By Elliot Dole, CFP
There are varying opinions on what drives planned giving and what keeps wealthy donors from giving more. There is also data, some of it based upon a study from The Philanthropic Initiative and U.S. Trust into those who give the most (and most often). The study was performed in 2013 and again in 2018 with basically the same results.
High-net-worth donors report that they give because they are passionate about a cause, have a strong desire to give back, and want to have a positive impact on society and the world.
The study also reports why philanthropists say that they don’t give more. These reasons, perhaps some of which will sound familiar to you, include:
1. They don’t feel connected to the charity.
2. They are afraid their gift will be wasted.
3. They fear the organization will just ask for more.
Notice that none of the preceding reasons are a fear that they won’t have enough or that their kids won’t inherit enough. Financial benefits, like potential tax breaks, tend to be a secondary driver of giving decisions and such financial and estate considerations are secondary factors in any reluctance to give more to charity.
Interestingly, the reasons wealthy donors identified for why they give less are different from the motivations their advisors ascribed to them – which primarily involved financial concerns. The study thus acknowledges something you may already have felt: a pretty serious disconnect in the philanthropic space that amounts to important qualitive obstacles to making larger gifts to the causes you care most about.
Clearly, then, your effective charitable giving strategy must do more than successfully navigate the notoriously complex set of rules and principles across retirement, income, estate, and tax planning. As a mentor of mine, Phil Cubeta, expressed so well, you must develop “roots” and “wings.” The roots go deep into causes, charities, faith traditions, family traditions, love and hope. The wings give expression to those values, allowing them to soar far and wide. A good charitable giving strategy encompasses both: the economy of love, grace and gratitude and positive results.
Perhaps that’s why about half of the wealthy surveyed for The Philanthropic Initiative and U.S. Trust study report a desire to involve children and grandchildren in family discussions about charitable giving.
According to the study, the use of structured charitable giving vehicles such as donor advised funds, foundations, charitable trusts, and gift annuities has increased since 2013 (32% in 2013 versus 43% in 2018), but don’t look to these giving tools to provide the enrichment you’re seeking.
In practice, effective and fulfilling charitable giving requires identifying and articulating connections between causes and family. That is a process. The way it takes shape varies for different people. You must ultimately understand and express what forms your connections, feel understood by the organizations, and know that giving pathways are well aligned with your perspective and intention.
What can you do to develop your charitable giving plan? Make it your primary goal to discover and communicate explicitly what is implicit and inherent in your thinking. Be prepared to share this self-knowledge with charities. Involve multiple generations of family. Develop your legacy plan and involve charitable giving in your wealth transfer plan.
You can break new ground by having more qualitative discussions about your giving and your family history. This starts with having a conversation about your most important goals, values, heritages and legacy.
About the author: Elliot Dole, CFP®, EA, AEP®, CExP™, CAP®
As a Wealth Advisor with Buckingham Strategic Wealth, Elliot Dole, CFP®, EA, AEP®, CExP™, CAP®, helps families uncover their ideal vision for the future and then works with them to realize it through investment, tax, charitable, legacy, and comprehensive financial life planning.
Important Disclosure: The information contained in this article is for educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Individuals should seek advice from qualified tax professionals prior to implementing tax strategies. The analysis contained in this article may be based upon third-party information and may become outdated or otherwise superseded at any time without notice. Certain information contained herein is based upon third-party information and is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. The opinions expressed by featured authors are their own and may not accurately reflect those of the Buckingham Strategic Wealth®. IRN-21-1873
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