How financial advisers can play an important role in philanthropy

Craig Connelly Fri, 12 May 2023

For any financial adviser who wants to provide the most holistic service for clients today, learning more about philanthropy is an essential skill. As we move toward the end of the fiscal year and people are thinking about strategies to minimise their tax liability, there will be a natural interest in advice on charitable giving. 

Philanthropy Australia’s recently launched Professional Adviser Guide to Giving is an essential tool for financial advisers looking for an opportunity to deepen their relationship with clients at a time when they might assist them consider tax minimisation strategies. 

This might be simple tax-deductible donations, or it may involve the establishment of a philanthropic structure that requires a formal giving strategy to be implemented. 

The obvious tax benefit of establishing a suitable philanthropic vehicle is often a transactional time-limited matter that occurs around an event that realises a substantial taxable gain for an individual or a family or may be triggered by retirement or the receipt of a large inheritance or other changed life circumstances. 

From a philanthropic perspective, that is literally the start of your client’s journey, offering a savvy and engaged financial adviser an opportunity to extend the relationship with your client and establish a relationship based on trust that goes well beyond your ability to deliver reasonable investment market returns. 

Being proactive and raising philanthropy with clients is worth considering before the life event occurs that might trigger an active engagement on the subject. Planting the seed by adding the practice of philanthropy as a standing item on the agenda when meeting with clients, mean that when they experience the event, you are the person they naturally reach out to as they seriously explore their philanthropic options. 

There is a substantial body of evidence, including a recent US study, Philanthropy in Complex, Multi-Generational Families, published by the National Center for Family Philanthropy, which suggests the five benefits for your client to effective philanthropy, include cementing family values, family connection, shared purpose and skills transfer, shared understanding, and effective engagement and succession planning. 

By raising philanthropy periodically, your clients can consider simple tax-deductible donations each year as a tax-planning strategy, but you can elevate the conversation to include relevant material that starts to consider the above five benefits of effective family philanthropy. 

Multi-generational family financial planning 

By extension and, over time, this will ensure you will start to engage with your client in multi-generational family planning, further deepening the relationship and, if done well, cementing an adviser’s place as a trusted consultant to a growing family. 

Financial advisers need not be the expert in all things though. There are many philanthropic advisory firms in Australia ready and willing to support advisers in their role, providing quality assistance as a client works through their values, their beliefs, their attitude to giving and a strategy to amplify and evaluate the impact of their own philanthropy. 

Philanthropy Australia’s Professional Adviser Guide to Giving provides financial services professionals with a useful handbook that asks them to consider why a client might give, when they might give and how they might consider giving. For any client considering structured giving, the guide also walks advisers through key issues to consider for a variety of giving structures. It also covers the role played by the client, the adviser, and any other relevant partners in a formal philanthropic endeavour. 

Ultimately, as more financial advisers understand the commercial benefit of engaging all your clients in a conversation that considers philanthropy, it is feasible that financial advisers could fast track Philanthropy Australia’s goal to double structured giving by 2030. 

This would be a wonderful “triple bottom line” benefit of (a) enhanced relationship for advisers with their clients (b) increased awareness of more Australians with funds to deploy of the benefit of effective giving, and (c) more giving that promotes positive social outcomes. 

Craig Connelly is a Partner at Perpetual Private. He is Chair of Philanthropy Australia’s Advisers Senior Working Group.  

Philanthropy Australia Financial Adviser’s resources: