IFAs need tools to give good philanthropic advice

IFAs need tools to give good philanthropic advice

Expert opinion

Training in Philanthropy for Professional Advisor's is vital for them to meet their client's needs - Sylvia Brown, Founder of Think Giving, and philanthropist, explains why in this article published in the FT Adviser. 

Financial and legal advisers face a quandary…they are encouraged to offer philanthropy advice as part of financial planning to foster stronger client relationships; yet most lack the training – let alone the time – to discuss much beyond basic tax principles, such as the Gift Aid rebate.  Charitable giving is an emotionally charged activity which can lead to tremendous satisfaction if enough time is invested in the process - time that advisers simply cannot justify spending on most of their clients, except the very wealthiest.  And even in private banks, philanthropy advice often is available from just one, overworked specialist.   

Discussing philanthropy is undeniably good for the advisory business.  But studies in the US and UK also show a glaring disconnect between how advisers and their clients view the experience.  Clients feel their advisers over-emphasize the technical (legal and tax) aspects of giving, rather than provide guidance on the “personal” (such as choosing a cause or selecting a high performing charity to support). Advisers misperceive their clients’ hesitation to give as being wealth related, when in fact the clients say it’s lack of knowledge.  In a US Trust study, two-thirds of clients who discuss philanthropy with their advisers want “to learn more” but are given inadequate resources; only 27 percent feel their advisers are “very capable” to recommend charities.  A majority of clients want their advisers to assist with philanthropic decisions, but only a tiny minority feel their advisers know how to "give to make a difference."  

Donors large and small all ask the same question: “is my donation making a difference?” And yet, the very individuals who spend hours online researching a holiday, a new car or an insurance policy will spend less than 15 minutes investigating the charities they support.  When queried, they care deeply about the impact of their gifts but do not bother to seek out high performing organisations.  Their giving is strongly influenced by recommendations from friends and family, rarely by comparing charities doing similar work.  In fact, they would welcome a TripAdvisor or Yelp that ranked Britain’s 166,000 charities according to a star system. 

A truly fair and accurate rating system for the entire charitable sector probably never will exist – metrics are too varied and evaluation capacity is too weak, particularly in smaller charities.  Many charities communicate their impact poorly.  And all the while, donors’ desire for instant answers is compounding their disappointment.   

The solution is for advisers to give their clients simple, practical tools to make their own thoughtful and effective giving decisions.  This is the best way to ensure donor satisfaction (and a grateful client to boot).  Indeed, brain-imaging technology shows the midbrain lights up when people donate to charity, the same area of the brain linked to cravings (such as chocolate or sex) and pleasure rewards.  When gifts are spontaneous or ad hoc, this “warm glow” dissipates after about two hours.  However, when donors spend even a little time planning their giving, satisfaction levels improve by almost 50 percent.

Some wealth advisers currently offer their clients access to virtual financial literacy courses, which require no staff time to run and are inexpensive to produce. A similar virtual donor education course that is both informative and emotionally engaging (not more PowerPoints and talking heads), practical and specific, providing both concrete case studies and personalized guidance, could generate outsized returns in client satisfaction. 

Producing just such courses has been the focus of my philanthropy for the past three years.  Rather than focus on a specific cause such as climate change or women & girls, I have chosen to leverage my skills and experience to help others give more thoughtfully and effectively – particularly individual donors who make giving decisions without the support of foundation staff or philanthropy consultants.

In both the US and UK, my research on small and midsize donor behaviour has revealed the crucial role of personal recommendations; so who better than a trusted adviser to educate clients on their charitable giving?  But my many conversations with advisers have also highlighted their time and budget constraints.  To solve this issue, I have created virtual, self-directed three-hour courses that provide clients with the detailed personal giving roadmap they seek, while requiring minimal investment from their advisers.   In the US, they are available under the “Smart Donors… Make a Difference” banner; in the UK, the label is “ThinkingGiving.” Some advisers simply hand their clients access to the course, others use some of its videos in webinars – all reap the benefits of an informed philanthropic conversation.      

This article also appeared in the FT Adviser you can see the article here https://www.ftadviser.com/your-industry/2022/05/06/ifas-need-tools-to-gi...

This expert opinion is tagged under:

  • Civil society
  • Donor stewardship
  • Family philanthropy
  • Impact measurement
  • Philanthropy Advice
  • Promoting philanthropy
  • Understanding philanthropy
  • Women's Philanthropy