Five things professional advisers should know about charitable giving
If you have high net worth clients, it’s likely that many of them have thought about charitable giving or even setting up a tax-effective foundation. Maybe they have experienced a liquidity event or are keen to start building a legacy. Whatever the reason, if your clients have reached a stage where they want to be more intentional about their charitable giving, they will want your help.
Clients want to talk about philanthropy
Quite simply, your clients would like you to talk to them about giving. Research from the Queensland University of Technology shows an increasing expectation and demand among high net worth clients for philanthropic advice from their professional advisers. Older generations want to build their legacy and consider succession planning, while for younger clients, charitable and values-driven activities are increasingly important in their life. As their trusted adviser, they are likely to be looking to you to guide them.
It’s good for your business
As in the US and Europe, many wealthy Australians now take their philanthropy as seriously as their businesses, presenting exciting opportunities for many professional advisers. Having conversations about passions and values can strengthen and deepen your client relationship. That’s good for your client – and good for your business. The money set aside for giving in a private ancillary fund (PAF) is often invested in perpetuity, an ideal environment for long-term investing. The amounts involved are significant. For example, APS clients have committed over $2 billion to charity, most of which is actively managed and invested by professional advisers. Charitable giving can play a significant role in intergenerational wealth transfer. With an estimated $3.5 trillion transferring across generations in the next 20 years, many younger people will be looking for help growing, managing, and giving away their new wealth in ways that align with their values and passions.
Starting the conversation is easier than you think
You already talk to clients about a range of sensitive issues, such as estate planning and intergenerational wealth transfer. Discussing philanthropy deepens your understanding about what matters to your client and their family. It can also be an excellent way to connect families and ensure you remain at the centre of your clients’ financial goals.
Choosing the right moment to introduce the topic of charitable giving can make it flow more easily. Several situations could naturally spark a conversation about giving:
- A liquidity event, such as the sale of a business or property
- Writing or revising a will
- Developing a family charter
- A life event, such as retirement
- Year-end tax planning
There are philanthropic options for every client
Fortunately, there’s more than one way for a client to structure their giving; what is right for your client depends on their unique situation. APS can help you navigate this and ask the right questions.
The most popular options are private and public ancillary funds. These enable an individual or family to put aside money in a trust to support charities over the long term. It is possible to open a named giving fund (also known as a sub-fund) within the APS Foundation (a public ancillary fund), with $40,000. There’s also the option of setting up a foundation, or private ancillary fund (PAF), with more than $1 million. APS will establish and administer the PAF while you manage the investments. With either structure, your client receives a tax deduction for any money donated and can choose from over 25,000 eligible charities to support.
APS can help
As the trusted partner to scores of professional advisers across Australia, APS works with advisers on behalf of their clients to set up and administer their charitable giving. We make it simple for advisers and support you and your clients every step of the way.
If you have clients who are interested in charitable giving, please get in touch with the experts at APS. Call us on 02 9779 6300 or reach us via email.