How to Have the Charitable Conversation With Clients Who Are Not Philanthropic

By Ken Nopar

Though over 95 percent of high-net-worth clients are generous in their support of various causes and charities, there always seem to be certain clients who just don’t seem to be interested. I’m often asked if there’s anything advisors can say or do to encourage these clients to become more active.

Many advisors have thought that clients aren’t more charitable because they’re concerned whether they’ll have enough money to support the lifestyle to which they’re accustomed, but past U.S. Trust studies have shown that clients don’t provide support to charity because they don’t feel connected to the organization, think that charities may misspend their money once donated, or believe that they’ll be frequently solicited for additional donations.

The frustration expressed by many advisors is that they know these clients have plenty of assets and that even a small portion that’s donated can make a difference and help these clients feel a great sense of pride, satisfaction and fulfillment which in turn can help create a legacy. These philanthropic efforts can even help unite their families for many years to come.

Strike a Chord

These clients may have always been fortunate and never experienced hardship or heartbreak, but we’ve all seen how lives and circumstances can change quickly.  Initiating one conversation with clients probably won’t immediately turn these clients into generous philanthropists, but repeated discussions with them over time will strike a chord at some point in their lives when they’re subjected to an unfortunate situation with someone in their own household or a valued employee, colleague or friend, while they’re on vacation in a foreign land, or even when they see something on television or the internet. 

Engage Clients

But the question remains, how do you engage in the charitable conversation with clients who aren’t philanthropic and may have:

1. Inherited great wealth
2. Worked hard at building their own businesses and haven’t had time to think about how to support nonprofits
3. Never married or had children
4. Never wanted to spend time thinking about what to do with their wealth after their death
5. Expressed a desire to avoid paying many taxes and leaving much money to heirs
6. Stated that they really don’t care what happens to their money when they’re no longer living

Many advisors succeed in starting the conversation by sharing that they can only provide the best financial, tax or legal advice if they know what clients want to do with their assets both during their lifetimes and after their deaths. By explaining the three options of leaving money to government, heirs or charity, clients realize that they have to make a choice or the government will take as much as they’re entitled without the proper planning. And as is often the case, when clients state that they don’t want the government to decide what to do with their money, and perhaps they don’t want to leave all or any to their family or others, then charity becomes the beneficiary that they choose.  

Questions to Ask

At this point, advisors can ask some of the following questions:

1. Is there anything you want to do to honor people, organizations or institutions that have been important to you? 
2. Are there certain geographic areas that have been important to you, your family or your business?
3. What has had a significant impact on your life?
4. Are there any family members, colleagues or friends who you admire and are very philanthropic? Would you be interested in supporting some of the causes and charities that they support?
5. Is leaving a legacy important to you, and if so, what type of legacy would you like to leave?
6. In your estate planning documents, have you named any charitable beneficiaries?
7. If you had unlimited wealth, are there any problems in society or the world that you would want to fix?
8. Do you have a desire to become more involved, but are concerned about the complexity and responsibility of donating money or possibly running a private foundation, the costs of doing so or the time that would be required? (They may not be aware that there are now over 300,000 donor advised funds (DAFs) that are very simple to use, inexpensive and used by people like them.)
9. Do you need any help in getting started or having a gatekeeper so you aren’t solicited for many donations? Are you concerned that charities may not use your generous contributions wisely? (There are philanthropic advisory firms that do this work if your firm doesn’t and can complement your own expertise. Some DAF sponsors have programs to help pay for some of these advisory services.)
10. And if there’s still little interest, the question that often gets clients onboard is: If you could only choose between leaving your money to the government so it can fund all of its programs or giving money to charities of your choice, which would be your preference?

And if there’s no interest, share that there have been other clients with similar thoughts, but it has been helpful to them when you’ve had the discussion again in the future because circumstances do change over time.

Beneficial Conversation

In the end, this conversation is beneficial to clients, you, your firm and society on the whole. Clients aren’t aware of options that can enable them to have an impact, keep their families united, or provide a positive feeling of accomplishment. Not everyone will be interested, but it’s certainly worth the minimal amount of time and effort to begin the conversation. The rewards will be many to your clients and to your own practice, as this can deepen and expand relationships and lead to additional opportunities.

(This article originally appeared in Wealth Management, July 23, 2018)

At American Endowment Foundation, we look forward to helping donors and advisors determine the best strategies for their charitable giving. Please contact us or call at 1-888-966-8170 with any questions.