- Philanthropic advisors can help donors with planning, coordinating family members, finding the right charities and assessing the impact of charitable gifts.
- As your ability to give grows, so may the need to enlist a philanthropic advisor.
- Experience, focus, chemistry and reputation are some key factors to assess in a philanthropic advisor.
We’ve seen the Super Rich (those with a net worth of $500 million or more) regularly tap the expertise of philanthropic advisors—often for guidance when it comes to effectively running private foundations with sizable assets. Today, however, philanthropic advisors are increasingly partnering with wealth managers who serve individuals and families that don’t have tens of millions of dollars to donate to their favorite causes.
That’s good news. It means you may be able to take advantage of the benefits that philanthropic advisors can potentially deliver—even if you’re not astoundingly wealthy.
With that in mind, here’s a look at what philanthropic advisors do, how to decide whether to include such a professional on your team of financial experts, and what you and your primary wealth manager should look for when selecting one.
What a philanthropic advisor does
Philanthropic advisors can serve in a number of roles when it comes to helping people become more effective donors, depending on an individual’s or family’s specific goals. Some examples of these roles are:
- Planning and strategy design. Philanthropic advisors can help charitable donors (and would-be donors) identify their philanthropic values, establish an overall mission for their charitable giving, and create specific giving goals that support the values and the mission. In effect, they can help donors build a framework for their giving.
- Family support. Philanthropic advisors can help coordinate and balance the often diverse (and sometimes conflicting) charitable interests and goals of family members—including multiple generations. These advisors tend to be adept at facilitating family conversations about wealth, inheritances and giving back. Armed with clear expectations and an agreed-upon vision of what philanthropic giving should look like, families can often magnify the overall impact of their giving while fostering stronger family harmony.
- Charitable organization identification. Even after one’s charitable goals are clear, it can be challenging to find the “right” specific charitable organizations to fund. Philanthropic advisors can help donors home in on nonprofits and even specific projects that are ideal matches for the philanthropic mission those donors want to accomplish. These advisors can also get involved in vetting the organizations. In some cases, philanthropic advisors possess specialized expertise in specific areas of giving (social justice, women and girls, environmental concerns, and so on).
- Giving vehicle identification. There are numerous ways to implement planned giving—and as your philanthropic goals and wealth expand, those options can become more complex to navigate. Should you establish a donor-advised fund, a private foundation—or perhaps both? Does it make sense to donate cash or would it be better to gift property (real estate, art, etc.)? A philanthropic advisor can help select the most appropriate giving methods.
- Outcome assessments. Philanthropic advisors can help donors determine if their gifts are generating the results they hoped to see (and that the charities themselves may have pledged to accomplish). These insights can help donors better decide whether to keep funding an organization—or seek out a different charity that may be more effective.
- Coordination with other professionals. Philanthropic advisors regularly coordinate their efforts with the planning done by wealth managers, trust and estate attorneys, and other financial professionals. Working in concert, these various advisors can develop comprehensive strategies that potentially help donors give in ways that are both highly effective and highly tax efficient—and that balance charitable intent with other key financial goals they have for themselves and their families.
Do you need a philanthropic advisor?
Despite the many benefits that philanthropic advisors can bring to the table, not everyone needs to work with one. Here are some questions to ask yourself—along with your primary wealth manager—that can help you decide whether your situation could potentially be improved by enlisting a philanthropic advisor’s help.
- How important is charitable giving to you and to your overall wealth planning? If you regularly donate small sums to one or two charitable organizations you trust and are highly familiar with, you may be well served by continuing on as you have been. But if your charitable aims are more complex or ambitious—or if you’re just not certain about the best way to “raise your charitable giving game”—it may make sense to enlist a professional who focuses on helping people maximize charitable impact. Likewise, if you have significant wealth to give away, you might want some help thinking through your options and developing a formal plan—particularly if you are being solicited for donations by multiple organizations.
- Are you (and relevant family members or other decision-makers) open to accepting advice and recommendations? To work productively with a philanthropic advisor, you need to be willing to hear the advice and recommendations he or she provides and act on them. This becomes especially important if there are multiple decision-makers involved in the giving process—such as family members or board members (if you’re part of a private or corporate foundation, for example). Stakeholders must be in sync about the need for a professional advisor and the role that advisor will play—and ready to engage with him or her.
- Do you lack the time or expertise to pursue your charitable goals to the extent you’d like to? Charitable planning can become as time-consuming and complex as advanced financial and estate planning. Donors and other stakeholders may need to identify their giving goals, find and vet specific charities, determine the best types of giving vehicles based on their goals and their finances, track the progress of their donations, and take other steps that can eat up a significant number of hours. Even if you enjoy getting “in the weeds” with philanthropic research, you may not possess enough expertise to tackle all the necessary tasks as well as a professional could.
- Has your ability to be charitable grown recently? Baby boomers are expected to pass along $32 trillion to Gen Xers over the next 20-plus years. That means many heirs will find themselves receiving a financial windfall—giving some of them a greater ability and a stronger motivation to make charitable gifts. If you’re faced with a large influx of assets, a philanthropic advisor could be useful in helping you gain greater clarity around issues of giving as well as in showing you new options and ideas that weren’t available to you previously.
- Are you struggling to identify the “right” charitable organizations or assess the impact of your giving? If the sea of charitable organizations has you experiencing analysis paralysis, it may make sense to enlist a professional who has a deeper understanding of an issue that matters to you as well as tools that can help uncover organizations that are the right fit for your goals and giving plan. As noted earlier, an advisor also can leverage relationships to “dig in” and evaluate whether the money you give is getting the results you expect.
If you and your primary wealth manager think it’s a good idea to enlist a philanthropic advisor for help, the next step will be to identify one who is a good match for you and your charitable goals.
The good news: A growing number of wealth managers are including philanthropic advisors as part of their network of experts these days—so there may be a high-quality philanthropic advisor at the ready.
Regardless, there are a number of key factors that should be at the top of your list when sizing up philanthropic advisors.
- Experience and focus. It’s good to see a philanthropic advisor with an extensive track record, of course. But it can be equally important to determine whether the advisor has experience in the specific areas of philanthropy that you want to pursue—which could potentially range from entirely local concerns to major international challenges. Keep in mind that the best advisor for you might not be the biggest, but rather the one that has extensive expertise in the type of issue you most want to tackle through your giving.
- Reputation and relationships. One way that many philanthropic advisors add value to donors’ lives is through their ability to bring like-minded philanthropists together and connect them with specific projects and opportunities. Building these bridges requires an advisor who has a rock-solid reputation in the charitable planning world and who has created strong relationships with influential people and organizations. Getting references and case studies about an advisor’s past efforts can help your assessment here.
- Chemistry and trust. Even the most technically skilled philanthropic advisor may not be helpful to you if you don’t “click” with each other. As is the case with any professional you rely on for help with crucial issues, there must be chemistry and a willingness to be open and honest with each other. The human element must be present—that is, a philanthropic advisor needs to demonstrate that he or she wants to understand you and your family (and any other stakeholders) at a deep level. Remember: Your charitable giving is about much more than assets—it’s about your values and even your identity.
If you have ambitious charitable goals, it probably makes sense to consider including a philanthropic advisor as part of your wealth management team. Working with a dedicated giving professional could potentially empower you to have a bigger impact on your favorite causes than you ever thought possible.
Securities offered through LPL Financial. Member FINRA / SIPC. Investment advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. NewEdge Advisors, LLC and Congruent Wealth, LLC are separate entities from LPL Financial
VFO Inner Circle Special Report By John J. Bowen Jr.
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