I was pleased to attend the Chartered Institute for Securities & Investment (CISI) Financial Planning annual conference in Birmingham at the beginning of October 2018.
The content was strong and one presentation on philanthropic giving particularly struck me. The focus was on charitable giving and the engagement process that many clients experience in their journey to giving.
Most of our clients have made wills. This is a cornerstone of financial planning with some leaving gifts in their wills to charity. More on this opportunity can be found on our website here: blog/a-taxing-topic-iht-and-your-estate
In some instances, particularly for those who do not have direct descendants, leaving an entire estate to a charity or to various charities is not uncommon. However, for some who have excess income, there is the opportunity to gift money away while they are alive, whilst still having sufficient for their needs, both now and into the longer term, even if changes such as long-term care are required. This opportunity can afford some the real benefit of seeing their money make a difference now, rather than after their death.
One question is whether the charities that are noted in a will have been researched carefully to ensure that they are associated with causes close to the client's heart, or whether the selection has been less thoroughly planned.
The first important point raised was that some individuals do not experience a journey, indeed feeling that their planned giving, whilst alive or through their will, does not provide a sense of fulfilment. So, what should you consider if you are interested in gifting to charitable arrangements, either directly or through other models, such as Community Foundations, which aim to inspire local giving for local needs. Out of interest, Surrey has its own Community Foundation and more details can be found here: cfsurrey.org.uk
Four key points were noted in the drive to encourage donor giving and these are detailed below:
1. Start with the client donor
This appears obvious; however, it is important to identify what they actually want to give.
Of course, many would head for the expectation that this would be money, but it may be more than this, for example their time, their business knowledge or a combination of all or some of the above. Finding this out is the start of the process of understanding why someone wants to give back, either to a specific charity or to a community or a cause.
The planned size of any gifting may have an impact on the plans you finally implement, and how any recipients may respond to the process. It is sensible to document this gifting, and its timeframe, in whatever form is agreed is worthwhile in creating a plan with the client for the future.
2. What is the difference that they want to make?
What does the donor want to achieve and why? Motivation is usually passionate and might be reached at a point when another life event occurs, such as an inheritance or a sale of a business.
Understanding the client's motivations here is key in aiming to reach their long-term objectives. What change would they want to see if it's a local cause, or if it is a larger charity, what identified project could they help towards?
There may be tax breaks for making gifts to a charity, such as a nil tax charge for inheritance tax purposes, but many of these gifts are not focused on the tax advantages, rather the tangible benefits that can be made to a charity in its work.
3. Tailor the plan of gifting
Agreeing the timing and size of gifting should be detailed carefully. Large amounts might be split over two or three years as an example, to fund an agreed project with a charity to make a real difference.
It is important to research possible partnerships that might be available from other individuals or organisations in joining together to create a greater fund to meet a greater need. Examples might be matched funding opportunities that could see a significant enhancement to any planned and agreed gifting.
Some donors might also be interested in impact investing for a charity, i.e. smaller gifts specifically targeted at particular needs within a charitable organisation to have a tangible impact on the outcomes. We are sure that most charities can identify opportunities that can make a real difference in a specified timeframe. Possibly very satisfying for the donor.
There are other ways of gifting that can make real differences, with beneficial loans and grants as examples, although each opportunity should be researched carefully, and a documented plan drawn up, before proceeding. There are likely to be advice and implementation costs which will also need to be considered carefully to ensure that these do not inhibit the advantages of giving.
4. Make the engagement work for the donor and the recipient
This is the last of the four points, but no means the least in importance.
Donors may want feedback for any agreed programme implemented, and if this is a staged programme of gifting, they may want regular updates on the progress that their gifting is facilitating, along with any partnership giving, and how this is making a real difference to the cause they have championed.
The issues raised within these four points could be endless; however, I hope that the outline above provides some food for thought.
My thanks go to Tom Murray at Charityflow.co.uk for his excellent presentation on this topic at the CISI financial planning conference.
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