advised funds and family foundations and trusts.
A FA’s knowledge of charities that they find by encountering their communities, through advising clients or by their own public service, would be a boon to any client looking to make a charitable impact. But when coupled with analytical training and a long practice of developing strategies, FAs are helping clients make even more of an impact than they would on their own.
Financial advisors also know other professionals in their field who work directly for nonprofits and higher education institutions. Many nonprofits rely on FAs to run their planned giving (estate gifts) departments.[5] That cross over in professionals between institutions that have charitable needs and clients that have charitable goals can create a lot more options that an FA alone could.
To paraphrase FAs are not only doing well, but they are also doing good. As they continue to help clients meet their needs and hone in on completing their strategies, they are continuing to benefit their communities. From little leagues to universities, FAs a due a thanks from their grateful communities for their help meeting charitable needs.
[1] https://institute.blackbaud.com/the-blackbaud-institute-index
[2] https://institute.blackbaud.com/the-blackbaud-institute-index
[3] https://www.theamericancollege.edu/news-center/5-ways-financial-advisors-help-charitable-giving
[4] https://www.financial-planning.com/news/why-financial-advisors-are-running-in-the-midterms
[5] https://www.financialplanningassociation.org/learn/podcast/yafpnw-enhancing-client-relationships-through-charitable-giving
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.
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