PLANNED GIVING
Gift Planning and Professional Advisors:*
How We Can Effectively Work Together
A Presentation by Cindy Sterling, Washburn & McGoldrick, Inc.

Summary by Arli Epton
The above presentation occurred on April 21st, this past spring, at 3 West Club, where most meetings of the Planned Giving Group of Greater New York (PGGGNY) are held. Cindy Sterling is an associate at the above firm, a comprehensive development consulting company. Before becoming a consultant, Ms. Sterling served as director of gift planning at Vassar College for nine years. She possesses Chartered Financial Consultant (ChFC) certification and frequently speaks at various related conferences. She has also published gift-planning research.

*Some of the research herein results from the presenter’s informal qualitative interviews with advisors.

Ms. Sterling began her talk by pointing out that many donors often rely on their own advisors to help them make decisions about planned charitable gifts. These for-profit advisors then have a significant intermediary role in the not-for-profit sector. For example, such advisors influence how charitable institutions receive gifts--through private funds, financial companies’ gift funds, or through charitable remainder trusts, etc. According to PLANNED GIVING IN UNITED STATES 2000: A Survey of Donors (National Committee on Planned Giving, 2001), legal advisors were an important factor in making gifts for 12% of bequest donors and 48% of charitable remainder trust donors.

In addition, women are more likely to use professional advisors than men. For females, relationships with advisors are very important; women highly value trust. (Center for Women's Business Research 2002, Tracy Longo, "Women Sill Lag Men in Retirement Investing," FINANCIAL PLANNING, 1999).

According to research conducted by THE CHRONICLE OF PHILANTHROPY, Ms. Sterling said: most financial planners do not mention philanthropy to clients, because they feel it is inappropriate. Also, few advisors feel proficient in planned giving. And few advisors feel comfortable discussing a client's values or other philanthropic topics.

Planned giving officers can better assist advisors if they understand these advisors' priorities and concerns. Such advisors consist of lawyers, financial planners, and accountants. Some deal with high networth clients and others with middle-income clients.

There are some lawyers, financial planners, and accountants who proactively involve their clients in philanthropy, while others discuss it only if their clients mention the subject. If you are an advisor, you can evaluate whether a client can make a charitable gift by determining his or her goals. Then you must determine whether the client has charitable intent. Finally, you must determine whether they can afford a gift.

Frequently clients like control and don't like irrevocability. Sometimes clients want advisors to tell them why they can NOT make a charitable gift. To determine if a client can afford a life-income gift: calculate the client's living expenses, determine his or her income sources and calculate his or her total income, then project the cash flow resulting from a life-income gift. A charitable gift annuity, for example, could be considered part of the fixed income portion of a client's portfolio.

The following are reasons advisors might suggest charitable gifts: appreciated assets, diversification of assets or reduction of ownership in a company.

So what can the planned giving officer do to help the process? First of all, he or she must carefully match a donor's interests with a charity's project. And as we all know, relationships are key. Nonprofits can also offer seminars that focus on a donor's total financial situation and then demonstrate how charitable gifts can complement financial plans. A proposal to a planned gift prospect should include a financial analysis that explains the gift. It should also include illustrations and cash flow projections. The proposal should be sent to the donor AND to the advisor (with the donor's permission, of course).

Planned giving officers should not assume that financial advisors know everything about planned gifts. Officers should provide advisors with technical information, perhaps even citing IRS rules. They should offer the advisors sample forms, technical newsletters, and even offer seminars with CEU credits.

Surprisingly, many wealthy donors say that they do raise the topic of philanthropy with their advisors. And many of them wish their advisors were more knowledgeable about philanthropic planning, rather than just about tax planning or specific gift vehicles. Estate planners often focus on tax reduction because they are more comfortable discussing specific tax strategies than developing philanthropic objectives. It would be better for them to focus on client-centered values first, by developing goals and then describing the technical planning tools to make the strategies work.

Advisors have said that they'd like more planned giving how-to articles in their professional journals, educational materials on philanthropy to share with their clients, and peer-to-peer seminars that would train them on the subject. Sources for these are the National Association of Philanthropic Planners and the Planned Giving Design Center.

What can charities do to work better with advisors? Nonprofit staff members can talk with advisors who are affiliated with their organizations about how the charitable groups can best collaborate with them. Nonprofit staff can attend advisor seminars to understand the different perspectives. And they can provide advisors with appropriate educational information on philanthropy through seminars, newsletters, and websites--as requested above.