Professional advisors often play a crucial role in facilitating a donor’s charitable intent. These trusted advisors – attorneys, accountants, financial advisors, wealth managers, bankers and trust officers – are often the first to learn of a client’s interest in making a large gift, and have a great deal of influence over the entire process.
It is not uncommon for individuals and families to select advisors who ultimately serve them for the long-term, sometimes for multiple generations. Over time, close relationships are formed with these trusted advisors as intimate details are shared about their financial lives, business transactions, family dynamics, and personal values. This relationship and the details of their client’s life are all relevant in helping the advisor engage in effective gift planning for their clients.
Importance of Working with Advisors
For any nonprofit seeking to develop their giving base among individual donors, it is not possible to overemphasize the importance of working with advisors. When clients are planning to make making major decisions (personal or business), they will typically consult with their advisors about the long-term financial impact of these decisions. Other times, the advisor may initiate a conversation about giving after determining that charitable gift planning may minimize taxes, or further a client’s personal goals.
Values-based planning, where an individual client’s values drive the investment and estate planning decision-making, is an approach being employed by more advisors because it enables them to develop closer relationships with their clients. As a result, more and more advisors are referring new donors to charitable organizations or including some philanthropic component in the client's plans. In a recent national survey, 78% of affluent donors (those with estimated net worth $5 million or more) reported that their professional advisors played a significant role in motivating and assisting them to make a major or deferred gift (see previous post: High Influence Donors, Multiple Gifts & Planned Gifts).
Professional Advisors with Asian American Clients: The Challenges
In addition to the opportunities, there are many potential challenges for trusted advisors.
1. Lack of Expertise. In their estate and financial planning practices, professional advisors routinely encounter clients who have tax issues and are charitably inclined, and thus open to the idea of making a gift to a nonprofit. But not all advisors possess the resources or technical expertise required to facilitate their client’s intent. An expert accountant or auditor is not necessarily an expert on establishing a family limited partnership; an attorney with a focus on estate planning does not necessarily know all there is to know about making gifts of company stock, or real estate.
Some advisors, because they are unfamiliar with charitable giving options, are reluctant to discuss philanthropy with their clients, and may even steer the conversation away from this area because of their own discomfort. In this case, the best outcome would be for the advisor to collaborate with other advisors to assist their client. As a nonprofit, being known in your community’s advisor network will build trust and improve your credibility. And having a relationship with a number of experts to whom you can refer an advisor will eliminate the lack of expertise as a challenge.
2. The Nonprofit Recipient. Some advisors with clients who wish to give to local or domestic charities, may not be familiar with all the different nonprofits working in a particular Asian American community. Other advisors have clients who wish to direct their giving overseas, and find that there are additional tax and legal hurdles. In both instances, a prospective nonprofit recipient can distinguish itself and increase the likelihood of receiving a gift by serving as a resource to the advisor community. The better informed advisors are about the organizations operating in their community, the easier it will be to have conversations with clients about becoming donors, and the more likely it is a gift will result. One way nonprofit staff can help advisors help their clients is to provide them with information about flexible ways to structure gifts, not just their programs and their areas of financial need. This requires some technical skills and basic knowledge regarding tax issues, legal implications, and investments, or the ability to find this information readily.
3. Complex Gifts. Another challenge advisors face is a reluctance to help a client direct a large or complicated gift directly to an organization because the advisor questions the charity’s ability to manage and steward such a gift. This is a relationship issue. Perhaps what the advisor needs is a one-on-one with the board chair or executive director to establish a continuing relationship to build trust. In the alternative, there are numerous, flexible ways to structure a gift that eliminates this issue, including the use of another organization to facilitate these gifts.
It is not at all uncommon for the staff at Asian American nonprofits not to know how to work with these prospective donors, or their professional advisors (see previous post 5 Challenges in Working with Asian American Donors). Therefore, we must encourage nonprofit staff to learn more about planned giving and how to respond appropriately to questions from advisor or donors. Finally, if you decide your organization needs to do more to promote its work to the trusted advisors and networks in your community (and we at Asian American Giving believe it’s a necessity), please remember two things: 1) Asian Americans do not work only with Asian American advisors – be sure to do outreach to non-Asian advisors, and 2) Asian Americans are not the only ones making gifts to Asian American nonprofits.
- Dien S. Yuen
Photo courtesy of James Jordan
