Clients misled by wealth needed for philanthropy

There are misconceptions around philanthropy as clients are unsure if they have enough money to make a charitable gift or legacy.

Speaking at the Institute of Managed Accounts Professionals (IMAP) Independent Thought conference in Melbourne, Caitriona Fay, managing partner of community and social investment at Perpetual Private discussed how advisers could discuss philanthropy with their clients.

In her role at Perpetual, she oversaw $100 million distributed annually through philanthropic trusts, estates and endowments. She also worked with the advice industry to support them on engaging values-based, philanthropic conversations with their clients to encourage the next generation.

There could be an unwillingness to speak to clients about wealth transfer and few clients had a full wealth transfer plan in place, despite there currently being the largest intergenerational wealth transfer in history.

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The biggest misconception among clients, Fay said, was that people thought it was only an option for billionaires.

“The biggest misconception is people think they don’t have enough money.

“Individuals think it is only for billionaires but philanthropy can be accessible to anyone, it is about being thoughtful with your giving which is where the adviser can be critical.”

Philanthropy could be done by choosing organisations that supported clients’ values and were well governed, using a charitable structure that reflected the size and purpose of the gift and ensuring the relationship worked for both parties through communication, involvement and tax-effectiveness.

Questions that advisers could ask clients to determine their views included:

• What would they like to improve in the world?;
• Had you or a family member been affected by illness that could be supported by research?;
• Do they want a fairer and safer world?; and
• Did they want to work with disadvantaged and disempowered?